The Economic Uncertainty of Climate Change
by
Alexander Reese Norton
AN HONORS THESIS
for the
UNIVERSITY HONORS COLLEGE
Submitted to the
University Honors College
at Texas Tech University in
partial fulfillment of the
requirement for
the degree designation of
HIGHEST HONORS
MAY 2015
Approved by:
_______________________________________
Mark A. McGinley, Ph.D.
____________
Date
Assistant Dean, Honors College
Associate Professor, Honors College
Associate Professor, Department of Biological Sciences
_______________________________________
Robert E. Forbis Jr., Ph.D.
____________
Date
Assistant Professor, Political Science
______________________________________
Keira V. Williams, Ph.D.
____________
Date
Assistant Professor, Honors College
______________________________________
Michael J. San Francisco, Ph.D.
____________
Date
Dean of the Honors College
Professor, Department of Biological Sciences
The author approves the photocopying of this document for educational purposes.
ABSTRACT
Anthropogenic climate change poses immense and devastating potential impacts toward
the environment and humanity. Despite the high degree of scientific confidence of many of its
environmental implications, there is relatively large economic uncertainty as to how climate
change’s numerous environmental impacts may affect local, national, and global economies. I
argue that the economic uncertainty relating to climate change negatively affects governments’
ability to more effectively regulate greenhouse gas emissions. However, misleading and
politically-based arguments about scientific uncertainty have stifled governments’ ability to
respond to climate change and to perform important economic analyses and assessments of the
potential costs associated with climate change. In this way, economic uncertainty regarding
climate change exists in the face of high scientific confidence, and establishing higher levels of
economic certainty as it pertains to climate change will help support governmental and global
efforts to regulate greenhouse gas emissions. I support this argument by reviewing and
synthesizing relevant literature in order to increase our understanding of the numerous and
complex relationships that exist between the environment, humanity, and the economy.
i
ACKNOWLEDGEMENTS
I would like to thank my thesis director, Dr. Mark McGinley, for inspiring me to learn
more about climate change and for helping me become a better and more organized critical
thinker. I would also like to thank Dr. Keira Williams, the coordinator of the Honors Thesis
program at the Texas Tech Honors College, for her undying support and commitment toward my
development as a researcher and scholar. I would also like to thank Dr. Robert Forbis for his
expert insight into the field of environmental law and public policy and for his enthusiastic
support of this research project.
I want to acknowledge and thank the Howard Hughes Medical Institute at Texas Tech
University for their funds, resources and support of my undergraduate research and this thesis
project. I would also like to acknowledge and thank the Center for the Integration of STEM
Education and Research at Texas Tech University for their funds, resources, and support. I
would like to thank the Texas Tech Honors College and all of its faculty and staff for their
support and for fostering a thoughtful academic community. I also want to acknowledge the
Texas Tech University System for being an academic institution of educational excellence that
embraces critical and scholarly thought and discussion.
I would like to thank Julie Isom, the associate director of the Center for the Integration of
STEM Education and Research at Texas Tech University, for putting me in the best possible
situation to grow and succeed as a student and undergraduate researcher and for giving me
counsel during difficult times. I would like to thank my parents, Adriane Norton and Kirk
Norton, for helping support me with the costs of college and giving me priceless guidance.
Lastly, I would like to thank Rachel Ortega for her encouragement and for her endless personal
support.
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TABLE OF CONTENTS
ABSTRACT…………………………………………………………………………………......i
ACKNOWLEDGEMENTS……………………………………………………………………..ii
TABLE OF CONTENTS………………………………………………………………………..iii
INTRODUCTION…………………………………………………………………………….....1
CHAPTER 1: Climate Change…………………………………………………………………..5
CHAPTER 2: Scientific Uncertainty……………………………………………………………14
CHAPTER 3: The Economics of Climate Change and Economic Uncertainty………………...22
CHAPTER 4: Environmental Policy and Global Mitigation Efforts……………………………33
CHAPTER 5: Ecosystem Services………………………………………………………………42
CONCLUSION………………………………………………………………………………….52
BIBLIOGRAPHY……………………………………………………………………………….55
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INTRODUCTION
Climate change, or the long-term change in the earth’s climate properties and weather
patterns, poses immense risks and challenges for humanity (IPCC 2014). Its various ecological
implications, which include increasing global average surface temperatures, rising sea levels, and
ocean acidification, will have large impacts on our environment (IPCC 2014). Climate change
has proven to be a very complex and controversial topic, but it is a tremendously important
subject because of its immense current and projected impacts on humanity (Salzman 2010).
The scientific community has been aware that the earth’s climate has changed and has
undergone different cycles over long periods of time since the end of the end of the nineteenth
century, but anthropogenic, or “man-made” climate change, has only been extensively studied
since the middle of the twentieth century (Speth 2008). Since the Industrial Revolution began in
the 1850s, large amounts of greenhouses gases have been released and trapped in the earth’s
atmosphere (Ackerman 2009). Greenhouse gases include carbon dioxide, methane, ozone, water
vapor, nitrous oxide and chlorofluorocarbons; after being emitted by humans, a portion of
greenhouse gases stay trapped in the earth’s atmosphere, reradiating heat on the earth’s surface
and increasing the global average surface temperature (Salzman 2010).
The Intergovernmental Panel on Climate Change (IPCC 2014), an international body of
scientists and experts established by the United Nations to study climate change, was 95%
confident in their 2014 Fifth Assessment Report that more than half of the observed increases in
the global average surface temperature since the 1950s was caused by the anthropogenic
emissions of greenhouse gases (IPCC 2014). Specifically, the IPCC is now 95% confident that
the human activity of burning of fossil fuels or carbon energy sources has overwhelmingly
contributed to the warming of the earth and climate change.
1
Scientific uncertainty and confidence are at the crux of the climate change debate in the
United States (Speth 2008). Philosophically speaking, the scientific method cannot “prove”
anything (Freudenberg 2008). Instead, the scientific method is used by the scientific community
to disprove alternate theories in an effort to support a hypothesis or hypotheses. In this way, the
scientific method can never “prove,” or be 100% certain about any one theory or idea
(Freudenberg 2008). However, increasing levels of scientific confidence supporting a particular
hypothesis can be achieved through further experimentation and research (IPCC 2014).
In the commercial, political, and governmental realms, even scientific research with high
levels of scientific confidence have been effectively undermined under the guise and improper
use of the term scientific uncertainty (Freudenberg 2008). Skeptics point toward scientific
uncertainty as a political method to prevent the world’s governments from regulating greenhouse
gas emissions in an effort to more effectively mitigate the future environmental and economic
implications of climate change on humanity (Freudenberg 2008).
Climate change denial, or the dismissal of the scientific community’s consensus that
human activity is affecting climate change and/or the dismissal that the earth’s climate is
changing at all, is affecting the world’s ability to effectively respond to climate change and
reduce greenhouse gas emissions (Dunlap 2011). The ability of climate change deniers to cast
doubt on the anthropogenic cause of climate change is a politically-based argument rather than a
scientific one (Dunlap 2011). In turn, this form of politically-based, anti-science argumentation
leads to government stagnation in responding to the risks of climate change (Freudenberg 2008).
Thus, consideration of the potential costs associated with government responses to the risks
deters, or more appropriately, stifles any effort to perform important economic analyses of
climate change.
2
Historically, legislation such as the Clean Air Act of 1963 has given the Environmental
Protection Agency (EPA) the legal authority to regulate substances that are known to be harmful
to human health and wellbeing (Salzman 2010). In this way, scientific certainty has been a
central theme in the history of environmental law and policy. However, political and unscientific
claims of uncertainty have been used as misleading political arguments to stifle the government’s
ability to conduct important economic analyses of climate change, more effectively regulate
greenhouse gas emissions, and innovate more low-carbon energy sources such as solar and wind
energy (Salzman 2010).
Despite relatively high scientific confidence regarding climate change, there is relatively
enormous economic uncertainty regarding climate change (Stern 2007). The potential economic
costs resulting from climate change are still largely uncertain, and the literature regarding climate
change is overwhelmingly focused on the current and predicted future environmental
implications rather than on economic analyses (Stern 2007). I argue that economic uncertainty
affects the government’s ability to more effectively address known environmental, health, and
economic risks associated with climate change.
In this thesis, I analyze the existing literature in order to demonstrate how economic
uncertainty affects the United States government’s ability to more effectively regulate the
greenhouse gas emissions that are largely responsible for anthropogenic climate change. I argue
that stronger economic analyses in the context of climate change and a higher level of certainty
regarding the economic costs associated with the potential impacts of anthropogenic climate
change will provide government and global mitigation efforts with a stronger background and
argument to more effectively regulate greenhouse gas emissions. By regulating greenhouse gas
emissions, the rate at which anthropogenic climate change is occurring can be more effectively
3
slowed, its environmental implications can be mitigated, and the economic costs for humanity
can be reduced.
4
CHAPTER 1
Climate Change
Climate Change: A Brief Background
Climate change is the change in the state of the climate that can be identified by changes
in the mean and variability of its properties that persists for an extended period of time (IPCC
2014). It refers to any change in the earth’s climate over long periods of time, and it results from
both human activity and natural variability. The field of climate change has proven to be
extraordinarily complex and controversial in the early twenty-first century, but the importance of
addressing climate change is important to both the earth’s ecology and economies (Salzman
2010).
In the early nineteenth century, the scientific and academic communities began to
research and better understand the earth’s ice ages and various changes in paleoclimate (Bolin
2007). In 1896, a Swedish chemist named Svante Arrhenius first theorized that carbon dioxide
emissions from the combustion of coal could lead to increasing global temperatures (Salzman
2010). In the early twentieth century, scientists suspected a natural greenhouse effect could be
occurring in the earth’s atmosphere and that those greenhouse gases could be affecting the
climate (Bolin 2007).
By the 1960s, when carbon dioxide was identified as a particularly important greenhouse
gas that affected climate change, scientists became increasingly more confident of anthropogenic
greenhouse gas emissions being linked to global warming (Bolin 2007). However, it was not
until the early 1990s that climate change began to be studied extensively outside of the
atmospheric sciences, and it has since expanded into multiple disciplines, including economics
(Stern 2007).
5
Greenhouse gases such as carbon dioxide, nitrous oxide, methane, water vapor and
chlorofluorocarbons accumulate in the atmosphere and warm the earth in a phenomenon known
as the “greenhouse effect” (Brown 2009). Greenhouse gases allow the sun’s light to travel
through the atmosphere, absorb a fraction of the heat from the earth’s surface, and re-radiate the
heat back, which leads to additional warming (Salzman 2010). The result of the greenhouse
effect is an increase in the total energy stored in the earth’s atmosphere. The increased energy
causes an increase in global average surface temperatures, which has various impacts and
changes on the earth’s climate patterns (IPCC 2014).
Greenhouse gases only account for approximately 3% of the atmosphere on earth, but
their concentrations, namely carbon dioxide concentrations, have been increasing over the last
century (IPCC 2014). Since the industrial era, ice core samples taken from the Antarctic and
Greenland ice caps demonstrate that atmospheric concentrations of anthropogenic greenhouse
gases have increased: carbon dioxide by 37%, nitrous oxide by 19%, and methane by 150%
(Salzman 2010). The earth’s fossil fuel and carbon-based economy is overwhelmingly
contributing to the greenhouse effect and climate change (IPCC 2014).
Anthropogenic Greenhouse Gas Emissions
It is estimated that 6.5 to 8.5 (see Figure 1 on next page) billion metric tons of carbon are
emitted into the earth’s atmosphere each year, and about 3 billion metric tons of that carbon
remain in the atmosphere (Salzman 2010). The atmosphere contains the highest amount of
carbon dioxide it has ever contained in at least the last 650,000 years (Speth 2008). The
additional carbon is assimilated through the ocean or used by plants and phytoplankton during
photosynthesis (Speth 2008). Forests and plants act as carbon reservoirs and absorb much of the
earth’s atmospheric carbon dioxide each year. Thus, it is estimated that deforestation may
6
contribute up to 20% of anthropogenic carbon contributions, though the relationship between
climate change and forests is not completely understood (Salzman 2010).
Figure 1: Global Carbon dioxide concentrations (teragrams) from 1900 to 2008
Source: Oak Ridge National Laboratory, Carbon Dioxide Information Analysis
Center
As a result of increased greenhouse gas emissions and deforestation, global carbon
dioxide concentrations rose by 22% between the years 1980 and 2000 (Speth 2008).
Additionally, the increase in the rate of greenhouse gas emissions has tripled over the average
over the years 1990-1999 (IPCC 2014). The International Energy Agency predicts that if the
world continues on a business-as-usual path between the years 2004 and 2030, there will be
approximately 55% more atmospheric carbon dioxide in 2030 than levels in 2008 (Speth 2008).
In more optimistic scenarios in which greenhouse gas emissions are significantly reduced
7
throughout the globe, the atmospheric carbon dioxide level is still expected to rise by 31% (Stern
2007).
Industrial nations are estimated to have contributed much more to the atmospheric
concentration of greenhouse gases than developing nations (Salzman 2010). The developed
countries have contributed an estimated 75% of the cumulative greenhouse gas emissions and are
also responsible for an estimated 60% of the emissions in 2008, even though these countries only
make up about 20% of the world’s total population (Speth 2008). The United States has emitted
approximately the same amount of greenhouses gases on an annual basis as 2.6 billion people
living across 150 different developing nations (Speth 2008).
However, in recent decades, the emissions of greenhouse gases in developing countries,
particularly India and China, have increased rapidly (Stern 2007). In 2004, the developing world
was the source of over half of the global carbon dioxide emissions (Speth 2008). Unless
industrial nations provide developing nations with strong economic incentives to curb
greenhouse gas emissions, it is very doubtful that developing nations will sacrifice economic
growth to help mitigate the effects of climate change (Stern 2007).
Impacts of Climate Change
There are number of negative implications that climate change is having on the earth, and
it is important to note that the IPCC’s estimates of future climate change impacts are made in a
variety of contexts; i.e., the more greenhouse gases emitted and trapped in the earth’s
atmosphere, the more severe the environmental implications of climate change will become
(IPCC 2014).
In the IPCC’s Fourth Assessment Report, the IPCC observed that snow cover and
mountain glaciers have declined in both the Southern Hemisphere and Northern Hemisphere
8
(IPCC 2007). Longer and more intense droughts have been recorded since the 1970s, particularly
in the tropics and subtropics, and this has been linked with the fact that higher average global
temperatures have led to increased evaporation of water (Speth 2008). Though there have been
decreased precipitation events, the frequency of heavy precipitation events has increased over
most regions, along with increased amount of atmospheric water vapor due to increased rates of
evaporation (IPCC 2014).
Additionally, the IPCC claimed that the warming of the earth is “unequivocal” based on
scientific evidence from observations of global average ocean and air temperatures, the
widespread melting of polar icecaps, glaciers, and snow, and the rising average sea level (IPCC
2014). The report observed that 11 of the past 12 years (1995-2006) ranked as the hottest years
on instrumental record (since the year 1850), and that most of this warming was very likely due
to the increase in anthropogenic greenhouse gas emissions (Speth 2008).
Perhaps the most well-known ecological implication of climate change is the increasing
average annual surface temperature of the earth. The IPCC’s Fifth Assessment Report showed a
0.85C increase in global average temperature from 1880 to 2012 (IPCC 2014). Each of the past
three decades have been successively warmer than any previous decade since 1850, and the
warmest thirty-year period over the past 1400 years was most likely 1983 to 2012 (Salzman
2010).
Another well-known ecological impact of climate change are the rising sea levels of all
the earth’s oceans and major bodies of water (IPCC 2014). From 1901 to 2010, the global mean
sea level rose by 0.19 meters (IPCC 2014). Over the next century, the global sea level is
expected to rise between 18 and 58 centimeters (Salzman 2010). The sea level rise is due to two
reasons: the thermal expansion of water due to increased temperature, and the melting of polar
9
ice (Salzman 201). The Arctic is warming at approximately two times the rate of the rest of the
globe, the average rate of ice loss in the Antarctic ice sheet was likely 147 gigatonnes per year
from 2002 to 2011, and the average rate of ice loss in the Greenland ice sheet was likely 215
gigatonnes per year from 2002 to 2011 (IPCC 2014). Interestingly, governments and countries of
the circumpolar north have already begun political and economic discussions over the sovereign
control of new shipping routes that will be opened up by the disappearing ice by as soon as 2020
(Speth 2008).
Rising sea levels could potentially displace millions of people living on island nations
and low-lying delta areas such as Bangladesh, Egypt, Florida, and Louisiana (Salzman 2010). It
is estimated that as many as 850 million people could be forced to migrate from their homes by
the end of this century due to rising sea levels, melting glaciers, and changes in monsoon patterns
(Speth 2008).
Climate change also has significant impacts on day-to-day weather, precipitation, weather
patterns, and storm severity (IPCC 2014). There is expected to be an increased number of warm
days and heat spells and a decreased number of cold days each year (IPCC 2014). Additionally,
the IPCC’s Fifth Assessment Report predicts that there is likely to be an increased number of
heavy precipitation events with precipitation occurring over fewer days total (IPCC 2014). There
is medium confidence that there will be increased occurrences of drought due to decreased
precipitation in some areas and decreased freshwater availability due to melting glaciers and
snow cover (IPCC 2014). Climate change is expected to shift the overall availability of fresh
water, and some regions are expected to get dryer while other regions are expected to get wetter
(Speth 2008).
10
Additionally, drought is expected to increase in some areas while flooding is expected to
increase in other areas. By the year 2080, millions of people across the globe who live on the
coast are expected to lose their homes due to flooding each year (Speth 2008). Denselypopulated areas along the mega-deltas of Africa and Asia are especially at risk, and small islands
are extremely vulnerable to being completely flooded (Speth 2008).
The overall health and wellbeing of ecosystems are also in jeopardy due to unprecedented
climate change caused climate drivers, such as the changing of land use, the overexploitation of
natural resources, and pollution (IPCC 2014). Approximately 20% to 30%of all animal and plant
species that have been scientifically studied are predicted be at increased risk to go extinct (Speth
2008). As oceans become increasingly acidic due to increased uptake of atmospheric carbon
dioxide, fish, coral, shellfish, and other mollusks will be at great risk for extinction (IPCC 2014).
In addition to ocean acidification, ocean warming will inevitably lead to more occurrences of
coral bleaching and coral mortality, which will have devastating effects on aquatic ecosystems
(Speth 2008).
Other species may benefit from increased global temperatures and cause damage to
ecosystems. In the American Northwest, for example, dark beetles are destroying hundreds of
thousands of acres of forests each year (Speth 2008). Normally, these pests are controlled by
harsh winters that limit their population growth, but milder winters have allowed their
populations to rapidly and uncontrollably increase. Milder winters are expected to decrease the
populations of some species and increase the populations of other species due to changes in
geographic range as a result of temperature changes (Speth 2008).
Human health is also expected to be affected in a variety of ways. Disease vectors, such
as mosquitoes for malaria, are expected to increase in spatial distribution (Speth 2008). Higher
11
occurrences of malnutrition, as a result of decreased soil fertility, will increase globally and
especially in developing countries (UN 2009). There are expected to be increased deaths due to
more severe storms, floods, droughts, heat waves, and forest fires (UN 2009). Additionally, there
is an increase expected in the prevalence of cardio-respiratory diseases due to higher ozone
concentrations related to climate change (Speth 2008).
In 2004, the World Health Organization estimated that 150,000 human lives would be
lost each year due to the effects of climate change (Speth 2008). By 2030, the World Health
Organization projects that estimate could nearly double largely due to malnutrition, malaria, and
diarrhea-related diseases and that the majority of these deaths would occur in developing
countries (Speth 2008).
It is clear that climate change will have large and devastating impacts on the environment
and human wellbeing. Some of these impacts possess high level of scientific confidence, and
others contain low to medium confidence (IPCC 2014). Though the precise statistical changes in
the earth’s climate properties are unknown, there are very high amounts of scientific confidence
of the various climate change scenarios based on future greenhouse gas emission levels (IPCC
2014).
The implications of climate change are expected to have devastating impacts on both the
earth’s environment and local, state, and national economies. (Salzman 2010). Though many
impacts on the environment and humanity possess high levels of scientific confidence, the
economic implications of those impacts are less understood (Stern 2007). Currently, the
published literature on climate change is overwhelmingly devoted to the climate and atmospheric
sciences, and the economic consequences of climate implications on the environment and
humanity need to be better analyzed (Stern 2007).
12
Furthermore, claims of scientific uncertainty have been used as legal arguments to
negatively affect the government’s ability to more effectively regulate known pollutants from
harming the public’s health and wellbeing (Salzman 2010). As it pertains to climate change,
political arguments cloaked under the guise of scientific uncertainty and in the face of high levels
of scientific confidence are currently being used in the United States and around the world to
impede or halt the regulation of greenhouse gas emissions or other efforts intended to mitigate
the effects of climate change (Freudenberg 2008).
13
CHAPTER 2
Scientific Uncertainty
Solving environmental problems often involve complicated technical and economic
issues. Scientists do not possess perfect knowledge of the causes of or solutions to environmental
problems, and therefore lawmakers do not have perfect knowledge when proposing legal
solutions and discussing public policy decisions (Salzman 2010). In this way, scientific studies
and environmental decisions are closely linked.
Using the scientific method, scientist are unable to “prove” anything. Instead, scientists
use the scientific method to disprove alternative theories and increase scientific confidence to
support a hypothesis or a set of hypotheses (Freudenberg 2008). The scientific method is an
empirical and peer-reviewed process by which scientists asks questions, propose a hypothesis,
test that hypothesis, and analyze findings to discover things about the natural world. The phrase
scientific uncertainty has different meanings in public, commercial, political, and governmental
and scientific rhetoric. Scientific and academic research inherently contain uncertainty, but that
does not necessarily indicate that the support for a particular hypothesis has low scientific
confidence (Freudenberg 2008).
Various degrees of scientific uncertainty affect many areas of environmental law and
policy (Salzman 2010). For example, scientific experiments have supported that some particular
pesticides cause cancer in mice, but not in humans, so it is scientifically uncertain if the same
exposure to pesticides in the environment will cause cancer in humans (Salzman 201). We could
reasonably hypothesize that pesticides may cause cancer in mammals, but scientific uncertainty
exists about the exact effects of the long term exposure of the pesticides to human beings. If no
scientific experiment is performed to analyze the effect of the same pesticides on human health,
14
then government might be forced to make a decision and create environmental public policy with
low levels of scientific confidence.
Additional sources of scientific uncertainty in environmental policy are the complex
relationships between the causes of environmental problems. Many environmental problems
arise from multiple, cumulative actions rather than from a single, identifiable action (Stern
2007). For instance, if a species of fish is becoming endangered, is it because of overfishing,
coastal pollution, damming of rivers, or a combination of all three? To conserve the fish
population, we must address most of these issues, if not all, in order to prevent the fish species
from going extinct. However, increased scientific confidence as to which factor is most
dangerous to the fish species would help create more effective public policy for government to
more adequately increase the probability the fish species will not go extinct.
Similarly, conclusions of scientific research regarding the environment are not without
some level of uncertainty. For instance, atmospheric scientists have observed increases in the
earth’s temperature over the past century, but how much certain can be established that the
warming is due to anthropogenic greenhouse gas emissions? In the context of climate change,
scientists have made many predictions of future climate impacts based on a variety of models
(IPCC 2014). These climate impact predictions include areas such as increasing temperature and
rising sea levels.
As seen in Figure 2 (next page), the IPCC has constructed a multi-model of the expected
change in the global average surface temperature. The figure demonstrates the empirically
observed global average surface temperature increase from the year 1900 to the year 2000 in
degrees Celsius (black line). Each colored line represents a different climate scenario based on
the predicted amount of greenhouse gases in the earth’s atmosphere. Additionally, each line is
15
shaded in width to denote a +/- 1 degree Celsius standard deviation range of each of the model
averages (IPCC 2007). The gray lines to the right of the graph represent each individual climate
scenario’s “best estimate” temperature increase along with a possible range of temperature
increase based on greenhouse gas emissions models.
Source: IPCC
4th
Figure 2: Multi-Model Surface Warming Ranges
Assessment Report: Climate Change 2007: Working Group I: The
Physical Science Basis
If annual greenhouse gas emissions stayed at constant 2000-level concentrations then the
earth’s global average surface temperature is still expected to increase by 0.6 degrees Celsius
(yellow line in Figure 2). The “lowest scenario” for greenhouse gas emissions has a range of 1.12.9 degrees Celsius increase with a 1.8 degrees Celsius “best estimate” and is represented by the
blue B1 line in Figure 2 (IPCC 2007). In other words, the B1 line represents the lowest predicted
greenhouse gas emissions scenario with a corresponding increase in temperature of a range of
16
1.1-2.9 degrees Celsius increase, with a 1.8 degrees Celsius increase being the best estimate. In
this example, the IPCC and climate scientists are virtually certain and scientifically confident
that the earth’s global average surface temperature will increase, but there exists uncertainty as to
how much of an increase will occur.
Conversely, the “highest scenario” for greenhouse gas emissions has a range of 2.0-5.4
degrees Celsius increase with a 3.4 degrees Celsius “best estimate” and is represented by the red
A2 line in Figure 2 (IPCC 2007). In other words, the A2 line demonstrates the IPCC’s “worstcase scenario” for the increase of global average surface temperatures as a result of relatively
high amounts of anthropogenic greenhouse gas emissions and deforestation.
Prediction models of climate change and other environmental models can only include
estimate range predictions, so there exists a certain amount of inherent scientific uncertainty,
even in the face of high levels of scientific confidence (Salzman 2010). Regardless, even
conservative estimates of minimum greenhouse gas emission scenarios suggest that climate
change will have immense impacts on the environment, humanity, and the economy (IPCC
2014).
Arguments claiming that little to nothing should be done to reduce greenhouse gas
emissions because climate change prediction models contain scientific uncertainty are
misleading and represent a misunderstanding of the scientific method, since scientific uncertainty
is inherent in science (Freudenberg 2008). In the face of increasingly high scientific confidence,
climate change denial is a political argument rather than a scientific one, and the guise of
scientific uncertainty is preventing governments and humanity from reducing greenhouse gas
emissions and mitigating the devastating impacts of climate change.
17
Addressing Scientific Uncertainty
There are two primary ways to address scientific uncertainty as it pertains to
environmental policy. The first way is to research and develop better information (Salzman
2010). Many environmental statutes require extensive information to provide an adequate basis
to create policy (Salzman 2010). With each passing year, more and more research and
information is developed regarding the scientific basis of climate change and its impacts. With
each assessment report, the IPCC gains increasing amounts of scientific confidence regarding
their environmental models that predict various impacts of climate change, each based on
different greenhouse gas emission scenarios (IPCC 2014).
The second way to address scientific uncertainty as it pertains to environmental policy is
the precautionary principle. The precautionary principle weighs caution against the considerable,
but scientifically uncertain, threats (Salzman 201). The precautionary principle shifts the burden
of proof from those who would challenge an offending activity to those who wish to commence
or continue the activity (Salzman 2010). This shift in the burden of proof could reduce the time
period between when an environmental threat is recognized and when a legal response is
developed.
For example, in the context of climate change, the burden of proof would fall on carbon
energy and fossil fuel companies to determine that climate change is not a credible threat to the
environment before searching for more resources. This shift in the burden of proof changes how
well understood an environmental problem must be before legal action can be taken, but it does
not address how serious the environmental problem must be to take action or the appropriate
action to take (Salzman 2010).
18
In the case study below, Massachusetts v. Environmental Protection Agency, the United
States Supreme Court applied the precautionary principle to the question of whether or not the
Environmental Protection Agency had the legal authority to regulate greenhouse gas emissions
on the basis that climate change could be potentially harmful to human health or wellbeing
(Salzman 2010).
The Clean Air Act of 1963 gave the Environmental Protection Agency (EPA) the ability
to regulate airborne contaminants that are harmful to human health, but it wasn’t until the 2007
Massachusetts v. EPA U.S. Supreme Court case that the EPA was legally able to address climate
change (Salzman 2010). In 1999, nineteen different organizations petitioned the EPA to regulate
carbon emissions from new vehicles under the Clean Air Act. In order for the EPA to have this
authority, the EPA would have to find a relationship between air pollution and vehicle emissions
that would be harmful to human welfare or health (Salzman 2010). However, under the Bush
administration, the EPA denied the nineteen organizations’ request on the basis that it did not
have the legal authority to issue regulations addressing climate change (Massachusetts 2007).
The EPA claimed that it was only able to regulate air pollutants under the Clean Air Act,
and that unless the U.S. Congress used language specifically addressing greenhouse gases and
carbon emissions, they could not legally address climate change (Massachusetts 2007).
Additionally, even if the EPA could address climate change under the Clean Air Act, there was
disagreement as to whether there was any link between greenhouse gas emissions and climate
change.
After the EPA’s rejection of the petition, twelve states, including Massachusetts and
Washington, D.C., appealed the decision to the U.S. Court of Appeals for the District of
Columbia Circuit (Salzman 2010). The state of Massachusetts claimed that climate change could
19
cause harm to humanity. In particular, Massachusetts cited that rising sea levels would cause a
significant portion of their state’s coastal regions to become flooded and result in hundreds of
millions dollars of damages (Salzman 2010).
The D.C. Circuit found that there was too much scientific uncertainty regarding climate
change for the EPA to have legal authority to regulate greenhouse gases. The D.C. Circuit
court’s concurring opinion also argued that Massachusetts could not prove “particularized
injuries” required by the Clean Air Act, which requires the EPA to demonstrate that particular
airborne contaminants are harmful to human health (Massachusetts 2007).
However, when the case was brought to the Supreme Court, there was a 5-4 ruling in the
state of Massachusetts’s favor (Massachusetts 2007). The Supreme Court held that the EPA did
indeed have the legal authority under the Clean Air Act to regulate greenhouse gas emissions.
The Supreme Court ruled that the EPA must provide a reasoned explanation for refusing to
classify climate change as a threat to human health and welfare because greenhouse gases could
be classified as air pollutants under the Clean Air Act (Massachusetts 2007). The Supreme Court
mentioned that the EPA alone could not regulate climate change, but it could help mitigate
greenhouse gas emissions, and that Massachusetts had standing given the fact that states could
act in the interest of the health of their citizens (Massachusetts 2007).
The 2007 Supreme Court case of Massachusetts v. Environmental Protection Agency was
important step in applying the precautionary principle to an environmental issue in the face of
claims of scientific uncertainty. When President Barack Obama took office in 2009, the EPA
proposed an endangerment finding under the Clean Air Act, claiming greenhouse gases posed a
threat to human health and welfare (Salzman 2010). The filament of this endangerment act
20
represented the first step in the United States toward allowing government to regulate mobile
vehicles’ greenhouse gas emissions (Salzman 2010).
Additionally, Massachusetts v. Environmental Protection Agency represented an
important legal step in addressing the specific environmental issue of climate change. The
Supreme Court acknowledged that there was enough scientific certainty regarding the link
between greenhouse gases and climate change in order to regulate greenhouse gas emissions
(Massachusetts 2007). Since climate change will cause sea levels to rise, it poses a potential risk
to Massachusetts citizens who live on the coast of the state. Furthermore, greenhouse gases are
linked to climate change and can therefore be regulated under the Clean Air Act of 1963 because
they pose a threat to human health and wellbeing (Salzman 2010).
The decision in Massachusetts v. EPA reflects the scientific consensus that human
activity is increasing the global average surface temperature (Massachusetts 2007). However,
attempts to reduce greenhouse gas emissions to slow the rate of climate change are currently
being undermined by arguments centering around scientific uncertainty with political and
economic agendas (Freudenberg 2008). Instead of scientific uncertainty, the larger uncertainty
regarding climate change is its future economic consequences for humanity (Stern 2007). In the
face of high scientific confidence regarding the implications of climate change, increased
attention should be focused onto its economic implications. I explore these implications in the
following chapter.
21
CHAPTER 3
The Economics of Climate Change and Economic Uncertainty
Climate change has had and will continue to have large and relatively uncertain effects on
the global, national, and local economics (IPCC 2014). The IPCC is made up of the most
qualified climate scientist experts in the world, and their research and annual reports primarily
focus on the causes of climate change, its ecological implications, and future climate conditions.
In their latest annual report, however, they acknowledge the potential economic costs of climate
change as a highly important consideration, noting that there is only “small but growing” amount
of literature devoted to performing economic analyses of climate change (IPCC 2014).
In other words, despite relatively high scientific certainty regarding humanity’s ability to
cause climate change, there still remains a high level of economic uncertainty pertaining to the
effects climate change (Stern 2007). Estimates of potential costs associated with climate change
possess high levels of uncertainty, and the literature regarding climate change is overwhelmingly
focused on its ecological implications rather than on economic analyses (Stern 2007).
Stern Review: The Economics of Climate Change
The Stern Review is widely considered the most comprehensive and detailed economic
analysis of climate change to date (Nordhaus 2007). It is a 700-page report on the economics of
climate change, and the review was led by British economist Nicholas Stern (Stern 2007).
Although the Stern Review is not the first review of the economics of climate change, it
represents an important and significant contribution to studying climate change in the context of
its effects on the global economy (Nordhaus 2007).
22
The Stern Review supports the perspective that the scientific evidence regarding climate
change and global warming is “overwhelming,” and it acknowledges that human activity is the
driving force behind the observed increase in global average surface temperature over the past
century (Stern 2007). Additionally, the Review studies the economics of climate change from an
international point-of-view, emphasizing the global nature of climate change and how it will
affect the economies of every country on Earth.
The Review claims that climate change is the largest market failure, or inefficient
allocation of resources, that humanity has ever experienced (Stern 2007). In the context of
climate change, the free market is said to fail because the adverse effects of greenhouse gas
emissions are external to those conducting the activities that result in the accumulation of
greenhouse gases in Earth’s atmosphere (Asafu-Adjaye 2000). In other words, individuals,
companies, and countries have an immediate economic incentive to conduct activities that
release greenhouse gases, but the adverse effects of that activity primarily fall upon future
generations instead of those conducting the activity. Therefore, the Stern Review claims the
earth’s free market fails by over-producing greenhouses gases, and in order to reduce greenhouse
gas emissions, global cooperation and government action is required (Stern 2007).
The Stern Review acknowledges that scientists cannot predict the future implications of
climate change with complete and 100% certainty, but it also says that there is enough scientific
certainty to understand the risks, and even conservative estimates of the costs of climate change
are too large not to properly consider and analyze (Stern 2007). At the core of the Stern Review’s
findings, the Review emphasizes that the benefits of “strong, early action” regarding climate
change heavily “outweigh the costs” (Stern 2007).
23
One of the Stern Review’s key economic conclusions and analyses is that climate change
will cost the global economy 5% of its annual GDP each year (Stern 2007). If less minimalistic
predictions are used pertaining to prediction greenhouse gas emissions scenarios and a more
severe range of the impacts of climate change are considered, the economic damage could rise to
as high as the global economy losing 20% of its GDP each year at some point in the future. In
contrast, the Stern Review estimates that the costs of efforts to reduce greenhouse gases could be
as little as 1% of the global GDP each year (Stern 2007).
Therefore, the Review claims that investing in the mitigation of greenhouse gas emissions
will have a significant effect on the earth’s global economy in the future (Stern 2007).
Additionally, the Stern Review finds that earlier action addressing climate change is better
because some of the effects of climate change are irreversible, and that the economic benefits of
early action greatly outweigh the known, scientifically confident future risks of climate change
(Stern 2007).
The Stern Review considers the economic costs associated with climate change in three
different ways (Stern 2007). The first method involves disaggregated techniques. In other words,
the Review considers the impacts of climate change on the economy, the environment, and
human life, and analyzes the costs associated with the approaches to reduce greenhouse gas
emissions (Stern 2007). The second method involves creating macroeconomic models that
integrate smaller economic models to consider the potential costs of climate change and the
transition to an economy that is less based on fossil fuels and carbon energy sources. The third
method used in the Stern Review to estimate the costs of climate change is using comparisons of
current and future trajectories of carbon impact costs (Stern 2007). In other words, a comparison
was drawn between varying levels of greenhouse gas emission increases and reductions.
24
Through these three methods, the Stern Review supports the idea that ignoring climate
change will severely damage global economic growth (Stern 2007). The Review also supports the
argument that early mitigation and reduction of greenhouse gases outweighs the cost of doing
nothing and not addressing climate change. The Review emphasizes that increased mitigation
efforts to reduce greenhouse gas effects will have larger economic benefit the stronger and
earlier the action is taken, and that waiting to address climate change and reduce greenhouse
gases will be more costly and have more global economic consequences (Stern 2007).
In 2007, the level of carbon dioxide in the earth’s atmosphere was approximately 430
parts per million; this level is rising at about 2 parts per million each year (Stern 2007). The
Stern Review predicts that the most damaging impacts of climate change can be reduced if
atmospheric carbon dioxide levels are maintained between 450 and 550 part per million.
Therefore, the reduction of carbon dioxide emissions must be at least 25% of current levels by
the year 2050 in order to fit into the Stern Review’s 450-550 part per million atmospheric carbon
dioxide level stabilization range (Stern 2007).
Reducing carbon dioxide emissions and greenhouse gas emissions will have economic
costs, but these costs are not as large as the costs associated with complete inaction (Stern 2007).
More specifically, the Stern Review estimates that the cost of stabilizing atmospheric carbon
dioxide levels between 500 and 550 parts per million will cost about 1% of the globe’s annual
GDP if strong mitigation is taken now (Stern 2007).
Additionally, although the burden of climate change mitigation falls upon all of the
earth’s countries, this burden is not distributed equally (Stern 2007). In other words, countries
with the greatest and most significant amount of greenhouse gas and carbon dioxide emissions
(China, the European Union, the United States, India) must make more significant mitigation
25
efforts toward climate change sooner than developing countries, but developing countries must
also take significant action (Stern 2007). Although immediate mitigation action has costs
associated with it, new low-carbon energy technologies (such as solar and wind energy) would
be expected to grow and increase employment and development opportunities with time. In other
words, reducing greenhouse gas and carbon emissions is the more cost-effective global economic
strategy, and new low-carbon technologies and business will help mitigate those costs in both
developed and developing countries (Stern 2007).
The mitigation efforts identified by the Stern Review refers to can be summarized into
four main groups: emissions trading, adaptation, technology cooperation, and reducing
deforestation (Stern 2007). Emissions trading, or cap-and-trade programs, are trade systems
where policymakers establish a desirable total cap of greenhouse gas emissions, and separate
entities are permitted to trade their carbon allocations (Salzman 2010). This type of system
provides an economic incentive to reduce greenhouse gas emissions. In other words, a global cap
of two parts per million of annual greenhouse gas emissions could be established and agreed
upon, and each country would be allocated and sold a specific cap of greenhouse gas emissions
that they cannot exceed in that year.
Additionally, a country could buy or sell greenhouse gas emission permit allocations, but
exceeding the cap would have political and economic consequences (Salzman 2010). A cap-andtrade system would better ensure that the global greenhouse gas emissions would not exceed a
designated and pre-determined total global amount. Also, developing nations could stand to
benefit from such a system because they could both sell their carbon permits while
simultaneously using those funds to develop more alternative and sustainable energy sources
(Stern 2007).
26
The second mitigation technique is adaptation. Developing countries are the most
vulnerable to negative implications of climate change because their economies tend to rely more
heavily on agriculture, and climate change is predicted to greatly reduce crop yield in tropical
and subtropical regions (UN 2009). Wealthier nations must commit to support developing
nations through international funding and research new crop varieties that are more resilient to
lower amounts of precipitation or flooding (Stern 2007).
The third mitigation technique is technology cooperation. It is critical for nations and
scientific bodies to research and develop more sources of low-carbon energy and alternative
energy, including solar energy, geothermal energy, wind energy, nuclear energy, and other
alternatives to fossil fuel energy sources that release greenhouse gases into the atmosphere (Stern
2007). Technology cooperation between the earth’s countries will be crucial to reducing the use
of carbon energy sources in order to mitigate the economically harmful effects of climate change
(Stern 2007).
The fourth and final mitigation technique described in the Stern Review is reducing
deforestation. Reducing deforestation is a very cost-effective way to help reduce atmospheric
levels of carbon dioxide (Stern 2007). Plants, including trees, use and absorb carbon dioxide
from the earth’s atmosphere as a part of the process of photosynthesis, so deforestation leads to
more atmospheric carbon dioxide being trapped in the earth’s atmosphere. It is estimated that
deforestation contributes more to global greenhouse gas emissions than the entire transport sector
(cars, busses, trains, etc), so reducing deforestation is another major category of reducing
greenhouse gas emissions in order to mitigate the economic costs associated with anthropogenic
climate change (Speth 2008).
27
Lastly, the Stern Review identified three elements of policy that are necessary for an
effective global response to climate change. The first of these elements is to price carbon through
tax, regulation or trading (Stern 2007). The second is to research, develop, and support more
alternative energy or low-carbon sources or energy. Third, educating individuals about climate
change and what they can do to help respond to it is also vital to effectively address climate
change (Stern 2007).
Critiques of the Stern Review
Though the Stern Review is considered the largest and most comprehensive economic
study of climate change, it has faced some amounts of criticism from economists around the
world (Nordhaus 2006). Dr. William Nordhaus, an economist at Yale University, critically
analyzed the Stern Review’s findings and summaries in a 2006 paper. Nordhaus called the Stern
Review “impressive,” and pointed out that though the Review is not as balanced as an IPCC
report, it represented an extensive synthesis of the literature on climate change (Nordhaus 2006).
Nordhaus then went on to question the Review’s economic assumptions and modeling.
Nordhaus claims that while he was not certain of the Stern Review’s overall “size” of the
assumptions made between economics and environmental danger, the conclusions drawn were
fundamentally correct in “sign” (Norhaus 2006). Furthermore, Nordhaus appreciated the link the
Stern Review made between economic objectives and climate change policies, citing that this
link was absent in the Kyoto Protocol (Nordhaus 2006).
Nordhaus argued that the Stern Review should be looked at as a political paper because
its author, Sir Nicholas Stern, is the Head of the Government Economics Service of the British
government and is also an adviser to the British government, rather than an academic expert
28
(Nordhaus 2006). However, Nordhaus praised the Stern Review’s call to increase taxes on carbon
so that governments and individual firms will possess a stronger economic incentive to develop
low-carbon energy sources such as solar and wind energy (Nordhaus 2006). Nordhaus said that
this point is “virtualy absent” from the grand majority of political discussion about the solutions
to climate change because it is economically “inconvenient” (Nordhaus 2006).
Lastly, Nordhaus criticized the Stern Review’s use of discounting. Discounting is the time
value of money (Asafu-Adjaye 200). In particular, present values of money are preferred and are
more valuable than future values of money due to the potential of investments and the effects of
inflation. In his review, Nordhaus stated that the Stern Review used a social discount rate that is
“essentially zero” and that this discounting rate, combined with other assumptions, led to largely
magnified and dramatic findings that are potentially inaccurate and overestimated (Nordhaus
2006).
In conclusion, Nordhaus found that while the social discounting rate of the Stern Review
might have led to some uncertain economic predictions, the Review’s overall message that our
world should work to make sharp, immediate reductions in greenhouse gas emissions was very
important and decisive (Nordhaus 2006). Finally, Nordhaus concluded that the central economic
questions, such as how much we should spend addressing climate change, how fast we should
spend addressing climate change, and how costly our mitigation efforts will be, remain open and
uncertain (Nordhaus 2006).
Two other world-renowned economists, Dr. Richard Tol and Dr. Gary Yohe, wrote a
review of the Stern Review that presented six main criticisms. First, they claimed that the Stern
Review based its economic predictions of climate change and greenhouses gases upon previous
literature with no truly novel research or literature (Tol 2006). This fact is important because the
29
Review’s estimates and costs of climate change were “far outside” what the current literature
might suggest (Tol 2006).
Second, Tol and Yohe, like Nordhaus, criticized the Review’s use of discounting. They
argue that the Stern Review used too low of a discount rate, which led to inaccurate estimates of
the time value of money and costs associated with climate change (Tol 2006). Third, the two
economists claimed that the costs of mitigating climate change predicted by the Stern Review
were too low because they ignored many economic repercussions regarding the value of money
invested in the low-carbon energy sector (Tol 2006).
Fourth, Tol and Yohe claimed the costs associated with climate change predicted by the
Stern Review and the benefits did not reflect its corresponding policy conclusion (Tol 2006). In
other words, Tol and Yohe argued that the Stern Review does not properly propose optimal
solutions based on the dramatic costs predicted. Fifth, the two economists criticized the Review
by saying it relied too much on performing cost valuations on climate change in the short term
despite the fact that there currently already exists a strong economic case to reduce greenhouse
gases in the near future (Tol 2006).
Lastly, Tol and Yohe argued that the strong “alarmism” supported by the Stern Review
may further polarize the subject of climate change (Tol 2006). They argued that critics will focus
more on the apparent economic estimation errors within the Review rather than the overall
message of the document, which suggested that strong, immediate action addressing climate
change and greenhouse gas emissions will cost less than later action (Tol 2006).
In conclusion, Tol and Yohe found that in order to significantly slow down climate
change, strong and immediate cuts in greenhouse gas emissions must be made worldwide (Tol
30
2006). They predict that this effort will take a minimum of 50 years and will have to possess a
common political will among generations, political parties, and countries (Tol 2006). They
argued that the Stern Review contains “true uncertainty” regarding both the costs of emissions
reductions and the damages of climate change (Tol 2006).
In essence, the Stern Review represents the most comprehensive review of the economic
implications of climate change to date (Nordhaus 2006). The document represents an important
first step in analyzing the economic implications of climate change, and its overall stance that
climate change will require immediate and strong action now is generally accepted by other
economists around the world (Nordhaus 2006). However, many questions still remain
concerning its findings and methods (Tol 2006). Particularly, the Stern Review’s near-zero social
discounting rate raises questions regarding the global cost of effectively reducing greenhouse gas
emissions and mitigating climate change (Nordhaus 2006).
This debate between economists indicates the need for more knowledge and better
understanding of the potential economic costs of climate change. Currently, the climate change
debate is largely focused on the scientific aspects and causes of climate change despite there
being high scientific confidence and a scientific consensus that human activity is causing climate
change (Freudenberg 2008). Increased consideration of the economic implications of climate
change could help provide a stronger and broader basis for public discussions about how to
address climate change and mitigate its devastating impacts.
Increased and more sophisticated economic analyses of climate change, particularly on a
national level, could allow the United States government and other government agencies such as
the E.P.A. to possess stronger and more comprehensive arguments to effectively regulate
greenhouse gases and encourage the innovation of more low-carbon energy sources. In short,
31
stronger economic analyses of climate change could provide governments with a stronger basis
on which to create public policy addressing the potentially disastrous economic and
environmental effects of climate change.
32
CHAPTER 4
Environmental Policy and Global Mitigation Efforts
In order for greenhouse gas emissions to be effectively reduced to slow the rate of
climate change, governmental action must be taken (Stern 2007). The Stern Review argues that
climate change is the largest market failure in the world and that the free market does not
currently possess the ability to address climate change. Climate change is a global issue, and
therefore it will require an unprecedented and coordinated global effort to institute environmental
public policy in order to effectively mitigate its devastating environmental and economic
consequences (Stern 2007).
Understanding the United States’ environmental policy history can help provide a more
cohesive framework for the country’s current attitude toward environmental issues, including
climate change. In this chapter, I outline a brief history of environmental policy in the United
States, and I also discuss previous global mitigation efforts that are making efforts to reduce
greenhouse gas emissions.
Environmental Policy: A Brief Background
Environmental protection and the perception of the environment in the United States have
changed dramatically over time. When Europeans first arrived in North America, the wilderness
was viewed as something dangerous and hostile to civilization rather than something to be
eagerly sought out and explored (Salzman 2010). Later settlers came to view the wilderness as
something to be controlled or managed, rather than conquered (Salzman 2010).
During the Westward Expansion of the United States in the early and mid-1800s, the
frontier mantra was focused on taming the environment. During the nineteenth century, the focus
was shifted to preserving the environment rather than taming it, and national reservations began
33
to be set aside (Henderson 1999). By the end of the century, most of the wilderness had been
settled and managed, so the public’s primary concern turned to preserving the remaining wild
areas.
One of the first battles that put conservationist movements into national prominence
involved the Hetch Hetchy Valley of Yosemite National Park (Salzman 2010). From the years
1901 through 1913, there were repeated requests to dam the Tuolomne River of the Hetch
Hetchy Valley in order to increase the water and electrical supply of San Francisco (Salzman
2010). The water needs of a city of 400,000 people were weighed against the benefit of
preserving Hetch Hetchy. John Muir, a leading figure in the conservation efforts during the early
twentieth century, led a grassroots campaign against the federal government, citing the
Tuolomne River’s potential recreational uses and beauty (Salzman 2010). The conservationist
lost the political battle, and Hetch Hetchy was dammed, but the movement helped popularize the
conservation movement in the United States (Salzman 2010).
In the example of the Hetch Hetchy Valley conservation battle, human health and
economic benefits were weighed by the federal government against recreational, natural, and
aesthetic value. Historically speaking, economic arguments have been more effective than
conservation arguments when government is forced to make a decision between the two (Speth
2008). Therefore, more closely analyzing and understanding the economic costs of climate
change could provide for a stronger legal argument in future environmental decisions regarding
greenhouse gas emissions in a similar way that the federal government ruled in favor of the
economic benefit of damming the Tuolomne River of the Hetch Hetchy Valley.
After World War II, the construction of much of the interstate highway system had taken
place, and America’s public lands became more revered (Salzman 2010). In 1954, a dam
34
proposal was made at Echo Park that threatened to destroy Dinosaur National Monument near
the Colorado-Utah border. During the Hetch Hetchy dispute, there were only a few conservation
groups, but by the early 1950s, there were around three hundred in the United States (Salzman
2010). Due to increased conservation awareness and involvement, mail to Congress was
approximately 80-to-1 against the dam, and the dam proponents were defeated (Salzman 2010).
This particular example helps illustrate how increased public awareness and public education of
environmental issues can help government more effectively make environmentally-conscientious
decisions.
During the 1960s, landmark laws such as the Wilderness Act of 1964, the Land and
Water Conservation act of 1965, and the National Historic Preservation Act of 1966 were passed
(Salzman 2010). This new wave of legislation represented a renewed national interest in
preserving and protecting the environment (Salzman 2010). These interests were upheld in
important and notable court battles, as well.
In 1965, the Consolidated Edison Company of New York, Inc., was granted a license by
the Federal Power Commission to construct a hydroelectric plant on the Hudson River (Salzman
2010). The plant intended to give additional power and electricity to New York City, but its
construction threatened to flood a nearby forest and remove a part of a mountain near the Hudson
River. Conservation groups and local residents helped protest the project, arguing that it would
destroy the area’s natural beauty and kill many fish populations in the river (Salzman 2010).
Together, these groups combined to form the Scenic Hudson Preservation Conference, and they
sued the Federal Power Commission to stop the project (Salzman 2010).
The Second Circuit granted standing to the Scenic Hudson Preservation Conference,
citing that Section 10(a) of the Federal Power Act required all construction projects initiated by
35
the Federal Power Commission be able to serve public uses, including “recreational uses”
(Salzman 2010). The court argued that the Federal Power Commission had not sufficiently
researched the alternatives or put together an adequate record to support the project.
In 1971, the court held that the Federal Power Commission had sufficiently considered
the recreational and environmental implications of the project, but the decision had major
consequences for the future of environmental protection (Salzman 2010). The case provided an
example of the benefit of requiring agencies to consider environmental impacts and also gave a
basis for local groups, such as the Scenic Hudson Preservation Conference, to sue those agencies
on the grounds of public and environmental interest.
The Federal Power Commission decision is an example of the government applying the
precautionary principle to address the scientific uncertainty of an environmental issue. The
Federal Power Commission had not fully or properly assessed the potential environmental
implications of building a hydroelectric plant on the Hudson River, and the Second Circuit
required the Commission to analyze recreational and environmental implications of the project
(Salzman 2010).
Similarly, when applied to climate change, the precautionary principle will shift the
burden of proof of demonstrating that there is no strong link between climate change and any
economic costs associated with climate change implications from environmental lobbyist groups
to energy and fossil fuel companies and other contributors of greenhouse gas emissions. The
precautionary principle will help our society and country better consider the environmental and
economic impacts associated with greenhouse gas emissions and climate change, and also
provide conservationists with a stronger legal grounds to appeal decisions that are potentially
harmful to humanity.
36
During the twenty-first century, application of the environmental protection laws of the
1960s and 1970s has proven to be very controversial (Salzman 2010). Property rights advocates
and economic opportunity have often been pitted against environmentalism, and increasing
levels of partisanship over environmental policy greatly slowed the passing new federal laws in
the 1990s (Salzman 2010). Congress refused to ratify the Kyoto Protocol, an international treaty
regarding climate change, in 1998, and when President Barack Obama took office in 2009, it had
been over a decade since Congress had last made amendments to major federal environmental
legislation (Salzman 2010).
Our nation’s environmental policy history and attitude toward the environment are
important factors to consider when discussing potential public policy to address climate change.
Additionally, global climate change mitigation efforts are also important to analyze so that we
can better understand what public policies and ideas might most effectively reduce greenhouse
gas emissions on a global scale.
Climate Change Mitigation Efforts
The IPCC. The United Nations established the Intergovernmental Panel on Climate
Change in 1988 (United Nations 2009). The IPCC was established by the World Meteorological
Organization and United Nations Environment Program to assess scientific, socio-economic, and
technical information regarding climate change (United Nations 2009). The international panel is
made up of hundreds of the world’s most qualified climate science experts, and they host an
annual meeting each year to discuss the various aspects and components of climate change. The
panel includes three major working groups, which include a group that assesses the scientific
aspects of climate change, a group that researches the socio-economic effects of climate change
37
and adaptation options, and a final group that researches options to reduce greenhouse gas
emissions and mitigate the effects of climate change (IPCC 2014).
The IPCC’s Fifth Assessment Report, released in 2014, collected and synthesized data,
experiments, and information from climate scientists around the world to create a cohesive and
comprehensive understanding of the overall outlook of climate change (IPCC 2014). Using
advanced statistical confidence intervals, the Fifth Assessment Report claimed that there is a
95% chance that the increase in average global surface temperature observed since 1950 is due to
anthropogenic greenhouse gas emissions (IPCC 2014).
The Fifth Assessment Report described the numerous ecological implications of climate
in detail, which include increased global average surface temperature, ocean acidification, rising
sea levels, melting ice sheets in Greenland and Antarctica, changes in precipitation patterns, and
changes in severe storm frequency and magnitude (IPCC 2014). The report also outlines climate
stabilization, climate change commitment, and climate irreversibility. The IPCC’s Fifth
Assessment Report strongly supports the claim that climate change is both an immediate and
long-term threat toward humanity and is almost entirely affected by anthropogenic emissions of
greenhouse gases (IPCC 2014).
The IPCC is arguably the most coordinated and global effort that the United Nations has
implemented to address climate change. As described in Chapter 2, one of the methods to
address scientific uncertainty is to research and develop more information. The IPCC’s primary
objective is to research and learn more about climate change, its causes, its future implications,
and its consequences for the environment and humanity. The IPCC represents the global experts
on the subject of climate change, and the Panel is central to all research and policy relating to
global climate change (United Nations 2009).
38
The Kyoto Protocol. The Kyoto Protocol (1997) was an international treaty that
committed its parties to reduce greenhouse gas emissions on the basis that climate change is
occurring and human activity (particularly carbon dioxide emissions) are responsible (Oberthür
1999). The Kyoto Protocol was an extension of the United Nations Framework Convention on
Climate Change (UNFCCC), a 1992 international treaty designed to “stabilize” greenhouse gas
emissions to prevent harmful anthropogenic effects on the earth’s climate system (Oberthür
1999). The Kyoto Protocol instituted the original objective of the UNFCCC of addressing
climate change by reducing greenhouse gas emissions.
The Kyoto Protocol’s major feature is a sharp reduction in greenhouse gas emissions for
the countries that have signed the treaty (Oberthür 1999). In most cases, the countries that signed
the Kyoto Protocol were legally obligated to reduce their greenhouse gas emissions by 8% with
at least a 5% reduction compared to 1990 emission levels in a commitment period between 2008
and 2012 (Oberthür 1999). However, a key and controversial feature in the Kyoto Protocol is
that its emission commitments vary from nation to nation and place a stronger emissions cut
burden on the countries that were more historically responsible for the high amounts of
greenhouse gas emissions in the atmosphere, such as the nations of the European Union and the
United States (Oberthür 1999).
In order to increase the likelihood that countries were able to meet their designated
greenhouse gas emission cuts, “binding targets” were designed to increase the flexibility of the
Kyoto Protocol’s agreements (Oberthür 1999). These binding targets allowed countries to
increase and maintain forests (which absorb carbon dioxide from the atmosphere via
photosynthesis) and other carbon sinks, pay for other countries’ projects to reduce greenhouse
39
gas emissions, and emissions trading, where countries were given an economic framework to pay
for smaller greenhouse gas emission cuts (Oberthür 1999).
Additionally, the objectives of the Kyoto Protocol were to occur in distinct phases. In
1997, when the 197 signed parties agreed to the Kyoto Protocol’s broad provisions, the first
commitment period was designed to start in 2008 and end in 2012 for the Annex I parties, the
countries the Protocol designated to be the most historically responsible for the current carbon
dioxide atmospheric concentrations (Rosen 2015). However, a second commitment period after
2012 was proposed, but it was not ratified. Negotiations to continue to framework of the Kyoto
Protocol were held again in 2014, but China, India, and the United States refused to ratify any
legal agreement that would commit them to reduce carbon dioxide emissions. Lack of global
cooperation among some of the world’s most powerful countries effectively ended the Kyoto
Protocol (Rosen 2015).
The overall review of the Kyoto Protocol is that it was correct in its message to reduce
greenhouse gas emissions in order to address climate change, but that it was largely ineffective
(Rosen 2015). In essence, the Kyoto Protocol failed in that it did not significantly reduce
greenhouse gas emissions. The Kyoto Protocol itself has faced many criticisms for its design, but
there also is likely some blame of its failure to be assigned to countries who refused to ratify the
international treaty, most notably the United States (Stern 2007).
Most climate change adaptation strategies have focused on short-term measures to reduce
the effects of climate change, such as building a sea wall in a coastal area to reduce the effect of
rising sea levels and storm surges (Salzman 2010). A mitigation approach, in contrast, is a longterm approach geared toward attempting to reduce greenhouse gas emissions and the
atmospheric concentration of greenhouse gases. As such, the Kyoto Protocol is an example of a
40
mitigation approach, and it symbolically represents the type of global effort and coordination that
will be necessary in order to effectively address climate change.
The Kyoto Protocol was not effective in reducing greenhouse gas emissions, but it was a
very important symbolic step forward for the world to begin to think of ideas to act as a
coordinated unit (Stern 2007). Since climate change is a global issue, it will take a global
response that is decisive, strong, and unified in order to be effective. Without the unified
participation of the earth’s largest and most powerful nations, such as the United States,
effectively addressing climate change will be a near-impossible task (Stern 2007). In the
following chapter, I explore another possible means of an environmental mitigation effort by
linking the environment with the economy: ecosystem services.
41
CHAPTER 5
Ecosystem Services
An ecosystem service is defined as the benefit that people obtain from the environment
(Millineum 2005). They can either be goods or services, and they include things such as clean
air, fresh water, the decomposition of waste, and the pollination of agricultural crops.
Ecosystems provide for human health, economic, social, and cultural human needs, and they
offer higher levels of economic certainty regarding the environment (Costanza 1997). Each
ecosystem service has intrinsic natural capital, and that economic value can be used in
environmental public policy and legal decisions regarding the environment to provide higher
levels of economic certainty.
What is an Ecosystem Service?
The Millennium Ecosystem Report divides ecosystem services into four different groups:
supporting services, regulating services, provisional services, and cultural services.
Supporting services are defined as “necessary for the production of all other ecosystem services”
(Millennium 2005). This type of service includes things such as nutrient recycling, soil
formation, and the synthesis of organic compounds necessary for life. Regulating services are
defined as “benefits obtained from the regulation of ecosystem processes” (Millennium 2005).
They include climate regulation, air and water purification, waste detoxification and
decomposition, and carbon sequestration.
Provisioning services are defined as “products obtained from ecosystems” (Millennium
2005). These include food, water, minerals, raw materials, energy, genetic and medicinal
resources, and ornamental resources. Cultural services are defined as “the nonmaterial benefits
people obtain from ecosystems through spiritual enrichment, cognitive development, reflection,
42
recreation, and aesthetic experiences” (Millennium 2005). These include things such as art,
nature spirituality, science, outdoor activities, and ecotourism (Millennium 2005). Each of these
different types of services and goods contain intrinsic natural capital, and the process by which
this value is estimated is performed by sophisticated environmental economic analysis (Costanza
2007).
The Natural Capital of Ecosystem Services
Each ecosystem good and service that the earth provides for humanity has natural capital
(Costanza 1997). In other words, each good and service that nature provides to society has an
intrinsic economic value. Though it is nearly impossible to provide exact estimates of the natural
capital of ecosystem services, rough and even conservative estimates are crucial to understanding
how to incorporate ecosystem services into public policy or decisions regarding environmental
issues (Costanza 1997)
Robert Costanza, one of the world’s leading ecological economics researchers, has been
interested in quantitatively measuring the value of the earth’s natural capital. Natural capital is
defined as the components of the natural environment that provide a long-term stream of benefit
to individuals and society as an entire unit (Costanza 1997). Natural capital consists of good and
services that are provided by complex dynamics of the natural environment (Millennium 2005).
These goods and services can come from both biotic (e.g., timber) and abiotic (e.g., minerals)
sources (Millennium 2005).
Costanza and his research team set out to estimate the annual value and capital of the
world’s ecological services (such as the water cycle, nutrient cycling, gas regulation, etc). Using
various advanced statistics and mathematical models, they estimated that the value of the entire
43
biosphere’s annual ecological services is between 16 and 54 trillion US dollars, which they
published in a 1997 Nature study (Costanza 1997).
The study helped give a rough estimate of the enormous value that nature and climate
have in the context of the global economy. It also introduced the idea that ecological services
have natural and economic capital and should be considered in policymakers’ decisions in the
future. Costanza’s work is particularly important because assigning economic value to ecological
services could be a key factor in governmental planning and policy decisions regarding the
environment (Costanza 1997).
How are Ecosystem Services Valuated?
Services and goods provided by ecosystems have intrinsic natural capital, but human
estimations of the natural capital provided by ecosystem services can be difficult and complex
(Millennium 2005). Some scholars argue that placing a natural capital value on ecosystem
services is impossible because the value of long-term ecological benefits and human lives are
invaluable (Costanza 1997). However, these sorts of valuations on human life are done every day
by our government and insurance companies (Asafu-Adjaye 2000). Placing a valuation on
natural capital is not exact science, but it is a critical component to incorporating ecosystem
services’ natural value into decisions regarding the environment.
Many of the valuation methods used to estimate ecosystem services are based on
“willingness-to-pay” model and assumptions (Costanza 1997). For example, if an ecosystem
service provided $100 worth of natural capital of coal, then the beneficiaries of this ecosystem
service would be willing to pay up to, but not over, $100 for the service. Additionally, if the land
itself provided another $100 in aesthetic or conservation values, the government or market would
44
be willing to pay $100 for it. In this example, the total value of the ecosystem service would be
$200, but the beneficiary of the ecosystem would only pay $100 in contributions.
In the state of New Jersey, for instance, Robert Costanza and a team of researchers
estimated the value of the ecosystem services provided by New Jersey using hedonistic
regression (Costanza 2006). This type of valuation decomposes the item into smaller
components. For example, when determining the value of a home, one could count the total
number of bathrooms, living rooms, and bedrooms for a more accurate estimate.
Robert Costanza and his team used the concept of natural capital to study New Jersey’s
ecological services over a two-year period. In total, they separated the state’s ecological services
into seven components, including wetlands, marine ecosystems, forests, urban green space,
beaches, agricultural land, and open fresh water (Costanza 2006). Using three different economic
analyses and approaches consisting of value transfer, hedonic analysis and spatial modeling, the
total value of the above ecological services was estimated to be 19.4 billion U.S. dollars per year
(Costanza 2006).
Costanza and ecological service researchers openly admit these estimates to be
potentially inaccurate and rough in nature, due to various estimations and gaps in available data
concerning the ecological services listed (Costanza 2006). However, it is becoming increasingly
important to begin to understand ecological issues in terms of economics in order to more
effectively include environmental issues in public policy discussions (Costanza 1991).
Ecosystem Services Cases Studies
Applying the concept of ecosystem services to real-world public policy or environmental
problems could help decision makers include important financial contributions that the
ecosystem naturally provides for our species (Costanza 1997). Every ecosystem service provides
45
goods and services to humanity, and those goods and services poses natural capital (Costanza
1997). Though estimates of particular ecosystem services are intrinsically rough in nature, even
minimalistic fiscal values should at least be considered while making important decisions
regarding the environmental (Chichilisky 1998).
The following cases are examples in which policy makers have taken ecosystem services
into account when making decisions regarding the environment. Though none of these cases deal
directly with climate change, they can still serve as examples of the added perspective that
ecosystems as natural capital can provide.
Case #1: The 1996 Water Supply of New York City. New York City’s water supply is
derived mainly from the Catskill Mountains, a region approximately one hundred miles
northwest of the city (Postel 2005). The drinking water was purified naturally by microorganisms
in the soil and by root systems in the surrounding area. As the water runs from the northwest and
near New York City, the water is filtrated through the soil and roots of trees, and the natural
filtration system was adequate enough to uphold the U.S. Environmental Protection Agency’s
standards on clean drinking water (Salzman 2010).
However, fertilizers, pesticides, and sewage began to reduce the soil and the ability of the
surrounding trees to properly filter and clean the water (Postel 2005). In 1996, the EPA deemed
that New York’s drinking water supply had fallen below their clean drinking water standards
(Postel 2005). After falling below the EPA’s standards, New York City had two choices: the city
could restore the natural ecosystem services of the natural filtration systems of the Catskill
Mountains, or they could build a filtration plant at a cost of $6-$8 billion US dollars, with a $300
million annual operating fee (Postel 2005).
46
In other words, New York City had to decide if they wanted to invest in physical or
natural capital. In order to invest in natural capital, the city would have to purchase the area
surrounding the Catskill Mountains watershed so that the land could be restricted (Postel 2005).
Purchasing this land and cleaning the watershed of all its fertilizers, pesticides, sewage, and other
pollutants would cost an estimated $1-$1.5 billion US dollars (Postel 2005). Though these
calculations are conservative by natyre, they illustrate the value of investing natural capital. New
York City decided to restore the natural ecosystem of the natural filtration systems, and in the
process, the city saved an estimated $4.5-$6.5 billion dollars (Postel 2005).
In addition to the watershed’s filtration services, the ecosystem also provides other
important services such as carbon sequestration and the support of biodiversity (Postel 2005).
These ecosystem services provided by the Catskill Mountains’ watershed have not been
estimated, though it can be estimated that they provide millions of dollars of natural capital on an
annual basis. Since New York City’s investment in natural capital in the Catskill Mountains’
watershed, their drinking water has met the standards of the EPA as well as saved the city
billions of dollars that they would have invested in the water treatment plant, even if they had
underestimated their natural capital investment by over half.
Case #2: France’s Payment for Ecosystem Service Plan. Vittel, a French mineral water
company, receives its water from the Great Spring that formed at the base of Vosges Mountains
(Bulte 2008). Vittel’s water (now owned by Nestle) is renowned around the world for being one
of the purest sources of water, and the company sells this water to over seventy countries (Bulte
2008). However, in the 1980s, pesticides and nitrates began leaking into Vittel’s natural mineral
water supply. The strict legislation in France dictates that if the nitrate levels in mineral water
47
rise above 4.5 mg/L, then the water could no longer use the label of “natural mineral water”
(Bulte 2008).
As a result, Vittel’s name brand as a natural mineral water company was at stake, and the
company either had to find a way to reduce nitrate levels in their water supply at the base of
Vosges Mountains or lose their special mineral water designation and try and uphold their
business without their brand. The Vittel water company decided that they needed to find a way to
reduce nitrate levels in their mineral water so that they could keep their mineral water
designation with the French government (Bulte 2008)..
However, in order to reduce nitrate levels in the bottled water, the agricultural techniques
and pesticides of the farmers near the base of Vosges Mountains needed to change. In 1989,
Vittel formed a partnership with the French National Agronomic Institute and launched a
research program known as Agriculture-Enivronment-Vitte (Bulte 2008). The research
conducted by this program looked into ways to incentivize farmers to change their farming
techniques so that fewer nitrates and pesticides seeped into their local springs and water supplies
(Bulte 2008).
As a result of this research, Vittel developed a financial incentive package for farmers to
change their agricultural methods and nitrate pesticides that had contaminated Vittel’s natural
mineral water product. The incentive package developed is what is known as a “payment for
ecosystem service” (PES) program. The package included long eighteen-to-thirty year contracts
that subsidized farmers 150,00 euros per farm to cover cost of new farming equipment (Bulte
2008).. The package also included a subsidy of an average of 200 euros per year over the first
five years to ensure proper transition into the program, and free technical assistance to learn to
new farming techniques, among other financial and labor incentives (Bulte 2008). This financial
48
package was offered to farmers by Vittel in the local area of their water supply in exchange for
the farmers enhancing their farming techniques and reducing the level of nitrates in their
agrochemicals.
Since the establishment of Vittel’s PES program, their water supply quality has remained
in accordance with the French government’s standards. This case study serves as an example of
using a PES program as a way to incorporate environmental goals into financial packages and
decisions. There are many other examples of successful PES programs, including one
particularly successful case in Costa Rica, where a PES program has been established to preserve
the island’s forests. PES programs could also potentially be designed and used to help reduce
greenhouse gas emissions by incentivizing alternative energy sources and the use of electric
vehicles.
Case #3: Wild Bees of California. Bee pollination of crops in agricultural regions of the
United States is estimated to contribute to 15-30% of all of U.S. domestic food production
(Kremen 2005). On many large-scale agricultural areas in California, many farmers will import
stock non-native bees to pollinate their crops (though native bees still provide for a large portion
of pollination). The most frequently imported species is Appis mellifera, otherwise known as the
western honeybee (Kremen 2005). Dr. Claire Kremen of the University of California-Berkeley
and her lab have put together a large functional inventory to analyze the ecosystem contributions
to sunflower, tomato, and watermelon crops of the imported non-native bees and their native
pollinating counterparts.
Dr. Kremen found that the wild population of bees alone can provide complete
pollination services (Kremen 2005). Additionally, the native populations of bees can have
enhanced services of through complex social interactions between the native bees (Kremen
49
2005). However, stock honeybee populations have steadily declined over the past 50 years due to
diseases (Kremen 2005). Additionally, imported pollination services are rapidly decreased due to
agricultural intensification. In other words, many of the stock imported bees are dying, but the
native population of bees are not compensating by increasing in community population size.
The wild oak-woodland and chaparral habitat in the 1 to 2 kilometers surrounding
California farms can indicate the health of a native bee pollinator services (Kremen 2005). In
areas where there is more native bee pollination and less stock pollination, there are more
established bee nesting sites in these local woodland areas. Dr. Kremen has found relationships
between pollinator services and surrounding natural habitats that can help indicate areas in need
of more natural pollinating services (Kremen 2005).
Dr. Kremen has supported the idea that an investment in natural capital of planting oakwoodland and chaparral habitat around farms can help establish colonies of native bees, which
provide natural the natural ecosystem service of pollination (Kremen 2005). Investing in these
natural capital woodland areas can act as insurance policies for California farmers, as the stock
imported bee populations are rapidly dying. However, without an investment in this natural
capital, large amount of agricultural areas may not be prepared for the sudden decrease in stock
bee populations, and food production as well as the local economy may take devastating losses.
As the 3 cases above indicated, ecosystem services represent a crucial link between the
environment and economics. Ecosystem services help assign a value of natural capital to
particular ecosystem goods or services and can be used to help governments make more
informed decisions regarding the environment. Even if the most conservative and minimalistic
ecosystem service estimates are used, they help provide decision makers with more economic
certainty when weighing the costs of environmental choices (Costanza 1997).
50
In this way, ecosystem services provide stronger economic certainty when creating public
policy decisions. Similarly, economic analyses of climate change would provide governments
with stronger economic certainty when making decisions and creating public policy regarding
climate change. In particular, ecosystem services are an example of how considering the
environment’s economic value as it pertains to humanity can help governments make more
effective environmental decisions that affect the environment, the economy, and human
wellbeing.
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CONCLUSIONS
Climate change is a global issue that has the potential for immense and devastating
impacts the earth’s environment, humanity, and the global economy (Speth 2008).
Anthropogenic emissions of greenhouse gases have “unequivocally” contributed to climate
change, and the IPCC is now 95% confident that at least half of the observed warming since the
1950s can be attributed to human activities (IPCC 2014). Some of climate change’s ecological
impacts include increasing global average surface temperature, rising sea levels, ocean
acidification, as well as many other ecological consequences that will have potentially disastrous
effects for humanity, the environment, and the economy (IPCC 2014).
Climate change has had empirically observed impacts on the environment, but scientific
experts also predict future environmental consequences with varying amounts of scientific
confidence. For instance, climate scientists predict that the earth’s temperature will increase 1.12.9 degrees Celsius by the year 2100 in a “low-emissions” scenario, with the highest scientific
confidence pointing toward a 1.8 degrees Celsius increase best estimate (IPCC 2014). Although
there is scientific uncertainty regarding how much the earth’s temperature will increase by the
year 2100, there is very high scientific confidence that the temperature will increase significantly
as a result of human activity by even the most minimalistic and conservative of estimates.
In this way, arguments that little to nothing should be done to reduce global or national
greenhouse gas emissions on the misleading basis of scientific uncertainty are political
arguments by nature that do not properly reflect an understanding of the scientific method or the
scientific consensus on the subject of climate change (Freudenberg 2008). In essence, climate
denial, on the politicized basis of scientific uncertainty, is a political argument that impairs
governments’ ability to effectively perform important economic analyses of climate change that
52
could help provide an important legal basis for the regulation of greenhouse gases and implement
policy to innovate more low-carbon energy sources (Freudenberg 2008).
A major consequence of the climate change debate and discussion focusing on the
misleading pretense of scientific uncertainty is that there is currently a dearth of literature
devoted to the economic consequences of climate change (Stern 2007). The largest and most
comprehensive economic analysis of climate change, the 2007 Stern Review, represents an
important but highly-criticized step toward understanding how climate change might affect the
global economy (Nordhaus 2006).
In its conclusion, the Stern Review found that the scientific evidence for the link between
human activity and climate change was “overwhelming” and that “strong, early action”
regarding climate change would heavily “outweigh the costs” (Stern 2007). Though most worldrenowned economists agree with the Stern Review’s message in principle, many criticized the
Review’s methods of estimating the costs of climate change, particularly its near-zero social
discounting rate (Tol 2006). Economists suggested that the Stern Review was correct in in its
overall conclusion that addressing climate change will take strong, decisive, early and global
governmental action to reduce greenhouse gas emissions, but many economists also claim that
more economic analyses needed to be performed on such a large environmental issue with so
many potential impacts and risks for humanity and the environment (Nordhaus 2006).
In large part due to misleading scientific uncertainty arguments, government and global
action and public policy addressing climate change have been unsuccessful (Freudenberg 2008).
Additionally, United Nation efforts to reduce greenhouse gas emissions, such as the Kyoto
Protocol, have been unsuccessful in effectively mitigating climate change (Rosen 2015). I argue
that a stronger understanding of the economic consequences and costs of climate change will
53
help government more effectively reduce greenhouse gas emissions and create public policy to
help mitigate the effects of climate change (Salzman 2010).
In particular, the concept of ecosystem services provides an example of a potentially
useful way to relate environmental goods and services to natural capital values, linking the
environment with economics (Costanza 1997). Though ecosystem service estimates of natural
capital possess potentially wide ranges of economic uncertainty, even minimalistic estimates can
be useful in governmental decisions regarding environmental issues (Costanza 1997). In other
words, the knowledge of ecosystem services as natural capital can provide critical
environmental-economic insight into decisions about the environment by providing an increased
amount of economic certainty.
It is becoming increasingly clear that climate change presents devastating and potentially
disastrous impacts toward Earth and humanity (IPCC 2014). In many ways, it is the single most
globally complicated issue that our planet has ever had to face (Speth 2008). Reducing
greenhouse gas emissions now and in the future is the only feasible way to effectively mitigate
climate change (Stern 2007). In order to have a stronger argument to reduce greenhouse gas
emissions, the economic impacts of climate change must be better understood, researched, and
analyzed. It is increasingly evident that complicated relationships exist between the environment,
humanity, and the economy, and understanding and emphasizing those links and relationships
could be key in achieving global sustainability and more effectively addressing the global issue
of climate change.
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