"Using the results from formal economic models, the Review estimates that if we don't act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.
In contrast, the costs of action - reducing greenhouse gas emissions to avoid the worst impacts of climate change - can be limited to around 1% of global GDP each year." -- Stern Review on the economics of climate change
While somewhat downplayed in the United States -- the Washington Post buried it on page 18 -- the review of the economics of climate change headed by former World Bank economist Nicholas Stern was well publicized in Europe. Government officials in the United Kingdom, for example, are using it as a guide for policy advocacy.
For this essay, I want to take as given the report's assessment of the cost of global warming. Also, I will take as given that the strategy of reducing emissions of carbon dioxide, which I call the de-industrialization strategy, would cost one percent of global GDP each year. I want to suggest exploring an alternative strategy for fighting global warming, which I call the climate engineering strategy.
Climate engineering, or what I call Operation Sunscreen, would mean trying to alter the heat absorption properties of the atmosphere. The goal might be to reduce average temperatures by, say, 2 degrees centigrade.
I have no idea how to reduce heat absorption, but one can imagine a number of possible approaches to climate engineering: putting reflectors out into space; using some physical or chemical process to "wash" carbon out of the atmosphere; or coming up with a way to reduce concentrations of water vapor (the most abundant greenhouse gas) in the atmosphere.
One is a Big Number
When the Stern Review says that the cost of the de-industrialization strategy "can be limited to around 1% of global GDP each year," that makes the cost seem small. The number 1, after all, is a low number.
However, when the cost of de-industrialization is converted to dollars, the number no longer seems trivial. According to World Bank data, total world GDP in 2005 was over $40 trillion dollars. One percent of that would be over $400 billion dollars. What Stern is saying is that we should forego over $400 billion a year to forestall global warming. Of course, his Review estimates that the cost of global warming would be far higher. Again, for the purpose of this essay I am not questioning that. Instead, I want to suggest that at a price of $400 billion a year, it is worth investigating the possibility of alternatives to the de-industrialization strategy.
For example, imagine that Operation Sunscreen could be deployed for a one-time cost of $50 billion, with annual maintenance costs of $2 billion. That would clearly be far less costly to the world than a de-industrialization strategy that costs $400 billion per year.
Another potential advantage of Operation Sunscreen is that we might produce more reliable management of global temperatures. For example, it would be rather a shame to toss away $400 billion dollars a year using the de-industrialization strategy and then discover "Oops, the cause of global warming wasn't carbon-dioxide emissions after all. It must have been something else, because temperatures are still rising, even though we reduced emissions to levels that we thought would stabilize global temperature." Instead, climate engineering could reduce global average temperature regardless of whether global warming is caused by carbon-dioxide emissions or not.
I readily concede that I have no idea whether Operation Sunscreen can be carried out or what it might cost. What I would propose at this stage is that the National Science Foundation undertake a feasibility study concerning the climate engineering strategy. This feasibility study would examine various approaches in order to assess their costs, benefits, and risks.
I also will concede that I am not entirely comfortable putting the world's climate in the hands of scientists who attempt to engage in climate engineering. However, that discomfort is nothing compared with my fear of putting our future in the hands of international bureaucrats who are eager to embrace de-industrialization and to engineer a reduction of world GDP of $400 billion a year.
Arnold Kling is author of Learning Economics.