Why Bjorn Lomborg is Wrong

Mark Thoma has an excerpt of Partha Dasgupta's review of Bjorn Lomborg's new book today. It took me a while to get Dasgupta's point, so let me try and rephrase it in a slightly simpler manner, since it was pretty opaque to me on a first reading.

Lomborg's argument is the easy bit. Look at all the money that Plan A – implementing Kyoto – would cost, and look at what benefits we would get in return for that cost. Now, look at Lomborg's Plan B. It costs a fraction of the cost of implementing Kyoto, and the benefits are much higher. So if we want to maximize the planet's welfare, we should do things like build infrastructure to protect against floods and hurricanes, while keeping the amount of carbon in the atmosphere to a maximum of 560 parts per million. The cost is lower, and the benefits are higher.

Hang on a second, says Dasgupta. The problem with Lomborg's argument is that he thinks he knows what the costs and benefits of a world with atmospheric carbon concentrations of 560 parts per million are. But he doesn't: nobody does. You can't just extrapolate from what we're seeing at current concentrations of 380 parts per million, because the climate is a non-linear system:

The transition to Lomborg's recommended concentration of 560 p.p.m. would involve crossing an unknown number of tipping points (or separatrices) in the global climate system. We have no data on the consequences if Earth were to cross those tipping points.

So run Lomborg's numbers again. Only instead of using Lomborg's best guess as to the costs and benefits of his Plan B, use a more reasonable range of probabilities. You can even say that Lomborg's best guess is the most likely outcome – but you also have to assign some kind of probability to much worse outcomes.

If you do that, then Lomborg's numbers cease to be nearly as compelling. Even a small probability of a catastrophic outcome during the move from here to 560 parts per million sends the costs associated with Lomborg's Plan B skyrocketing. On the other hand, the costs associated with Plan A – call it Kyoto, or anything else which stabilises atmospheric carbon at much lower levels than 560 parts per million – don't rise nearly a much. The known, up-front costs in terms of dollar expenditures are higher, to be sure. But the unknown, contingent costs of irreversible future catastrophes? Those are lower.

There are two visions of the world at war with each other here. In the first vision, the planet is on its way to environmental catastrophe, and we should do anything and everything we can in an attempt to insure against that catastrophe from occurring. In the second vision, climate change is a relatively gradual, non-catastrophic phenomenon, which has consequences (floods, hurricanes and the like) which we can protect ourselves against with infrastructure investment.

In the second vision, Lomborg is right: it's a lot cheaper to build a hurricane-proof house than it is to change the composition of the atmosphere in an attempt to prevent that hurricane from occurring in the first place. But in the first vision, Lomborg is wrong: all the hurricane-proof houses in the world will do precious little good if the population of the planet is decimated by freak weather patterns, food shortages, and a rapidly-increasing proportion of the Earth's landmass becoming uninhabitable because it's too hot or too wet or otherwise impossible to live on.

To put it another way, Lomborg's choice between Plan A and Plan B is a false one. He makes it sound like the costs of Plan B are low, while the benefits are the same. But that's a bit like saying that homeownership is always profitable over the long run: in order to make such a statement you have to ignore the possibility of catastrophe (or foreclosure). When you consider all the possible downsides, and not just the most likely ones, it makes sense to plump for Plan A instead.