Saturday, June 30, 2007

An Economist's Perspective on Climate Change and the Kyoto Protocol (Part 1)

This is a long article and unfortunately I was unable to copy the graphs used. Still I think it is possible to follow his line of thought.

An Economist’s Perspective on Climate Change and the Kyoto Protocol
By Ross McKitrick
Associate Professor
Department of Economics,
The University of Guelph
and Visiting Associate Professor
School of Economics and Business
Wilfrid Laurier University
Presentation to the Department of Economics Annual Fall Workshop
The University of Manitoba
November 7, 2003

An Economist’s Perspective on Climate Change and the Kyoto Protocol
Ross McKitrick
0. Introduction
I have spent many years trying to figure out what is the optimal climate change policy for Canada. I believe the answer is, roughly, "keep studying the basics, don’t try to stop it and learn to adapt." But one does not come to this view with reference to economics alone. So in my discussion today I will try to give a snapshot of some of the range of technical issues that I have tried to think through in pursuit of an optimal climate policy.

There are no intellectual shortcuts on this issue. Even a simple question like "what is the cost of Kyoto" turns out to be maddeningly difficult to answer. Kyoto is, at best, a target: the costs are attached to the specific policies that will be used to reach that target, and to date no one knows what those policies will be for Canada. Broadening the issue to ask "what is the cost of climate change for Canada?" only piles up the ambiguity.

There is no formal definition of "climate," only traditional rules based on rather ad hoc averages of geophysical data, the sampling of which is often very unsystematic. There is even less agreement on what constitutes "change," which is why every time a forest burns or an iceberg calves someone asks: "Is this a sign of global warming?" Witness the apocalyptic thrill as seers and sages scan the skies for signs, omens and portents of global warming; but climate change is an elusive concept, and no one is sure what the thing would look like, even if it was already happening.

This ambiguity is reflected in the two key documents that govern much of the thinking on this issue. The 1992 UN Framework Convention on Climate Change (UNFCCC) defined "climate change" as follows:
"Climate change" means a change of climate which is
attributed directly or indirectly to human activity that
alters the composition of the global atmosphere and which
is in addition to natural climate variability observed
over comparable time periods.

The recent Third Assessment Report (TAR) of the Intergovernmental Panel on Climate Change (IPCC) defined it differently (
"Climate change in IPCC usage refers to any climate change over time,
whether due to natural variability or as a result of human activity."

This is a very important difference: The IPCC is looking for signs of any change, whereas the policy instruments prescribed by the UNFCCC are not triggered unless it is a particular kind of change: that attributable to human activity. When IPCC officials declare that "climate change" is for real, this is about as informative as announcing that the passage of time is for real. Of course the climate changes: if it didn’t Winnipeg would still be under a glacier. But the fact that the last ice age ended doesn’t imply that the policy mechanisms of the UNFCCC should kick in.

That’s the problem with the ambiguity over the term "climate change"—and it seems to trip up a lot of people—accepting the reality of "climate change"does not mean accepting the need for policy interventions. And denying that global warming is a problem requiring costly policy measures is not the same as denying "climate change."

This purported link between two fundamentally different concepts was written into those pamphlets Environment Canada sent out two years ago. They began, ominously, "Our Climate is Changing" and concluded with the stuff on the back about the importance of turning down your thermostat and doing the laundry in cold water. It’s always comforting when big, complicated issues turn out to have such simple solutions, so perhaps we should take our cue from this line of thinking.

Therefore, rather than start with one of the complicated, ambiguous questions posed above I will organize my presentation around the practical question, "Does the possibility of climate change imply that I should wash my socks in cold water?" The affirmative answer offered by the Government of Canada arises from a long chain of assertions like this:

1. The "climate" is a well-defined thing, the mean state of which is measured with precision.

2. The equations of motion of the climate are sufficiently-well understood that the full range of natural variability is quantified and future climate states can be predicted.

3. By adding to the stock of atmospheric CO2 humans have an affect on the climate which necessarily involves a general warming of the Earth’s surface.

4. The present state of the climate can only be explained by invoking this mechanism.

5. Continued use of fossil fuels, by adding CO2 to the air, will cause unprecedented changes to the future climate.

6. These changes will be generally deleterious.

7. We ought to reduce emissions of CO2.

8. The best mechanism to accomplish this is through the Kyoto Protocol.

9. The best way for Canada to comply with Kyoto is to pursue a package of measures as outlined in the Canadian Climate Change Plan, which includes encouraging Canadians to do their laundry in cold water.

To the extent time permits I will grapple with each of these assertions. Notwithstanding the simplicity of the solution proffered in #9 I find the chain of thinking problematic at each step.

1. The "climate" is a well-defined thing, the mean state of which is measured with precision.
"It’s sunny out" is a statement about the weather. "Palm trees do not grow in Winnipeg" is a statement about the climate. Climate is a rather abstract concept that stands behind the weather. Dictionaries define it with phrases like "prevailing conditions" and "averages over some period of time" and so forth. Linacre (1992) surveyed 16 published definitions and reduced them to the following:

"Climate is the synthesis of atmospheric conditions characteristic of a particular place in the long-term. It is expressed by means of averages of the various elements of weather, and also by the probabilities of other conditions, including extreme values."

Note the ambiguities: Does ‘long-term’ in a geophysical setting mean 5 years? 30 years? 300 years? What are the ‘various elements’ and how do they average together? For example how would one average warm and wet, then compare it to the average of cold and dry?

Very well, it’s vague: so is ‘the economy.’ We don’t need to have a precise definition of ‘economy’ to study it, so we shouldn’t impose undue burdens on other fields. We can work with averages and aggregates in economics without doing too much violence to theoretical consistency (usually). But in the case of thermodynamic phenomena there is a catch, which as far as I know has not been discussed in the context of climate change before Chris Essex and I wrote Taken By Storm.

The catch does not involve a novel, contentious or obscure theory; it involves an old, standard, well-known definition from introductory thermodynamics. Indeed it seems to have been overlooked precisely because it is so elementary. The main problem in the debate over what the Global Temperature is doing is that there is no such thing as a Global Temperature.
Temperature is a continuous field, not a scalar, and there is no physics to guide reducing this field to a scalar, by averaging or any other method. Consequently the common practice of climate measurement is an ad hoc approximation of a non-existent quantity. Figure 1 shows NASA’s version of this simulacrum.

Figure 1. The "Global Temperature" from
Even if climate scientists were willing to use one arbitrary average and call it the "Global Temperature," they also face the acute problem of sampling. Meteorological services use a 30-year interval to define "normals" for temperature. These are not "normal" temperatures, the name notwithstanding, they are just averages. On a geological scale the "normal" for Winnipeg would be that of the interior of a glacier. Why don’t we use, say, 300 years? The answer is the data do not exist. But this does not provide scientific justification for defining ‘climate’ as a 30-year average.

Equally problematic is the collapse that occurred around 1990 in the number of climate monitoring stations around the world. Figure 2 (Peterson and Vose 1997) shows the numbers for the Global Historical Climatology Network (GHCN), graphed in terms of the number of stations with at least 10 years of reliable data (a) and the corresponding geographical coverage (b). In the early 1990s, the collapse of the Soviet Union and the budget cuts in many OECD economies led to a sudden sharp drop in the number of active weather stations.

Figure 2: From Peterson and Vose (1997).

Figure 3 shows the total number of stations in the GHCN and the raw (arithmetic) average of temperatures for those stations. Notice that at the same time as the number of stations takes a dive (around 1990) the average temperature (red bars) jumps. This is due, at least in part, to the disproportionate loss of stations in remote and rural locations, as opposed to places like airports and urban areas where it gets warmer over time because of the build-up of the urban environment.

This poses a problem for users of the data. Someone has to come up with an algorithm for deciding how much of the change in average temperature post-1990 is due to an actual change in the climate and how much is due to the change in the sample. When we hear over and over about records being set after 1990 in observed "global temperatures" this might mean the climate has changed, or it means an inadequate adjustment is being used, and there is no formal way to decide between these.

Nevertheless, confident assertions are routinely made about ‘changes in the global temperature’ on the order of tenths of a degree C per decade. The confidence masks pervasive uncertainty in the underlying concepts and data quality.

This discussion only looked at temperature. If we look at precipitation, humidity, air pressure and so forth the situation only gets worse. Ad hoc averaging rules, inconsistent sampling and a lack of theoretical guidance as to how to define and interpret the basic quantities pervade the topic and consequently I am very skeptical about our ability to define and measure "climate" of the Earth with the sort of precision we expect in a medical thermometer.

2. The equations of motion of the climate are sufficiently-well understood that the full range of natural variability is quantified and future climate states can be predicted.

There is no theory of climate. This is an overlooked but elementary point Chris Essex and I tried to reinsert into the climate discussion. By ‘theory’ I mean a set of known equations representing laws of nature. There is a theory of how atoms and molecules behave: that is, there are differential equations that can be written down and used for predicting things.

Average up from them to the everyday level we experience and you find a theory also exists for describing the behaviour of fluids (it’s called Navier-Stokes theory). The theory can be derived by the averaging-up process, but conveniently it was already known before this approach was undertaken, so the path was well-marked. Also, experimental data are available to guide the theorizing. So this aspect of the scientific work went ahead with the intellectual odds in its favour, and nonetheless it was very hard.

Now think about the next step: averaging up to a theory that describes air and water motions on the scale of climate—time scales of decades or centuries and spatial scales of regions and continents. We are used to seeing numbers like "annual average temperature." But remember, we compute these things, we do not observe them. Nature does not work with annual averages. Nature integrates temperature over time, but in different ways in different materials, over different time scales. The growth and decline of glaciers represents a local "averaging" of temperature and precipitation, as does the migration of the northern tree line in a particular region. The appropriate time scale, be it annual, decadal or some other, is up to nature herself, and is not determined by what we find convenient for organizing our data.

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