Saturday, January 19, 2008

Response: Global Warming Skepticism, Denial, Faith, Solutions

Highnumber got our conversation off to a great start, and I'll try to offer some thoughts in the same vein as his thoughtful post.

Those who believe that there is no change (the rate of change is constant), they will take no action - they will behave as before. To arrive at this point, they can be satisfied with the data and analysis they've seen, or they are approaching it from a naive position.

Those who believe the rate of change is increasing, it could very well be irrelevant if they believe there is a substantial human component to the change. For them, the question what are potential implications is very important.

If the person believes that the outcome will be no different from today, that person could choose constant action (i.e., action as before), too.

However, if the person believes the outcomes will cause change in his/her life, what can be done?

Personal conservation makes sense insofar as using resources costs a lot. If keeping cool in the summer increases in cost enough, the person will have to reallocate other resources, for example.

Let us say for a moment that the agent ("A") believes that the rate of change is increasing, breaking trend, but is unsure of the human contribution. How could A arrive at a decision as to which actions would be best?

As the cost of information is relatively high due to the oftentimes contradictory nature of the data - who compiled them? Is there a clear agenda? What does the collector have to gain from advancing the data? I believe there are actors on both sides who seek to do this. To this end, I believe that a certain degree of skepticism of politically-motivated "solutions". TCS et al will definitely follow a certain agenda, while several European agencies will follow theirs. Both have the climate change issue as a means to another ends.

"A" receives and hears all of this information, and is unsure of outcomes and impact of any action. Here is where the scientific consensus that the rate of change is increasing, resulting in warming is important. Will "A" believe this? Real Climate addresses some of this.

The Center for Strategic and International Studies also has a paper outlining geopolitical implications of warming. CSIS, a bipartisan K Street think tank, clearly stakes out the position that the climate is warming, and there are political consequences that even the most ardent skeptic of claims by "tree huggers" could understand and grasp.

TCS gives a third view that the IPCC plays fast and loose with the data: [...]curves have occasionally been 'corrected' to better fit the man-made global warming hypothesis.

Finally CATO takes the position, the best policy is to live with some modest climate change now and encourage economic development, which will generate the capital necessary for investment in the more efficient technologies of the future..

CSIS and Cato appear to be in some form of agreement: each believes that a change is happening, Cato advises stepwise changes, while CSIS alerts the reader to potential political consequences. In both cases, the reader must decide how skeptical to be with their recommendations.

So the reaction, R is based on the reader's beliefs of the various scenarios. Let us pick the ubiquitous "Sky Is Falling" scenario that Cato and TCS cite as the IPCC's alleged outcome as one. Let's pick TCS's "too soon to guess, anyways, it's nothing" as the other pole, and Cato and CSIS are in between".

So the reaction is based on assigning the likelihood of each event (u is our standard, tidy error term that's iid, ect):

R = p1(SIF) + p2(TCS) + p3(CATO) + p4(CSIS) + p5(Other) + u

p1, ..., p5 are the probabilities assigned to each term, sum of all = 1.

Those who believe TCS would probably assign p2 = 1 and R = TCS, meaning that TCS's response would be their's as well.

By sketching this out, I am not advocating doing something for the sake of doing something, but I am suggesting that a portfolio of action, designed to deal with costs and potential for profit (or mitigation of negative consequences, augmentation of positive consequences) is a reasonable course of action. I understand this is very crude and the question "what the hell is 'other'?" screams out! I intend the R function to be conceptual and illustrative of a simple decision-making process.

Investors have a portfolio designed to minimize risk and maximize return. The CAP-M is a basic way of understanding this. You weigh the risks of the riskless return and the opportunity cost to see what the portfolio should be.

Highnumber and I are mere novices in the climate change debate, and don't even get me started on my investment acumen, but the concept that "doing something" is covered across the range of possible responses. If R = TCS (when p2 = 1), that is a response - it is taking action - so I am arguing that, R captures behavior.

One thing to realize: I am not suggesting that reacting to climate change is a Pascal's Wager. Quite the opposite: each individual has a choice of actions and can build a portfolio of responses based on which presentation of data they find most convincing.

I have always been a skeptic of the political forces in the climate change debate, but also have suspected that the rate of change had been increasing. I believe the data support this. Furthermore, I am a fan of research into other forms of power generation (nuclear, wind, solar, water, natural gas, other), and I do behave in ways to reduce utility and gasoline bills - but that is a shorter term financial motivation.

1 comment:

highnumber said...

This post belies its own tag.
Excellent.