The Cost of Combating Global Warming

Thomas C. Schelling

From Foreign Affairs, November/ December 1997

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Summary:  The developing world will be the main beneficiary of global climate control -- with the developed world picking up the tab. But wouldn't it be better to invest in development today than pay for climate relief tomorrow?

Thomas C. Schelling is Distinguished University Professor of Economics and Public Affairs at the University of Maryland.

THE COST OF COMBATING GLOBAL WARMING

At international conferences, people speaking for the developing world insist that it is the developed nations that feel endangered by carbon emissions and want to retard elsewhere the kind of development that has been enjoyed by Western Europe, North America, and Japan. A reduction in carbon emissions in the developing world, they assert, will have to be at the expense of the rich nations. Their diagnosis is wrong, but their conclusion is right. Any costs of mitigating climate change during the coming decades will surely be borne by the high-income countries. But the benefits, despite what spokespeople for the developing world say, will overwhelmingly accrue to future generations in the developing world. Any action combating global warming will be, intended or not, a foreign aid program.

The Chinese, Indonesians, or Bangladeshis are not going to divert resources from their own development to reduce the greenhouse effect, which is caused by the presence of carbon-based gases in the earth's atmosphere. This is a prediction, but it is also sound advice. Their best defense against climate change and vulnerability to weather in general is their own development, reducing their reliance on agriculture and other such outdoor livelihoods. Furthermore, they have immediate environmental problems -- air and water pollution, poor sanitation, disease -- that demand earlier attention.

There are three reasons the beneficiaries will be in the developing countries, which will be much more developed when the impact of climate change is felt. The first is simple: that is where most people live -- four-fifths now, nine-tenths in 75 years.

Second, these economies may still be vulnerable, in a way the developed economies are not, by the time climate change occurs. In the developed world hardly any component of the national income is affected by climate. Agriculture is practically the only sector of the economy affected by climate, and it contributes only a small percentage -- three percent in the United States -- of national income. If agricultural productivity were drastically reduced by climate change, the cost of living would rise by one or two percent, and at a time when per capita income will likely have doubled. In developing countries, in contrast, as much as a third of GNP and half the population currently depends on agriculture. They may still be vulnerable to climate change for many years to come.

Third, although most of these populations should be immensely better off in 50 years, many will still be poorer than the rich countries are now. The contribution to their welfare by reduced climate change will therefore be greater than any costs the developing world bears in reducing emissions.

I say all this with apparent confidence, so let me rehearse the uncertainties, which have remained essentially the same for a decade and a half. Arbitrarily adopting a doubling of greenhouse gases as a benchmark, a committee of the U.S. National Academy of Sciences estimated in 1979 that the change in average global surface atmospheric temperature ...

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