False Alarm over Environmental False Alarms Author(s): S. W. Pacala, E. Bulte, J. A. List, S. A. Levin Source: Science, New Series, Vol. 301, No. 5637 (Aug. 29, 2003), pp. 1187-1188 Published by: American Association for the Advancement of Science Stable URL: http://www.jstor.org/stable/3835110 Accessed: 21/01/2009 16:00 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=aaas. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected]. American Association for the Advancement of Science is collaborating with JSTOR to digitize, preserve and extend access to Science. http://www.jstor.org POLICY FORUM ENVIRONMENTAL ECONOMICS False Alarm over Environmental False Alarms S. W. Pacala,* E.Bulte, J.A. List, S. A. Levin MWe live in an uncertainworld,in which actionand prudencemust be continuallyjuggled. Caution can be costly, but indifferenceto serious risks can be disastrous.In all aspects of life, we weigh risks andbenefits,invoking measures to insure against events that threaten what is most importantto us, while gamblingwith those thatcan be tolerated.In mattersof our environment,science has the responsibilityto informthese decisions, and society must find ways to identify the appropriatelevel of circumspection.By any calculation,we mustprotect ourselves against a wide variety of eventsthatindividuallyhavelow probabilities of occurrence,and still feel good when they havenot occurred.We mustrely on environmentalscience to alertus to an even wider set of possible disasters, manyof very low probability,so thatwe as citizens can decide which cause us most worry,andwhichmandateaction. Theunavoidable resultof thisprescription is thatmanywarningsof environmental scientistswillproveto havebeenunfounded, and otherswill haveled to actionsthatprevented or mitigatedthepredicteddireconsequences. Thusmanypredictionsof possibleenvironwill not cometo pass,in mentaldegradation somecasessimplybecausethosepredictions were made and heeded.Therewill then alwaysbe criticswho will trumpetthe failures as evidencethatwe shouldneverhavepaid attentionto those who urged caution,and that we shouldhence similarlydismissfuturewarnings.It is by now a familiartune. Totalcosts t O / / Totalbenefits o 0 A* Sensitivity of the alarm Net benefits of response to true alarms and costs of response to false alarms. At the optimumA*,the slope of the top curve(marginal benefits)equalsthe slope of the bottom curve (marginalcosts). the most (www.forsk.dk/eng/index.htm)-is recentof a longlistof suchefforts. Nonetheless, environmentalscientists need to confrontan importantissue, highlightedby these skeptics,thataccompanies the dualrole of the environmentalsciences in society.Funding,researchpriorities,and publicationstandardsreflectboth the need to advanceour fundamentalunderstanding of the Earth'secosystemsand a responsibility to soundthe alarmwhen a possible environmentalhazard is detected. Evidentiarystandardsin the basic sciencesare based solely on what most effectivelyenhanceslearning,whereasevidentiarystandards of an environmentalalarm system must balancethe benefits of early detection with the costs of alarmsbased on an earlystateof knowledge(2). Whatis the optimallevel of sensitivity The Skeptical Environmentalist by Bjorn for society's environmentalalarm? How Lomborg(l)-officially discreditedby the many signals should the environmental DanishCommittees on ScientificDishonesty communitysend to policy-makers,realizing thatsome (or many?)of themwill turn S.W. Pacalaand S.A. Levinare in the Departmentof out to be wrong? Is it true that environEcology and EvolutionaryBiology, PrincetonUnimental scientists are responsible for a versity, Princeton,NJ,08544-1003 USA.E. Bulte is litany of false predictions,as claimed by in the Department of Economics,TilburgUniversity, Post Office Box 90153, 5000 LE Tilburg, Lomborgand others,or is the balancebeNetherlands.J.A. Listis with the President'sCouncil tween false alarmsand correctones about of Economic Advisers; in the Agricultural and right,or even too conservative? ResourceEconomics(AREC)Departmentand in the The classification of environmental of of Department Economics,University Maryland, alarms as eithertrue or false obviouslyis College Park,MD, 20742-5535 USA;and at the National Bureauof EconomicResearch,Cambridge, too simple.Identifiedproblemsmaybe reMA02138, USA. al, but overstated or understated, and alarmsby consensus groups, such as the *To whom correspondenceshould be addressed.EPanelon ClimateChange mail:[email protected] Intergovernmental www.sciencemag.org SCIENCE VOL301 (IPCC),carry more weight than those of single scientists. When a critic such as comLomborgsays thatthe environmental munityissues too manyfalse alarms,he or she is actuallysayingthata reductionin the sensitivity of the environmental alarm would decrease the current regulatory costs morethanit woulddecreasebenefits. Thus,the claimof too manyfalse alarmsis a claim aboutthe slopes of the curves relatingbenefits and costs to alarmsensitivity, which are called marginalcosts and benefits in economics. A claim of too many false alarmsthus implies that marginal costs are greaterthan the marginal benefits. The structureof the cost-benefitproblem is shownin the figure (left). By sensitivity (the abscissa),we meanthe probability that an alarm would be sounded and acted upon in responseto some reference hazard.Sensitivitythus integratesthe effisciencesin deciencyof the environmental hazards,the evitectingandunderstanding dentiarystandardsthat cause environmental scientiststo issue warnings,andthe societal thresholds for regulatory action when given a warning. With this definition of sensitivity,the curvesfor the costs and benefits areprobablynondecreasingfunctions.The optimal sensitivity of the alarm system occurs when the marginal benefits of alarms equalstheirmarginalcosts [A* in the figure(left)].Thereis no formalmathematical reasonwhy the system shouldhave an internal optimum,and the formulafor the optimalsensitivityis not of muchpractical use because we cannot obtain precise quantitativeestimatesof the cost andbenefit curves.However,we can obtainsome quantitativeinformationthat establishesa lower bound for currentbenefits of response to environmentalalarms, and at least some informationabout the magnitude of the marginalbenefits. Evidenceis overwhelmingthathumans have had enormouslycostly effects on the environment.Lomborghimself estimates air pollutiondeathsin the UnitedStatesat morethan130,000annuallyandover3 million worldwide, and deathsavertedby the control of chlorofluorocarbons (CFCs) at morethan300,000 (2). Thus,even contrarian estimatesof the benefits of environmental action indicatethat these may be huge. Still, it is more difficult than one wouldthinkto showthatthis implieslarge benefits of respondingto environmental alarms. Where successful mitigationhas not yet taken place, such as with global 29 AUGUST2003 1187 POLICY FORUM warming, realized benefits remain small nationswith the samelevel of wealth,those or greatercabecauseof our failureto act. In cases with with more environmentalism, apparentlysuccessfulmitigation,the ques- pacityforpublicchoice,havelowerairpollution is inevitablyraised "Whatwould the tion. Public choice (as a manifestationof world have looked like in the absence of civil liberties)of courseinvolvesmuchmore mitigation?"When faced with well-docu- than environmentalism,making the obmentedhazardsand apparentlysuccessful servedrelationespeciallytantalizing. The balance of the evidence indicates mitigation,Lomborgandothershavedownactionand that we are receiving substantialbenefits playedthe role of environmental have arguedinsteadthat income and tech- from our response to environmental nology drive most improvementsin envi- alarms.These benefitsrangefromaesthetronmentalquality.Althougheconomicand ic (such as our joy at the bald eagle's retechnicalchangesunrelatedto environmen- covery) to the saving of millions of lives tal regulationare undeniablyimportantin (for example, regulationof air and water some cases, such argumentsare easily dis- pollutants).Still, the criticalquantitydetermissedin others,suchas thebaldeagle'sre- miningwhetheror not thereare too many coveryfromthe effects of DDT or the cur- false environmentalalarmsis the marginal rentdecreaseof CFCsin the stratosphere. benefitof the alarms-the slope of the benA popularcharacterization of the relation betweenpercapitawealthandpollutionis the so-calledenvironmental Kuznetscurve(3-5), cO whichis shapedlikeaninvertedU (seefigure, right).The decreasingportionof the curve . m fac- = I maybe inducedby purelytechnological of dirtyprod- c 8: tors,a shiftin the manufacture c0 ucts frommoreto less developednations,or dQ C. increaseddemandfor environmental regulationin developedcountries(3, 6-8). Whereall GDP per capita of thesefactorsmaybe operatingat once,esac- An example of an environmental Kuznets timationof thebenefitsof environmental andcontentious. curve. tionis inevitably quantitative Forexample,in the criticalcase of airpollution, emissionsof severalpollutantsin the efits curve-not the absolute benefit. United States were decreasingbefore the Historytells us thatmost of the knownanCleanAirAct of 1970(8, 9). Evenso, regres- thropogenichazards had already caused sionanalysesthatrelateemissionsto govern- considerableharmby the timetheiradverse mentregulations, income,measuresof envi- effectswereevenunderstood,let aloneregronmentalaction,and otherpossibledriving ulated; therefore,we argue that humans forces concludethat regulationsplayed a havetypicallylived on the steepportionof dominantrole in improvingair quality.The the benefits curve, ratherthan the asympProtection U.S.Environmental Agency(EPA) tote. Problemsof detectingwarningsignals (10) estimatedthe net humanhealthbenefits and overcomingvested interestsinevitably (benefitsminuscosts)of theCleanAirAct at lead to delay in regulation,often incurring $5.6 to $49.4 trillionfor a 20-yearperiod damages that could have been prevented (witha best estimateof $22.2 trillionin net with higher sensitivity.Small particulates benefits).In a critiqueof the Environmental (PM2.5)are the most dangerousair polluProtection Agencystudy,Galletet al. (8) also tants in the United States,and these were estimatedlargenet benefitsandshowedthat not even regulateduntil 1997 becauseepitheKuznetscurveforU.S.airpollutionshift- demiologicalstudiesshowingeffects at uned downbecauseof the CleanAirAct. Other expectedlylow concentrationswerenot reac- porteduntil 1989-1996 (12). studiesaffirmthe role of environmental Becausemarginalbenefitsareevidently tionandattitudesin achievingthe reductions (6, 11).Inaddition,we foundthatstatesin the so large,we arguethattheydwarfthe highUnitedStateswithproportionally highmem- ly uncertainmarginalcosts in most cases. in alarmis currently had lower Thus,ourenvironmental "green" bership organizations Kuznetscurvesfor air pollutantsthanstates too conservative,nottoo liberal.Considera with lowermembershiprates.Similarly,na- change in the sensitivity of the environtionswitha highscoreon anindexof civillib- mentalalarmlargeenoughto allow,on avertieshadlowerKuznetscurvesthannations erage,one of the majormillion-lifehazards with low civil liberties,probablybecauseof to pass undetected.Tobe beneficial,sucha actionin changewouldhaveto reducethe cost of inpubliclobbyingfor environmental countrieswith morecivil liberties(see sup- appropriate regulationseven morethanthe porting online material).These examples net value of the lives lost. We view this as stronglysuggestthatairpollutionis not sim- extremelyunlikely,giventhatthe valueof a statesor single "statisticallife" is usuallyestimated plya matterof income.Incomparing 1188 29 AUGUST2003 VOL301 in the low millions ($3 to $6 million currently in the United States) and that total expenditureson environmentalprotection in OECD(Organisationfor EconomicCooperationand Development)countriesare generallyestimatedat 1 to 2%of gross domestic product,with the United States at 1.6%(13-15). Also, new discoveriesfirst receive considerable scientific scrutiny, andmost false alarmsare discardedbefore they engenderserious costs. Furthermore, the costs of mitigationoften are far less thaninitiallyprojectedbecauseof induced technicalchange;delayingmitigationcan, therefore, increase costs. Environmental policy and science are dynamicpartners, and delays in addressingproblemstip the balanceeven more in favorof earlywarnings and actionthanthe staticcost-benefit analysiswouldsuggest(16). The optimalsolution of a cost-benefit analysisalwaysleaves some membersof a heterogeneouspopulationbearinga disproportionatefractionof the costs and others fractionof the enjoyinga disproportionate benefits. Thus, there will alwaysbe a robust marketof specialintereststo popularize books like The Skeptical Environmentalist.Weresuch complaintsnot heard, we wouldbe erringeven moreon the side of setting sensitivitiestoo high. Giventhe potential to save millions of additional lives, this is no time to turndownthe senalarm. sitivityof ourenvironmental References and Notes 1. B. Lomborg, (2001) The Skeptical Environmentalist (Cambridge Univ. Press, Cambridge, 2001), pp. 168, 182, and 274. 2. A. Kinzig et al., Ambio 32(5), 330 (2003). 3. K.Arrow et al., Science 268, 520 (1995). 4. T. M. Seldon, D. Song, J. Environ. Econ. Manag. 27,147 (1994). 5. G. Grossman, A. B. Krueger, Q. J. Econ. 110, 353 (1995). 6. W. Jaeger, "A theoretical basis for the environmental inverted-U curve and implications for international trade," working paper, Williams College, Williamstown, MA,1998. 7. J. Andreoni, A. Levinson, J. Publ. Econ. 80, 269 (2001). 8. C. A. Gallet, J. A. List, J. F. Shogren, "Reconsidering the emission savings due to the 1970 Clean Air Act of Amendments," working paper, University Maryland, College Park, MD, revised 2002. 9. R. Lutter, R. B. Belzer, Regulation 23, No. 3. (2000). 10. "The Benefits and Costs of the Clean Act. 1970 to 1990," http://yosemite.epa.gov/ee/epa/eermfile.nsf/ vwAN/EE-0295-2.pdf 11. S. Aoroa, T. Cason, South. Econ. J. 65, 691 (1998). 12. C.A. Pope III et al.,JAMA 287(9), 1132 (2002). 13. W.Viscusi,J. Econ. Lit. 31, 1912 (1993). 14. J. Lesser, D. Dodds, R. Zerbe, Environmental Economics and Policy (Addison-Wesley, New York, 1997). 15. "Pollution Abatement and Control Expenditures in o OECD Countries," www.oecd.org/dataoecd/41/57/ z 0 470431 1.pdf 16. M. Grubb, J. Kohler, D. Anderson, Annu. Rev. Energy Environ. 27, 271 (2002). 3J 17. We are grateful to M. Grubb, P. Ehrlich, S. Schneider, I and G. Daily for helpful comments on an earlier draft. Supporting Online Material www.sciencemag.org/cgi/content/fulv301/5637/1187/DC1 SOM Text Table S1 SCIENCE www.sciencemag.org u
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