Global Warming: The Economic Stakes William R Cline Publisher: Institute for International Economics, Washington, May 1992 Pages: (xi) + 103 Price: Not stated
Everyone these days is aware of the phenomenon of global warming, even if they find it difficult to distinguish between stratospheric ozone depletion and the greenhouse effect. Global Warming: The Economic Stakes is about the greenhouse effect and the resultant environmental pollution and global damage.
Incoming radiation from the sun has shorter wavelengths than outgoing radiation from the earth. Clouds, water vapour and greenhouse gases like carbon dioxide, methane, chlorofluorocarbons (CFCs), nitrous oxide and ozone are relatively more opaque to long-wave radiation. They allow in about half of the incoming solar radiation, but they also trap 80-90 per cent of the outgoing infrared radiation from the earth's surface. The result of the accumulation of these gases is that the earth gets warmer.
Part of this warming is natural, such as that due to water vapour. The point for worry is the additional global warming resulting from human activity such as the burning of fossil fuels and deforestation.
Carbon dioxide is the most important greenhouse gas. One of the most quoted estimates is that carbon dioxide levels will be double their pre-industrial levels by 2025. But Cline contends that use of this benchmark has led to a myopic perspective on global warming and says the dangers are much more serious when the time frame under consideration is longer.
Cline next proceeds to do a cost-benefit analysis of the effects of global warming. What sort of damage can one associate with an increase in global temperatures? Much of the damage is of the kind that is not thought of normally. Mean sea levels will rise. Electricity requirements for air conditioning will rise, but heating costs will go down. Lesser run-off in water basins will lead to curtailed water supply.
There will be increased urban pollution and rise in mortality due to heat stress. Consumer welfare will decline as a result of increase in the prices of agricultural produce. There are also intangible losses, such as the loss of species. Estimatedly, if US figures for 1990 are used as a benchmark, total damage would amount to 6 per cent of the gross domestic product (GDP).
The costs of reducing global warming are not as heavy. Carbon emissions can be reduced to 50 per cent of the baseline levels by the middle of the next century and this will lead to a loss of only 2 per cent of the GDP. Some initial cutbacks can be obtained free, such as through the increased use of compact fluorescent lights. Pricing rules can be changed to reward the saving of energy. Reduced deforestation and forestry measures can reduce some of the carbon dioxide emissions.
There is thus a clear economic case for reducing global warming. The question then is: How can this be achieved? This is the major hurdle, and not surprisingly, the aspect on which Cline's book is least convincing. He suggests a two-phase strategy. In the first phase, countries lower their emissions as best as they can, but there are no legally binding obligations. In 2000, by when the findings of greenhouse science will be further confirmed, they will move to an intensified policy regime to limit warming. In short, if you are interested in the survival of the earth, then this is definitely a book that you must read.
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