Flaws, Remedies and New Developments
by David Henderson
The
Treatment by Governments of Climate Change Issues:
Flaws, Remedies and New Developments
by David Henderson
Preview
Rather more than three years ago, to my surprise, I became involved with issues
relating to climate change. Increasingly, I have become critical of the way
in which these issues are being viewed and treated by governments all over the
world. In particular, I have become a critic of the role and conduct of the
chosen instrument of governments in this area of policy, namely, the Intergovernmental
Panel on Climate Change (IPCC).
My talk comes in four parts. First, I present some basic facts about the IPCC and the economic aspects of its work. Second, I summarise my critique of the IPCC and its member governments. Third, I sketch out proposals for remedying the present state of affairs. Last, I summarise some interesting and possibly significant recent developments in the UK.
PART I: Background
The IPCC
The IPCC came into being in 1988 as the joint subsidiary of two international
agencies, the World Meteorological Organisation (WMO) and the United Nations
Environmental Programme (UNEP). Its clients, and its governing body, are the
member governments of these two agencies - that is, effectively, the members
of the United Nations (UN). What I call its directing circle comprises senior
government officials, chiefly from environment departments; the heads and senior
staff of its parent international agencies; and some past and all present members
of its Bureau. The IPCC Bureau comprises 30 experts drawn from different countries
and disciplines, appointed by governments to act as a management body. The process
as a whole is under the direction and control of environment departments and
agencies.
The IPCC has produced three full-scale Assessment Reports, issued respectively in 1990, 1995 and 2001. Work is now well advanced on the Fourth Assessment Report (AR4), which is due next year.
The Panel operates through three Working Groups. WGI is concerned with scientific aspects of climate change, WGII with the prospective impacts of such change and ways of adapting to it, and WGIII with options for reducing emissions and mitigating climate change. Each of the Groups produced its own report as part of the Third Assessment Report. Alongside them was the Special Report on Emissions Scenarios (SRES), prepared for WGIII, which provided a range of projections of greenhouse gas emissions, covering the period from 1990 to 2100. Between them these four reports make up some 3,300 pages of text. Their preparation involved a small army of participants - authors, contributors, reviewers, and commentators - with delegates from member governments closely involved in the final stages of revision.
The IPCC's achievement
Since its establishment, the IPCC has come a long way. It has successfully completed
and published three massive and agreed reports, covering the whole range of
issues relating to climate change. In producing these reports, it has brought
together teams comprising over 2,000 specialists across the world and put in
place ordered procedures for directing their work: it has thus created both
an effectively-functioning process and an extensive professional milieu. It
has secured for its reports and their conclusions the acceptance of its many
and diverse member governments; and in consequence, it has informed the thinking
of those governments and prompted decisions by them. Its many participants and
outside supporters argue that it has created a world-wide scientific consensus,
based on an informed and objective professional assessment, which provides a
sound basis for policy.
Last, and especially to be noted, the IPCC has established itself, in the eyes of most if not all its member governments, as their sole authoritative source of information, evidence, analysis, interpretation and advice on the whole range of issues relating to climate change. It has acquired a monopoly position.
The IPCC and economics
In saying that the IPCC has become a monopoly purveyor of analysis and advice
'on the whole range of issues relating to climate change' I include economic
issues. There is an explicitly recognised economic dimension to the work and
responsibilities of the Panel.
The economic aspect is present, even dominant, at the beginning and the end
of the IPCC assessment process.
· First, projections of global warming are largely based on projected
atmospheric concentrations of CO2, which in turn are based on the projections
of CO2 emissions which emerge from the SRES; and the emissions figures themselves
are linked to SRES projections of world output, world energy use, and the carbon-intensity
of different energy sources. In these latter projections economic factors are
central.
· In the later stages, economic considerations, evidence and criteria
enter into the evaluation of the possible consequences of climate change and
of policies that might be adopted to deal with these. In a word, one might say
that after the projections of climate change have been arrived at, cost-benefit
analysis takes over.
In relation to the economic aspect, there is a feature of the IPCC process
that I find surprising. This is the non-participation, until a few weeks ago
in Britain, of the central economic departments of state - in particular, treasuries
and ministries of finance and economics. Over two years ago, I and my Australian
co-author Ian Castles wrote of these economic departments and agencies:
"That they have so far held aloof, and left the handling of economic issues
in the IPCC process to others, is surprising as well as unfortunate. An article
in The Economist (15 February 2003) that commented on our critique noted that,
in relation to issues of climate change policy, 'vast sums are at stake'. Yet
the questionable treatment of economic issues in the SRES and the IPCC's Third
Assessment Report, which as independent outsiders we have drawn attention to
in this and our previous article, seems not to have been noticed by a single
official in a single finance or economics ministry in a single country."
(Italics in the original).
This brings me to my second heading.
PART II: What's Wrong with the IPCC
There are good reasons to query the claims to authority and representative status that are made by and on behalf of the IPCC, and hence to question also the monopoly that it now holds.
Objectivity, consensus and monopoly
First, a general point. The whole idea of creating a single would-be authoritative
fount of wisdom, giving expression to a scientific consensus, is itself open
to doubt. Even if the IPCC process were indisputably and consistently rigorous,
objective and professionally watertight, it could well be unwise for governments
to place exclusive reliance, in matters of extraordinary complexity where huge
uncertainties prevail, on a single source of analysis and advice and a single
process of inquiry. Viewed in this light, the very notion of setting consensus
as an aim appears as questionable if not ill-judged.
More specifically:
· The Panel's treatment of economic issues is flawed. Writings that feature
in the Third Assessment Report contain what many economists and economic statisticians
would regard as basic errors, showing a lack of awareness of relevant published
sources; and the same is true of more recent IPCC-related writings, as also
of material published by UNEP. In relation to economics, the IPCC milieu is
neither fully competent nor adequately representative.
· These weaknesses, as also the Panel's handling of some other issues
outside economics, cast doubt on its claims to authority, objectivity and representative
status in relation to its work as a whole.
· The response of the Panel's directing circle and milieu to informed
criticism has typically been, and continues to be, inadequate or dismissive,
· The built-in process of peer review, which the IPCC treats as a guarantee
of quality, does not adequately serve this purpose, for two reasons. First,
providing for peer review is no safeguard against dubious assumptions, arguments
and conclusions if the peers are largely drawn from the same restricted professional
milieu. Second, the peer-review process as such, here as elsewhere, is insufficiently
rigorous. Its main purpose is to elicit expert advice on whether a paper is
worth publishing in a particular journal. Because it does not normally go beyond
this, '…peer review does not typically guarantee that data and methods
are open to scrutiny or that results are reproducible.'
· Both the directing circle, and the IPCC milieu more generally, are
characterised by an endemic bias towards alarmist assessments and radical 'solutions'.
This bias goes back to the earliest days of the IPCC: it is in line with the
views and presumptions of the Panel's sponsoring departments and agencies. From
the outset, this affiliation with what I have termed global salvationism has
affected the IPCC's capacity and readiness to treat the issues objectively.
PART III: What is to be done
In outline, my suggestions are as follows:
· First, the economic issues relating to climate change should no longer
be left to environmental ministries and agencies alone, to handle as they think
best. In particular, central economic departments of state should now become
involved, both individually and collectively through the OECD, while there is
also a role for national statistical offices. In addition, governments should
ensure wider non-official participation in this work.
· Second, governments should take further steps, both individually and
collectively, to make the IPCC process as a whole more professionally watertight.
In particular, they should recognise the limitations of standard peer-review
procedures, and ensure full disclosure and independent audit of empirical work
that enters into IPCC assessments.
· Third, the IPCC should no longer be viewed by its member governments,
as it has been ever since its creation, as their sole officially recognised
source of information and advice on issues relating to climate change. It should
be formally dethroned from its long-held monopoly position. The idea of achieving
a single consensus view on which to build policies should no longer be taken
for granted. Governments should actively encourage the preparation and dissemination
of work that offers an alternative view to that presented by the Panel.
PART IV: A New Situation
What are the prospects for a move by governments in this direction? My answer is that such prospects, while still not at all good, have recently improved somewhat. Up to the middle of last year, there appeared to be little chance of any effective challenge being made to either AR4 or the established IPCC process from which it is emerging. However, the possibility of presenting such a challenge, and of strengthening the basis for policies in this area, now appears as more hopeful. This is chiefly because of two developments in the UK.
A turning point?
The first of these was the publication last July of a report on the economics
of climate change by the House of Lords Select Committee on Economic Affairs,
a high-powered body. For the first time since the IPCC came into being, searching
criticisms of it have come from a source which cannot easily be disregarded
or set aside. A group of eminent, experienced and responsible persons, drawn
from a national legislative body and spanning the political spectrum, with the
help of an internationally recognised expert adviser, and after taking and weighing
expert evidence, has published a carefully considered and unanimous report in
which, among other things, the work and role of the Panel are put in question.
How far the Select Committee report may influence people, in Britain and elsewhere, is of course uncertain. The official British reaction has been uncompromisingly negative. After almost five months of reflection, Her Majesty's Government issued a lengthy response to the report. This document provides a further illustration of the IPCC directing circle's characteristic reaction to outside criticism: it is inadequate, misleading and dismissive.
Meanwhile, however, and I think independently of both the Select Committee report and the Whitehall response to it, the British government has taken an initiative of its own; and this is the second development I would draw to your attention.
This new initiative was first announced in July of last year and formally set up in October. The Chancellor of the Exchequer has established 'a major review of the economics of climate change' to be 'taken forward jointly by the Cabinet Office and HM Treasury…' - not, please note, by the Department of the Environment. The review is due to be completed by the autumn of this year.
This action by the British government, together with the Select Committee Report,
could help to open up a new phase in the treatment by governments of issues
relating to climate change. Both developments lend credence to two lines of
thought which up to now no IPCC member government has seriously entertained
at any stage in the 17 years since the Panel was created:
· First, the economic aspects of climate change should not be left as
the exclusive preserve of environment departments and agencies and the IPCC
directing circle, to handle as they think best.
· Second, the IPCC process is not to be viewed as self-sufficient, all-embracing
and authoritative. Rather, it should be seen as an exercise which cans both
be improved from within and supplemented by establishing other sources of ideas,
information and advice.
If these perceptions were to take root in the UK, and spread beyond its shores,
some far-reaching effects could ensue.
David Henderson
Westminster Business School, 9 January 2006
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