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Subject Files: Working Group on Global Climate Change #2 (IPCC - Intergovernmental Panel on Climate Change) and RSWG (Response Strategy Working Group) [Letters, Memorandums, Reports, and Other Information][2]
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Subject Files: Working Group on Global Climate Change #2 (IPCC - Intergovernmental Panel on Climate Change) and RSWG (Response Strategy Working Group) [Letters, Memorandums, Reports, and Other Information][2]
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These records pertain to Global Climate Change.
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Richard L. Schmalensee Files
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Originally Processed With FOIA(s):
FOIA Number:
2017-0310-F
2017-0310-F
FOIA
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This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Economic Advisers, Council of
Series:
Schmalensee, Richard, Files
Subseries:
OA/ID Number:
03679
Folder ID Number:
03679-013
Folder Title:
Subject Files: Working Group on Global Climate Change #2 (IPCC - Intergovernmental Panel on
Climate Change) and RSWG (Response Strategy Working Group) [Letters, Memorandums, Reports, and
Other Information][2]
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01. List
Re: Global Change Task Force Group (2 pp.)
n.d.
(b)(6)
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Collection:
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Bush Presidential Records
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Economic Advisers, Council of
Series:
Schmalensee, Richard, Files
Subseries:
WHORM Cat.:
File Location:
Group on Global Climate Change #2 (IPCC - Intergovernmental Panel on Climate Change) and RSWG (Response
Strategy Working Group) [Letters, Memorandums, Reports, and Other Information][2]
Pinksheet Number:
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Date Closed:
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FOIA/Sys Case #:
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EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
Date:
July 12, 90
Linda Stuntz, Dep Und Sec for
Policy, Plan & Analysis, DOE
Please deliver to:
Room 7B-098
FAX number of addressee:
586-5313
586-5316
Telephone number of addressee:
From:
RICHARD SCHMALENSEE, MEMBER
FAX number of sender:
202-395-6947
Telephone number of sender: 202-395-5036
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
NO
REMOTE STATION I.D.
START TIME
DURATION
#PAGES
COMMENT
1
202 586 5313
7-12-90 2:50PM
2'51"
6
TOTAL 0:02'51"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
John Schrote, Dep Asst Sec, Policy,
Budget, & Admin, Dept of Interior
Please deliver to:
Room 6214
200
343-35615048 5048
FAX number of addressee:
208
345-4123
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, Including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
NO
REMOTE STATION I.D.
START TIME
DURATION
#PAGES
COMMENT
1
202 343 5048
7-12-90 2:59PM
3'53"
6
TOTAL 0:03'53"
6
XEROX TELECOPIER 7020
HANDCARRIED TO:
Teresa Gorman
Associate Diretor for Environment,
Energy, and Natural Resources
Policy
Office of Policy Development
Old EOB, Room 227
Robert E. Grady
Associate Director
Natural Resources Energy and
Science
Office of Management and Budget
Old EOB, Room 260
Barry McBee
Special Assistant to the Secretary
to the Cabinet
Office of Cabinet Affairs
Old EOB, Room 235
July 12, 1990
TO:
The Honorable D. Allan Bromley
Assistant to the President for
Science and Technology
Office of Science and Technology
Policy
Old EOB, Room 358
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
with in N
July 23, 1990
send
TO:
ALLAN BROMLEY
FROM:
DICK SCHMALENSEE
Unl
dink
SUBJECT: Report on Economics of Global Change
As Nancy has no doubt told you, the Task Force generally
agreed with your judgement that publication of our report,
scrubbed and updated, would be valuable. They also agreed that
it should come out as a piece of analysis, not a statement of
policy. To this end, it seemed desirable to have it appear in
some already-established series, either well before or well after
the Second World Climate Conference, which kicks off on October
25. The Task Force decided to try for September publication (to
this end members agreed to prepare edits and updates within two
weeks) and to defer to you the choice of report series.
The Department of Energy offered its National Energy
Strategy White Paper series, and Bob Correl offered the CES
Report series. I just heard from DOE that the publication lag in
their series is "two weeks or less." I have not hear further
from Bob Correl, but he had said "two to four weeks" and was
uncertain regarding CES internal review.
I recommend that you decide now to go with DOE, for several
reasons. First, the shorter lag gives us a better shot at coming
out well before late October. Second, this paper is similar to
others in the DOE series, while CES has not put out anything
related to economics and hasn't put out much that is low-tech.
(I don't know the CES series well, but the DOE series has a
number of low-tech inter-laboratory review papers.) Third, the
DOE series may well have less visibility internationally.
Finally, a definite outlet decision will make it easier to put
pressure on people to deliver edits and updates.
Needless to say, I'll be happy to discuss this matter with
you, though once she reads the sentence above about the DOE
publication lag, Nancy will know at least as much about this as I
do
cc: Howard Gruenspecht
Nancy Maynard
wing
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
shill
August 3, 1990
MEMBER OF THE COUNCIL durye
MEMORANDUM FOR TASK FORCE ON THE ECONOMICS OF GLOBAL CHANGE
bee
FROM:
RICHARD SCHMALENSEE of
SUBJECT:
Science in our report
Bruly
I would like to suggest a change in the focus of our final
report -- a change that will, I think, both simplify our revision
task and lessen any problems that might be caused by the report's
public unveiling. Specifically, I propose to reduce
substantially the space devoted to describing the state of the
relevant science.
You will recall that we decided initially to include a
fairly extensive discussion of the science both to lay out and
justify a set of assumptions to be employed in the impact
analysis and to make the document more or less self-contained.
You will also recall how much effort our group, mainly composed
of non-scientists, spent haggling over the description of the
state of the science (particularly the description of the
uncertainties), even though we agreed fairly easily on the range
of plausible magnitudes that should be considered.
I propose that we draw on the considerable public discussion
of the science that has occurred since March and stick more
closely to our economic knitting. Thus I think we should
have a one-age science section that mainly repeats ranges that
the IPCC and others have made public, with full citation of all
important sources, and cut out all discussions of GCMs, clouds,
and oceans. Beyond numbers, I would merely note that
considerable research is under way to resolve substantial
uncertainties of various sorts and that all models suggest a
considerable lag between changes in trace gas concentrations and
warming of the earth system. These points seem both relevant to
our discussion and (relatively) non-controversial.
If I don't get any howls of outrage early next week, I'll
look to Bob Corell for a condensed science section. If there are
production problems at Bob's end, CEA will attempt the task.
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
Wulk shill F
WASHINGTON
July 30, 1990
MEMBER OF THE COUNCIL Clinic
pcc
MEMORANDUM FOR TASK FORCE ON ECONOMICS OF THE
WORKING GROUP ON GLOBAL CHANGE
FROM:
RICHARD SCHMALENSEE RA
proner
SUBJECT:
Publishing our Report
I learned from DOE last week that they could turn out a
your
White Paper based on our report in about 2 weeks. Such a short
publication lag should enable us to get a revision of our report
out by the end of September. Dr. Bromley has decided that we
should go down this track.
At our meeting of July 19, all present agreed that they
would do updates and revisions in two weeks, concentrating on the
sections for which they had had primary responsibility.
Accordingly, CEA will prepare and circulate a draft final report
based on materials (please send WordPerfect files of large
changes or inserts) sent to us by COB Friday, August 3 (and on
our own work on our sections). We will attempt to do this in two
weeks, to allow plenty of time for discussion
If this timing causes you problems, please call me ASAP.
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
MEMBER OF THE COUNCIL
April 23, 1990
MEMORANDUM FOR PETER A.J. TINDEMANS (fax 33-79-512-651)
Clink
GEBHARD ZILLER (fax 228-59-3601)
FROM:
RICHARD SCHMALENSEE (fax 202-395-6947)
al
Chose
SUBJECT:
Economics Research on Global Change/
Temporary Steering Committee
Cant.
Nu
I enjoyed very much meeting both of you and your colleagues
at the White House conference, and I look forward to our working
PAY
together to develop ways to enhance economics research on global
change and to integrate it more fully into the international
policy process. The purpose of this memorandum is to tell you of
a few events that have occurred since our conversation and to
mail
make sure we can communicate by fax. (If I hear nothing from you
in response to this memo by early next week, I will assume you
did not receive it and try to contact you by telephone.)
Since we had agreed that the Japanese should participate in
our deliberations, I summarized our conversation to the Japanese
conference delegation and asked them to tell me who our
correspondent in Tokyo should be. When I receive a name and fax
number, I will pass it along to you.
I also summarized our conversation to Chairman Boskin and to
the relevant sub-Cabinet coordinating group. I was encouraged to
work with you and the Japanese, to concentrate on the substance
(getting economics integrated with science and policy-making at
the international level), and to reserve judgement on the need
for the new Institute the U.S. proposed at the conference. On
the basis of our discussions, I led them to expect that there
would be a relatively small (fewer than 18 countries, fewer than
10 people per country), informal meeting in Europe in around two
months and that you and I and our Japanese correspondent would
draw up the invitation list in the next several weeks. Please
let me know if I misunderstood your intentions in any way.
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
April 27, 1990
work M
TO:
MICHAEL BOSKIN
STEVE DANZANSKY
FROM:
DICK SCHMALENSEE
Clib
SUBJECT: Global Change/ MITI Minister's Visit
Climits
I was told earlier this week (sorry for the delay) by a
Japanese diplomat that the MITI minister, on his visit here next
week, will raise the issue of possible U.S. (and broader
international) participation in MITI's new Institute of
Industrial Technology for the Global Environment. This
possibility will be raised with Michael and, quite likely, with
others on the Minister's itinerary. It would be good if the
various responses he hears have some common elements. For what
it is worth, my top-of-the-head reactions follow.
This Institute, you may recall, is a research operation that
will concentrate initially on "carbon scrubbing" -- technologies
to remove CO₂ from exhaust gasses and convert it into something
useful -- and will go on to consider other environmentally benign
technologies. Its agenda is thus broadly consistent with our
endorsement of "research for action" at the White House
Conference, though I am told that "carbon scrubbing" is not
considered a promising approach by many U.S. scientists.
In my view we ought to be cautiously positive. We can
hardly stress U.S. budget problems in light of the Conference,
and we should support the general thrust of their effort. But
there are some real issues about the nature of "participation" or
even (their phrase) "co-sponsorship" that would have to be
resolved before we could agree to play. These include:
O If this operation is to be internationalized, I think broad
participation is important -- a purely U.S./Japan operation
could easily be labeled another attempt to stall by our
friends in Europe.
What mechanism would be used to set the Institute's research
agenda and to determine its staffing? We would presumably
have little interest in passively funding Japanese
scientists following a GOJ agenda.
If patentable technology is developed, who holds the
patents, and what licensing policy would be followed? The
Europeans could easily view this Institute as PR cover for a
Japanese attempt to attain dominance in technologies that
will be important in the future. It seems unlikely to me
that we want to be seen to be playing the same game.
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
January 23, 1990
was
w
you
Choge
TO:
DICK SCHMALENSEE
FROM:
HOWARD GRUENSPECHT
HKG
SUBJECT: Presidential Speech to the IPCC
Attached is the memorandum from Admiral Watkins and Bill
Reilly to Allan Bromley on the Presidential speech to the IPCC.
Also attached are draft guidelines for the U.S. delegation to the
IPCC Plenary.
Attached
THE ATTACHMENT TO THIS MEMO IS CLASSIFIED AND IS IN THE SAFE
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
MEMBER OF THE COUNCIL
June 15, 1990
MEMORANDUM FOR D. ALLAN BROMLEY
FROM:
RICHARD SCHMALENSEE
6R
MOB
H4
SUBJECT:
Global Change Report
I appreciate your sharing with me Bill Reilly's letter of
May 24, which concerned the Task Force report on the economics of
global change. Most of the EPA comments are reasonable and deal
with small matters of wording, though they do ask for some
changes to which other agencies would object strongly. (I was
amused in one case to learn that EPA now objects to language on
which they had earlier insisted.)
Bill's letter raises an interesting (to me, at least)
possibility. I had always assumed, though not happily, that our
report would never be released. Bill's observation that "we will
likely be updating this report" and his "hope" that the
relatively minor comments he enclosed "will be helpful in
preparing future versions of this report" suggest he contemplates
revision and updating in the relatively near future. It is hard
to see why it would be worthwhile putting the Task Force through
another painful revision cycle anytime soon unless release of the
report (presumably with its "Preliminary" label still affixed) is
contemplated.
For what it is worth, I personally think that release of an
updated and polished version of this report would serve the
Administration well. If Bill agrees, perhaps the Working Group
would be inclined to go along. The summer is a good time to do
this sort of thing
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
June 7, 1990
MEMBER OF THE your COUNCIL
Chry
MEMORANDUM FOR MARK KERRIGAN, DOE
DICK MORGENSTERN, EPA
DAN NEWLON, NSF
FROM:
RICHARD RAY SQUITERI, SCHMALENSEE TREASURY Ql
SUBJECT:
International Coordination of Economic Research
on Global Change; Bonn, July 3-4
At the White House Conference, I initiated informal
conversations on international coordination (and promotion) of
economic research on global change with the Dutch and West German
delegations. (In Working Group discussions, they had indicated a
strong interest in an informal steering committee, as an
alternative to the U.S. proposal, which I floated as instructed,
for one or more international science/economics institutes.) The
Dutch and Germans volunteered to handle scheduling, and they have
set up a small, informal, agenda-setting meeting in Bonn on
July 3 and 4, to be followed by a larger meeting in the
Netherlands in September.
CEA is the U.S. contact point for discussions regarding the
the promotion and coordination of economics research on global
change. As your agencies have substantive interests in economic
research on this subject, I would like to invite your
participation in developing our agenda for these two meetings.
Prior commitments preclude either Howard Gruenspecht or me from
attending the Bonn meeting (the dates of which cannot practically
be changed). I do, however, plan to attend the September
gathering. My secretary will be calling your office to schedule
a meeting early next week to (a) provide more background, (b)
decide who should go to Bonn (my first impulse is to send Dick
and Ray, but I'm fairly flexible), and (c) discuss what the U.S.
agenda for that meeting should be.
cc: Steve Danzansky
Bob Corell
Chris Dawson
Lou Brown
Howard Gruenspecht
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
June 5, 1990
TO:
MICHAEL BOSKIN
FROM:
DICK SCHMALENSEE
Chilizo PM)
W powy
SUBJECT: Another Greenhouse Disaster
I was told this morning by (agitated) MITI personnel based
in the US that Fred Bernthal yesterday informally told the
Japanese delegation at the Geneva RSWG meeting that the U.S. will
reduce CO₂ emissions by 25% over "business as usual" by 2000 --
thus producing approximate stabilization. This information was
flashed to Tokyo and from there, early this morning with
confirmation requests, to MITI people here.
Linda Stuntz has slightly different information. (There are
3 DOE people on the U.S. delegation, and DOE has an intelligence
officer.) DOE understands Fred to have made this statement in a
speech (probably at last night's dinner with RSWG officers) and
to have spoken of near-stabilization of a comprehensive index of
all greenhouse gasses, not of CO₂, by 2000. Either way, this
reflects a process breakdown and is a substantive disaster.
The Bromley strategy group, on which Fred sits and which
discussed our RSWG position at length (I was there), did not
authorize (or even discuss) any statement of this sort. (I
have been unable to reach Steve Danzansky to find out if he
knows who, if anyone, authorized this statement.)
The (EPA) numbers that show near stabilization in 2000 on a
comprehensive basis, are questionable. (See Howard's
attached memo of May 23.)
-- They include the effects of regulations (on landfills
in particular) that have not yet been seen outside EPA,
let alone approved by OMB.
-- The projections, assumptions, and calculations have
apparently not been comprehensively reviewed by any
other agency. (Though the EPA guy in charge is one of
their best.)
- CEA has not been included in this (Boyden-led)
process.
The Japanese are particularly exercised because Bernthal
seems to be foreshadowing a softening in the U.S. position
on "targets and timetables" for emissions reductions.
-- The Japanese government is under strong domestic
pressure to break with us on global warming and to push
for CO₂ targets and timetables.
2
-- If we are perceived to be softening our position, this
pressure may prove irresistible.
- The G-7 could be very ugly as a consequence, with
the U.S. completely isolated -- unless we have
(mistakenly) decided to soften.
-- If we do soften, the pressure on us to go well beyond
"stabilize by 2000" will be intense, since Bernthal
asserts that we would incur no costs up to that point.
The Bernthal statement in either form gives a very
misleading impression of the costs of stabilizing U.S.
greenhouse emissions over the long haul.
-- Outside the U.S., everyone focuses on CO₂, and the EPA
numbers evidently show significant CO₂ increases by
2000.
- The EPA exercise, even if correct, thus says
nothing about the cost of CO₂ stabilization.
-- Many of the items on the EPA list are one-shot deals
such as control of methane from landfills and phaseout
of CFCs that will not reduce emissions after 2000.
- We would have to incur additional (probably very
high) costs to avoid increasing greenhouse gas
emissions after 2000 as the economy grows.
- That is, stabilization by 2000 may be easy, but
stabilization beyond 2000 is unlikely to be.
-- Even within the Administration, many people resist
counting CFCs in this context ("they're covered by the
Montreal Protocol") ; resistance will be stronger
internationally.
The RSWG meeting, which Bernthal chairs, continues through
Friday, so there is time to attempt a fix. (See Howard's
attached memo of June 5.) Bernthal should be instructed
immediately to state from the chair that
-- He was simply sharing preliminary results of an ongoing
emissions foreasting exercise dealing with a
comprehensive index of all greenhouse gasses, not just
CO₂ (in case the Japanese misunderstood).
-- He was neither making any promises nor signalling any
change in any U.S. position in this area.
MÈMORANDUM
COUNCIL OF ECONOMIC ADVISERS
May 23, 1990
TO:
MICHAEL BOSKIN
RICHARD SCHMALENSEE
FROM:
HOWARD GRUENSPECHT AKL
SUBJECT: Stabilization of Greenhouse Gases
Speeches made by the President and Administrator Reilly at
the White House Conference on Global Change suggested that the
United States was already taking actions that would significantly
reduce emissions of greenhouse gases (but not carbon dioxide)
from the baseline path. The President specifically referred to a
15-percent reduction stemming from the CFC phaseout, the Clean
Air Act, the tree planting program, and "other strategies."
Since the conference, the Administration (particularly
Boyden Gray) has been looking into the matter. By some
accounting, our existing measures will get us a 28-percent
reduction from the "no action" baseline. The interesting point
here is that EPA's preliminary analysis shows that the available
emissions reductions considered comprehensively are apparently
close to a stabilization of greenhouse potential over the next 10
years. (CO₂ would go up despite partial offset from trees, but
methane and CFCs would go down).
EPA has been invited to brief Boyden again (probably next
week) on their latest findings. I would bet my dollar to your
dime that Bill Reilly will start pushing this greenhouse
stabilization scenario hard within the Administration soon
thereafter. This matter could well come up in developing a
position on the environment for the Economic Summit.
The issue for the Administration to consider is whether (and
when) we want to come out with a pledge to stabilize our
comprehensively measured greenhouse contribution for 10 years
while scientific and economic uncertainties are resolved.
In considering this and other environmental issues, it is
important that the Administration get its act together. Instead
of reacting viscerally to each individual proposal, we need to
develop a strategy that achieves our real environmental
objectives, achieves a creditable environmental record, and
avoids large cost/no benefit blunders. This shouldn't be that
hard to do, but we haven't managed to do it. The problem is our
unwillingness of the Administration to hold its nose on some of
the highly symbolic, smaller environmental issues that would help
establish our environmental credibility. By taking the bait on
2
these small issues, like the CFC fund for LDCs, we are much less
capable of holding the line when serious matters are at stake.
Greenhouse is clearly one of the big issues that we want to
decide on purely substantive grounds. Pros and cons related to
the idea of a stabilization pledge include:
Coming out with such a pledge could get us some green stamps
-- the same commodity that our recently announced policy on
CFC reduction funding support for LDCs needlessly
squandered.
On the other hand, any commitment along these lines, even if
incidental to currently planned actions, would legitimize
the position that immediate action is called for. Once
having engaged, we would be under enormous pressure to screw
down tighter.
A long-term commitment to "greenhouse stabilization" would
be tantamount to a commitment to "CO₂ stabilization" at a
future emission level. This is true because many of the
steps in the EPA preliminary analysis are "one time only"
actions. Once we phase out CFCs or impose methane control
regulations on landfills, for example, opportunities for
further reductions needed to offset growth in CO2 look much
less attractive.
Reductions from a no policy baseline will be interpreted in
the environmental community as something of a sham, since it
is impossible to pin down the counterfactual with any
accuracy. They will ridicule any attempts to count CFCs
covered under the Montreal Protocol.
Our foreign friends will not be satisfied by this gesture -
they want carbon dioxide reductions, the real McCoy. It may
make more sense to conserve whatever slack we may have for
the negotiation process. The way things are looking now,
we're going to need more than we have on hand.
For reasons we have discussed before, it makes no sense in
either environmental or economic terms to minimize the costs
of environmental commitments.
If we decide not to make a stabilization pledge at this
time, the dissemination of official documents suggesting that
such a pledge is free could cause some embarrassment. We might
want to look ahead to this possibility.
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
June 5, 1990
TO:
RICHARD SCHMALENSEE
FROM:
HOWARD GRUENSPECHT
SUBJECT: RSWG Agenda
The RSWG meeting is scheduled for June 5 through June 8.
The matter in question might have come up during Bernthal's
dinner with the RSWG officers last night.
My understanding of the agenda is as follows:
June 5, 6 Editing Sessions on RSWG subgroup reports.
June 7
Editing RSWG Policymakers' Summary
June 8
Vote on RSWG report, begin to consider future
RSWG workplan.
The schedule does not appear to contemplate new discussions
of policy substance.
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
worth
September 18, 1990
TO:
ALLAN BROMLEY
FROM:
DICK SCHMALENSEE
which
chor
SUBJECT: Global Change
I appreciate very much your kind memo of a few days ago,
thanking Howard and me for our comments on your paper. We were,
after all, just doing what they pay us the big bucks to do
On a more substantive note, I offer two thoughts for your
consideration.
It seems clear now that the ad hoc coordinating committee
for research on the economics of global change that I initially
triggered at the White House conference has been captured by the
NSF and its sister agencies abroad. This means that movement has
slowed (the next meeting will be in February, not this month),
that the focus has broadened beyond economics to all social
science (per the organizational structure of NSF and related
agencies), and that the emphasis is on basic research that might
be related to global change rather than on applied research that
definitely is. This is by way of information, not complaint,
since some coordination of this sort is clearly called for, and I
don't know that I would undo what has been done even if I could.
But this development does cause me to wonder what
international mechanisms might foster and coordinate economic
research aimed specifically at global change policy concerns.
The OECD's efforts will serve this purpose to a limited extent,
but their focus is so far limited to a single question (costs of
reducing CO2 emissions), necessarily involves only the developed
market economies, and will mainly be done by existing OECD staff.
The only other possible venue that suggests itself is the
regional institutes that were also born at the White House
conference and that you are moving forward; these have the added
virtue of potentially involving developing economies. To this
end, I'd like to enter a plea that economics research not be
neglected or (effectively the same thing) be assigned a clearly
subordinate role in these institutes.
On the domestic front, I am beginning to share the unease of
many of my professional colleagues around the Administration at
having economic research on global change under the control of
scientists rather than economists. (I do not mean by this usage
to admit that economics is not a science, just that it is neither
a physical nor a life science.) We had agreed to CEES control of
2
the economics research effort on the assumption that it would be
in name only, with economists really in charge of the economics,
and because we had no obvious better alternative. Dallas Peck's
strong interest in the "ad hoc group of economic experts" he was
asked by Bob Grady to convene, his absolute insistence that Bob
Corell (fine fellow, but no "economic expert") co-chair that
group, and a bit of introspection suggest we may have been too
optimistic.
Whenever economic research (or social science research in
general) is treated as a second-class adjunct to research in the
sciences, it does not attract able researchers and thus does not
produce results. I now fear that the structure of the CEES
apparatus guarantees economics second-class status. However
appropriate this might or might not be on intellectual grounds,
it makes no sense in the policy context: the unanswered economic
questions are not noticeably less important for policy purposes
than the unanswered scientific questions. Moreover, we cannot
function on a permanent basis with "ad hoc group[s] of economic
experts"; we need a durable, workable governance structure. Thus
I believe we should re-think the U.S. governance structure for
economics research related to global change, with an eye to
putting economists explicitly in charge, since many agencies will
be involved in such research for some years to come, and
interdisciplinary turf battles will not serve anyone well.
CC: Michael Boskin
Howard Gruenspecht
Kenneth Yale
I'm
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
With M
September 13, 1990
real
Howard:
1
Please re-read the attached and recall the
following. We got agreement to publish this
Chief
report contingent on getting it out by early
October. Since it was clear that EPA would
have a raft of delaying objections to almost
anything we gave them, this effort was put on
a fast track. If we get this report out for
comment tomorrow, we will be 4 weeks late,
and publication will be in doubt. If it goes
out later, we are in deep trouble.
I know you have worked hard and well on many
things since August 3. But until this job is
done, unless Michael or I personally direct
or approve specific other work, you are to
spend NO TIME WHATEVER on anything but the
Dingell response (top priority), the global
change report, and the economics research
budget committee (about which we should talk
before your meeting). This means no
meetings, no phone calls, no legislative
referrals, nothing. Please see me if this is
at all unclear.
Club
Richard Schmalensee
Member
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
MEMBER OF THE COUNCIL
July 30, 1990
bcc
MEMORANDUM FOR TASK FORCE ON ECONOMICS OF THE
WORKING GROUP ON GLOBAL CHANGE
provides
FROM:
RICHARD SCHMALENSEE B4
SUBJECT:
Publishing our Report
from state
I learned from DOE last week that they could turn out a
White Paper based on our report in about 2 weeks. Such a short
publication lag should enable us to get a revision of our report
out by the end of September. Dr. Bromley has decided that we
should go down this track.
At our meeting of July 19, all present agreed that they
would do updates and revisions in two weeks, concentrating on the
sections for which they had had primary responsibility.
Accordingly, CEA will prepare and circulate a draft final report
based on materials (please send WordPerfect files of large
changes or inserts) sent to us by COB Friday, August 3 (and on
our own work on our sections). We will attempt to do this in two
weeks, to allow plenty of time for discussion
If this timing causes you problems, please call me ASAP.
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
untin
WASHINGTON
July 24, 1990
Jumb
Dear Chairman Dingell:
The issues raised by your letter of June 18 are important
and complex. This letter provides a brief qualitative discussion
of the economic costs of proposed clean air legislation.
Secretary Dole and I will also provide answers to your specific
questions (insofar as possible) and a copy of the
Administration's latest cost analysis in a later response.
Before turning to economic costs, let me make clear at the outset
that the air pollution problems addressed by the President's
proposal merit strong and swift attention.
The President has asked CEA to coordinate the
Administration's evaluation of the costs of proposed clean air
legislation. Speaking on behalf of my colleagues throughout the
Administration, let me state emphatically that we do not share
the view that a major extension of the clean air act can have
low, zero, or even negative costs. Assertions in the media to
the effect that expanded clean air programs would on balance
create jobs, increase productivity, and make the U.S. economy
more competitive in world markets are at best wishful thinking.
They are as economically illiterate as other claims in the media
that any clean air legislation must necessarily cripple the
economy.
The President's strong clean air proposal was carefully
crafted to make significant progress toward solution of important
environmental problems--including acid rain, nonattainment of
carbon monoxide and ozone air quality standards, and industrial
air toxics--by setting sensible targets and making maximum use of
flexible, incentive-based control mechanisms. It was thus
designed to minimize costs and dislocations and to be compatible
with strong economic growth. The President's support for this
proposal was not premised on the view that its costs would be
negligible; he is fully aware that any environmentally strong
clean air bill will reduce real income growth and cause some
temporary unemployment. Rather, the President believes that our
Nation is able and should be willing to pay a reasonable price to
clean its air.
But the President is not prepared to see American firms,
workers, and consumers overcharged or to see economic growth
slowed needlessly. From this point of view, the costs of both
2
the House and Senate bills are too high. Fortunately, the
conference has the opportunity to produce an environmentally
strong bill while avoiding needless costs.
Notwithstanding their significantly higher costs, the House
and Senate bills provide, at best, only very slight additional
environmental benefits as compared to the President's proposal.
The President's original proposal would impose annual direct,
quantifiable costs in the neighborhood of $20 billion in the year
2005, when its provisions would be fully phased in. Current
estimates indicate that the bills passed by the House and Senate
would each impose corresponding costs of around $25 billion.
Taking the most costly features from each bill, and adding the
costs of the Tier II tailpipe standards, could result in a total
annual phased-in cost exceeding $35 billion.
While reasonable people may differ on the appropriate
balance between economic and environmental concerns, it clearly
makes no sense to squander our scarce human and investment
resources in programs that are not expected to yield significant
additional environmental returns. For example, the Senate bill
requires strict additional cold start carbon monoxide controls at
an annual cost of over $2 billion at a date when EPA projects
that there will be few violations of the ambient carbon monoxide
standard related to vehicle emissions. This provision simply
imposes needless costs on American firms, workers, and consumers.
Moreover, detailed micromanagement of the economy, such as
the prescription of particular fuel formulations by statute,
limits flexibility and retards innovation without improving the
environment, thereby adding to both cost and dislocation.
Similarly, failure to provide local areas with the necessary
authority and flexibility to solve local problems adds needless
costs.
Simply put, the diversion of labor and capital investment
resources that would otherwise be devoted to the production of
conventional economic goods and services into expanded
environmental programs will decrease economic output. Thus the
direct compliance costs discussed above are manifested in and
give rise to a number of adverse economic effects mentioned in
your letter. The rest of this letter is devoted to a fairly
detailed qualitative discussion of these effects.
First, if the Clean Air Act is significantly strengthened,
future real consumption in the U.S. economy (excluding
environmental benefits) will be somewhat lower than it would have
been, and productivity growth will be reduced. Resources that
must be devoted to reducing air pollution are simply not
available to produce consumer goods and services or to make
investments that would increase productivity. Growth in workers'
average real income and in productivity will thus both slow.
3
Second, while the proposed legislation may stimulate exports
related to pollution control expertise and technology, on balance
our international competitiveness will be reduced. (Both effects
reflect the fact that no other nation has developed an air
pollution control program as sophisticated or as far-reaching as
the proposals currently being considered by the conference.) The
diversion of resources needed to comply with new mandates will
occur in a global competitive environment in which our nation
already suffers from shortages of skilled labor and a rate of
investment in productive capital persistently lower than that of
the other major industrialized countries. Any new regulatory
mandates or permitting procedures that increase the time required
to bring new products or new production facilities on line will
hamper the ability of American firms to compete with their
foreign rivals.
Domestic industries that are required to spend intensively
on pollution control will definitely become less competitive in
world markets, and some jobs will move offshore as a consequence.
Demand for the output of other industries will increase, but
these industries will not automatically become more competitive
as a consequence. Demand growth does not automatically improve
productivity or induce innovation.
Third, shifts in economic activity induced by the proposed
clean air legislation will produce some temporary unemployment.
If overall economic conditions are healthy and monetary and
fiscal policies are sound, workers displaced by clean air
legislation will find new jobs, just like the hundreds of
thousands of U.S. workers who are displaced each year for other
reasons, including changes in demands for particular products and
advances in technology. As our flexible economy adapts to
changes of all sorts, the number of jobs created every year
substantially exceeds the net increase in employment, as workers
who lose or leave jobs find new employment.
However, even though U.S. labor markets are generally quite
flexible and efficient, and U.S. workers are generally mobile
both geographically and occupationally, some displaced workers
could endure substantial unemployment and suffer significant
income losses. The President's proposal minimized these impacts
by avoiding needless costs and preserving flexibility wherever
possible. The House and Senate proposals, as they now stand,
would needlessly amplify these temporary dislocations.
On the other hand, proposed clean air legislation is not
likely to have important permanent effects on the aggregate level
of U.S. employment. The levels of employment and unemployment in
the economy as a whole are primarily determined by overall
economic conditions, which the government mainly affects by
monetary and fiscal policy.
4
Similarly, one should be skeptical of suggestions that
forced investment in pollution abatement equipment can provide a
stimulus to the economy as a whole. While this effect might
operate in a deep, protracted recession, such recessions are rare
historically. Since the proposed legislation mandates the timing
of environmental investments, it would be an extraordinary
coincidence if those outlays happened to occur under such adverse
economic conditions.
Major clean air legislation will impose additional costs,
which are difficult to quantify, via the permitting and
enforcement process. Direct administrative costs may be
particularly high for smaller firms that have had little contact
with this process to date. These firms will likely need to
devote considerable managerial attention to this process and to
hire outside consultants, particularly under the major source
definitions incorporated in the House bill. Indirect costs
include the carrying costs, uncertainties, reduced innovation,
and lost opportunities imposed by regulatory delays.
In conclusion, let me reiterate the Administration's view
that the conference has the opportunity to make significant
progress toward solution of important environmental problems
while avoiding needless costs. The best way to ensure the
compatibility of a healthy environment and a strong economy is to
enact a clean air bill that achieves the President's strong
environmental goals through flexible, cost-minimizing means.
Sincerely,
michael J Brilen
Michael J. Boskin
The Honorable John D. Dingell
U.S. House of Representatives
Washington, D.C.
20515
ONE HUNDRED FIRST CONGRESS
action 'RS+IN
BECOND SESSION
JOHN D DINGELL MICHIGAN. CHAIRMAN
JAMES H SCHEUER, NEW YORK
NORMAN # LENT, NEW YORK
MENRY A WAXMAN CALIFORNIA
EDWARD a MADIGAN. ILLINOIS
H.S. House of Representatives
PHILIP R SHARP INDIANA
CARLOS J MOORHEAD CALIFORNIA
EDWARD J MARKEY. MASSACHUSETTS
MATTHEW J. RINALDO. NEW JERSEY
THOMAS A LUKEN OHIO
WILLIAM E DANNEMEYER CALIFORNIA
Committee on Energy and Commerce
DOUG WALGREN PENNSYLVANIA
BOB WHITTAKER. KANSAS
AL SWIFT WASHINGTON
THOMAS J TAUKE. IOWA
CARDISS COLLINS ILLINOIS
Room 2125, Rapburn house Office Building
DON RITTER. PENNSYLVANIA
MIKE SYNAR OKLAHOMA
THOMAS J BULEY JR. VIRGINIA
W : "BILLY" TAUZIN LOUISIANA
JACK FIELDS. TEXAS
Mashington, DC 20515
RON WYDEN OREGON
MICHAEL G. OXLEY OHIO
RALPH M HALL TEXAS
HOWARD C. NIELSON, UTAH
DENN'S E ECKART. OHIO
MICHAEL BILIRAKIS. FLORIDA
BILL RICHARDSON. NEW MEXICO
DAN SCHAEFER. COLORADO
JIM SLATTERY KANSAS
JOE BARTON. TEXAS
GERRY SIKORSKI. MINNESOTA
SONNY CALLAHAN, ALABAMA
JOHN BRYANT TEXAS
ALEX McMILLAN, NORTH CAROLINA
JIM BATES CALIFORNIA
RICK BOUCHER. VIRGINIA
June 18, 1990
JIM COOPER TENNESSEE
TERRY L BRUCE. ILLINOIS
J ROY ROWLAND. GEORGIA
THOMAS J MANTON. NEW YORK
EDOLPHUS TOWNS. NEW YORK
C. THOMAS MCMILLEN, MARYLAND
JOHN $ ORLANDO. CHIEF OF STAFF
JOHN M. CLOUGH JR. STAFF DIRECTOR
The Honorable Elizabeth H. Dole
Secretary
Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
The Honorable Michael Boskin
Chairman
Council of Economic Advisors
Old Executive Office Building, Room 314
17th and Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Dear Secretary Dole and Chairman Boskin:
As you both know, as chief sponsor and supporter with
Congressman Lent of the President's Clean Air Act bill, H.R.
3030, I have been concerned about the impact of the present law
with the proposed amendments on the Nation's working force,
particularly the manufacturing industries, and on productivity.
Indeed, I have had an extensive exchange of correspondence with
the Labor Department and the Environmental Protection Agency
(EPA) concerning the impact on jobs in coal mining. That
exchange is reflected in the enclosed Committee report on
H.R. 3030.
Last year, with the help of the General Accounting Office, I
initiated an investigation concerning wood furniture plant
closings in Southern California and the movement of those plants
to Mexico and other States under the Clean Air Act. I asked the
EPA to investigate under section 321 of the Act, but EPA (in an
April 24, 1990 letter to me) declined to do so. (A copy of that
letter, together with a related letter from the Commerce
Department is enclosed.) The GAO investigation is continuing.
The EPA letter states:
Although the measures required to attain the air
quality standards will lead to alterations in the operations
of some businesses, especially in the South Coast Basin, EPA
believes that the decreased employment in some sectors will
The Honorable Elizabeth H. Dole
The Honorable Michael Boskin
Page 2
be offset by increased employment and business activity in
other sectors. A comprehensive picture of these economic
and social impacts is provided in an analysis by the South
Coast Air Quality Management District of the impacts of
their plan to attain the air quality standards. Enclosed
are several relevant sections of that report. As shown in
Enclosure 2, the District's plan is estimated to result in
increased employment in the Basin by 2010 of some 80,000
jobs. Although there will be employment reductions in
certain parts of the economy, this will be largely offset by
new jobs in the pollution control and services industry.
Clearly, the State and the South Coast District are aware of
the employment impacts of the plan and, in fact, the State
has directed the District to provide $1 million per year to
assist small businesses in complying with the District's
rules. (Underlining supplied.)
Also enclosed are relevant articles from The New York Times
and The Washington Post and a letter to the National Association
of Manufacturers.
I am troubled by the EPA statement that while existing
manufacturing jobs will be lost, they "will be largely offset by
new jobs in the pollution control and services industry." The
statement fails to recognize or discuss the social impact of job
loss or wage cuts on the existing wage earner and his or her
family. It fails to recognize or discuss that the new jobs may
be in other States, or miles away, or even Nations apart. It
fails to recognize or discuss the impact on productivity and
growth of the economy. It fails to recognize or discuss the wage
differential of the jobs lost and those gained, or the time delay
between jobs lost and jobs replaced. It fails to recognize or
discuss the secondary effects on other industries. It fails to
recognize or discuss the competition impacts. It fails to
recognize or discuss the impact on minorities. It fails to
recognize or discuss the impact on unemployment costs. Despite
these failures, the EPA and environmental organizations have made
this offset claim several times without explaining the basis for
it and the Administration, in providing cost estimates of its
proposal has, to my knowledge, never discussed these very
relevant concerns. I request that you do so for the conference
on S. 1630.
In particular, I request that you both discuss this
so-called "offset" and address each of the failures just
identified and explore the general nature of the jobs that may be
placed "at risk" as a result of the implementation of the Clean
Air Act with the new amendments and explore how those "at risk"
jobs might compare to jobs that might be created as a result of
such implementation. Enclosed are specific questions which
should help address these important issues. I request your
The Honorable Elizabeth H. Dole
The Honorable Michael Boskin
Page 3
response to each within your area of expertise. In responding, I
particularly want the Chairman of the Council to explain to what
extent these matters are reflected in the cost estimates of the
various versions of the legislation.
I also understand that the Council has prepared drafts of
memoranda analyzing the various versions of the Clean Air Act
bills that passed the House and Senate. However, apparently
those memoranda have never been made public. I request them.
I request your reply to all of the above matters by July 6,
1990. Please do not delay.
With best wishes.
Sincerely,
JOHN D. DINGELL
CHAIRMAN
cc: The Honorable Norman F. Lent, Ranking Minority Member
Committee on Energy and Commerce
The Honorable Dan Rostenkowski, Chairman
Committee on Ways and Means
The Honorable Augustus F. Hawkins, Chairman
Committee on Education and Labor
The Honorable Robert A. Mosbacher, Secretary
Department of Commerce
The Honorable William K. Reilly, Administrator
Environmental Protection Agency
The Honorable Richard G. Darman, Director
Office of Management and Budget
The Honorable Charles A. Bowsher, Comptroller General
General Accounting Office
Mr. Jay Power, Legislative Representative
AFL-CIO
Mr. Alexander Trowbridge, President
National Association of Manufacturers
The Honorable Elizabeth H. Dole
The Honorable Michael Boskin
Page 4
Mr. Carter V. Fox, President
American Furniture Manufacturers' Association
Questions by Chairman John D. Dingell
Regarding Job Loss, Dislocations, Wage Cuts,
and Offsets Re Clean Air Act
1. A 1982 study provided to me by the Congressional Reference
Service by H & W Management Science Consultants (enclosed) attempts
to categorize the types of job created by the Air Pollution Control
industry (APC). Please comment on the adequacy of the study which
admittedly is now several years old.
2.
According to that report, 46 percent of the employment
produced by the APC industry is direct employment related to the
fabrication, design, and installation of APC equipment; 19 percent
is associated with materials and auxiliary equipment, including
monitoring and testing; and 35 percent is for services, including
government regulation. Examining the breakdown of jobs created by
the industry as shown in table 1 from the report, please provide
the Committee with the average wage and benefit package for each
category of jobs. Any specific examples you have would be
appreciated.
mean Hell yes,
3. The study assumes that the jobs created by the APC industry
are located in the area making the expenditure. How reasonable is
this assumption? Based on the categories listed in table 1, what
are the most likely areas of the country for these jobs to be
created under the proposed amendments to the Clean Air Act? To
what extent are the jobs likely to be located in a foreign country?
4.
Pollution abatement equipment includes several sets of
components, including: the basic technological device; auxiliary
equipment such as fans, switches, valves, etc.; support and housing
facilities, such as foundation, walls, roofs, bracing, ducting,
etc.; and operating aspects, such as monitors, controllers, repair
parts, and maintenance. For each component for each industry
affected by the amendments, what is the likelihood that the
equipment/technology will be supplied from domestic suppliers?
What is the likelihood that the equipment/technology will be
supplied from overseas suppliers? What is the likelihood that the
equipment/technology will be produced under license to an overseas
source?
5.
Most attempts to estimate potential job losses from enactment
of the Clean Air Act Amendments of 1990 have focused on deriving a
MoThe
The
net gain-lost number. The Committee is interested in the types of
jobs that are at risk from implementation of the Clean Air Act with
NOT
the Amendments of 1990. Are they primarily resource extraction
(mining), manufacturing, service, government, or other category?
Are they the same job categories most likely to be gained from such
legislation? Please explain. What is the affect on productivity
and growth? How do the new jobs improve productivity?
6.
What are the average wage and benefit packages of the
categories of jobs identified in response to question 4? How do
they compare with the wage and benefit packages of jobs identified
in table 1?
7.
How does the timing of the jobs that the Amendments "create"--
CEA
identified in table 1 -- compare to that of jobs possibly lost from
the Amendments -- those identified as at-risk in the response to
question 4? Are there notable gaps or overlaps between job
creation and job elimination? Please explain.
8. Much has been made of the multiplier effects of jobs on other
industry Speit
jobs in a community. Please explain it. Does the multiplier
differ according to the type of job created (manufacturing, mining,
service) or the location of the job (urban versus rural) For the
jobs associated with the categories listed in table 1, what are
their relative employment multipliers? How do they differ
according to location?
9. What, if any, are the multiplier effects of the job categories
identified in response to question 4? How do they compare with the
multiplier effect of the jobs identified in table 1?
10. For the at-risk job categories identified in response to
question 4, what are the racial, ethnic, age, and sex profiles?
How do those patterns compare to the patterns associated with the
categories of jobs created that are identified in table 1?
Similarly, how do the educational requirements for the at-risk job
categories compare to the educational requirements of the created
jobs?
11. It is well understood that compliance with Clean Air Act
Amendments will result in shifts in coal mining employment between
different regions. Are the jobs per ton of coal mined and the
multiplier effects substantially different between these various
coal mining regions? Between high and low sulfur coal mining
areas?
12. The enactment of these Amendments may result in the
consolidation of certain service industries, such as dry cleaning,
in order to accommodate increased costs of pollution controls. Are
there examples from other regulatory actions that would indicate
the magnitude of job attrition from such consolidations? For
example, the shrinkage in numbers of service stations during the
energy crisis of the seventies.
13. Many argue that the U.S. air pollution control industry will
benefit substantially from tighter air pollution regulations.
Please describe and identify more clearly that industry and its
various segments. Is there any reliable analysis to suggest that
the various segments of this industry can meet sharply increased
demand without incurring bottlenecks or other dislocations? If
not, will foreign suppliers such as Japan and West Germany make
substantial inroads into U.S. markets partially offsetting the
putative domestic employment benefits of pollution control
expenditures?
Table 1
Overall Summary of Employment in the APC Industry
Labor Associated with:
Man-Years of Employment Share,
"
1. Fabrication, design &
installation of APC
equipment
40,787
36.7
2. Direct and Auxiliary
Materials and Equip-
ment
14,988
13.5
3. Government
13,780
12.4
!
4. Services
- 11,825
10.6
5. Operation, Mainte-
nance & Repair
10,500
9.4
6. Architects &
Engineers
8,269
7.4
7. Monitoring &
Testing Equipment
6,150
5.5
8. Manufacturer's
Representatives
1,684
1.5
9. Independent
Attorneys
1,600
1.4
10. Additional Support
Staff
1,500
1.3
11. Other R & D
300
0.3
Total
111,383
100.0
White
and
SOCIO-ECONOMIC AND HUMAN DIMENSIONS RESEARCH RELATED TO GLOBAL
CHANGE
Chist
(Final 4.7.1990)
A procedure for strengthening and implementing of national and
international socio-economic and human dimensions research
activities
Background
Problems of Global Change have now come to the forefront of
discussions between scientists as well as politicians. A number of
internationally coordinated programmes exist, which focus in
particular on issues addressed by the natural sciences. Most
notable in this respect are the WCRP and IGBP of WMO and ICSU.
However. Global Change implies major consequences for society and
the economy. Therefore, recent conferences have stressed the need
to stimulate research on human aspects related to Global Change on
an international level and to integrate these aspects in other
ongoing research activities. The HDGCP of UNU, IFIAS. ISSC and
UNESCO and the initiatives of DECD. IEA, ESF and EC on economics.
environment and energy should be noted.
Aim
Efforts should be undertaken to strengthen existing activities for
socio-economic and human dimensions research in order to increase
the orientation towards problems directly related to Global
Change. As a first step. a summary description of existing national
and international research activities should be prepared. This
will enable us to identify existing research gaps. Endeavors to
assess the current status of socio-economic and human dimensions
research, e.g. as provided by the IPCC, will also be taken into
account. Within an international framework the activities will
build upon and be financed on a national level. However, there is
the intention to establish better links between them and, in
particular, with the natural sciences programmes. The contents of
the activities should be defined by a bottom-up approach, in
particular by groups of scientists in an analogous process. as
e.g., in the IGBP and national Global Change programmes.
In addition, these programmes should be resoonsive to policy needs
(e.g., IPCC). There is a need for coordination of the activities
in the sense of an effective exchange of information and an
informal consultation between governments with respect to emerging
trends in research and resource needs in the social and economic
sciences.
Socio-economic and human dimensions research
2
Procedure
To implement the above-mentioned activities, the following steps
are proposed:
- Preparation of a short overview per country on existing
activities, involved agencies and funding commitments, etc. in
socio-economic and human dimensions research related to Global
Change. These overviews should follow a common formatted structure
to achieve comparability. In addition the same kind of information
should be assembled on international research activities in this
field. The reports should also identify gaps and areas where
special initiatives could be taken.
- Continuation of the informal meeting between governmental
agencies active in Global Change research, (hereafter called the
"Working group on social and economic science research") as
started with the first meeting in Bonn (3 July 1990). The number
of countries invited to participate will be enlarged to include at
least the members of the international group of funding agencies.
- The meetings will focus on particular research topics. In
addition to governmental agencies' representatives leading
scientists in the appropriate field will be invited to look at the
state-of-the-art of the respective scientific disciplines as well
as a discussion of general aspects such as funding requirements,
capacity building, training and involvement of Third World
countries.
- The UK offered to host the next meeting in February 1991, in
conjunction with the next meeting of the group of funding
agencies. This meeting will focus inter alia on the topic of
environmental economics.
Summary notes on the
Joint Meeting of the "Working group on Socio-Economic and Human
Dimensions Research related to Global Change" and the
"Representatives of National Funding Agencies for Global Change"
(4 July 1990)
During the joint meeting on July 4th 1990, in Bonn, the following
topics were dealt with:
- the result of the meeting of the "Working Group on 3 July
1990
- the role of ICSU in the field of Global Change research
-
the background and intention of the work for the group of
Representatives of National Funding Agencies for Global
Change.
It was agreed upon:
- Socio-economic and human dimensions research related to Global
Change and analysis of the interactive links between social,
economic and human issues and global environmental changes
comprise an important and inherent part of the overall Global
Change research Program.
- To further these research efforts it is understood that an
informal working group, hereafter called "International Group
of Funding Agencies" for Global Change Research (IGFA) is
initiated. The group will be formed by the two former groups
present at this joint meeting.
--- The concept of a "High Level Governmental Group" which will
receive and discuss reports from the IGFA was postponed at
that time. It should be discussed in more detail at the next
meeting in London, February 1991, on the basis of a draft
outlining the task, mandate and composition of this "High
Level Group".
---- The London meeting will be prepared by a group of four
countries (UK, US, NL, D); additional comments, suggestions
from all participants are welcomed.
3 July 1990
WORKING GROUP ON SOCIO-ECONOMIC AND HUMAN DIMENSIONS
RESEARCH OF GLOBAL CHANGE RESEARCH
o
experts from five countries
o
agreed on need for coordination of activities
(coordination = effective exchange of information and consultation among national funding agencies
re: emerging trends in research and resource needs in social and economic sciences)
o
brief overviews on national activities to be prepared and discussed at next meeting in February 1991
o
next meeting will focus inter alia on environmental economics
4-6 July 1990
INTERNATIONAL GROUP OF FUNDING AGENCIES FOR GLOBAL CHANGE RESEARCH
o
participants from national funding agencies in ten countries and Commission of European Communities
o
scientific leaders of seven international projects under IGBP and WCRP gave presentations
- highlighted research needs
- comparisons made with national commitments of resources
- identification of areas of action
o
agenda for next meeting (4-6 February 1991, London) including joint meeting with IGBP National Committee
Chairs
4 July 1990
JOINT MEETING OF WORKING GROUP ON SOCIO-ECONOMIC AND HUMAN
DIMENSIONS RESEARCH AND THE INTERNATIONALGROUP OF
FUNDING AGENCIES FOR GLOBAL CHANGE RESEARCH
(Scient.tiz)
o
merge interests under an informal working group "International Group of Funding Agencies for Global Change
Research"
o
group will serve as information exchange for all aspects of national and international global change research
efforts
o
meet again 4-6 February 199 (London)
o
participants briefed on ICSU activities in global change
- IGBP Scientific Advisory Council
- "Global Change Forum"
4-6 February 1991
INTERNATIONALGROUP OF FUNDING AGENCIES FOR
GLOBAL CHANGE RESEARCH
o
environmental economics (FRG lead, Netherlands, Canada, US)
o
long-term observational system and data management (US lead, Japan, France, Canada)
0
joint meeting with IGBP National Chairs (IGBP Secretariat, US)
o
developing country participation (IGBP Secretariat, Canada)
0
agency funding for international secretariats/offices which support global change research programs, including
WCRP and IGBP
0
update of 4-6 July 1990 resource review of global change research activities (US)
o
"High level forum" idea (Netherlands lead, FRG, US)
o
Report on ICSU Forum (ICSU)
0
Second World Climate Conference/Intergovernmental Panel on Climate Change (France, Finland, US)
o
Regional Research Centers (IGBP Secretariat, France)
0
Scientific Committee on Antarctic Research (SCAR) -IGBP activities in Antarctica
DOE/PE-0096P
The Economics of Long-Term
Global Climate Change
A Preliminary Assessment
Report of an Interagency Task Force
TERRIMENT OF
UNITED DEPA
OF ENERGY.
STATES
September 1990
United States Department of Energy
Office of Policy, Planning and Analysis
This report has been reproduced directly from the best available copy.
Available from the National Technical Information Service, U.S. Department of Commerce,
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Price: Printed Copy
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Microfiche A01
Codes are used for pricing all publications. The code is determined by the number of pages in
the publication. Information pertaining to the pricing codes can be found in the current issues
of the following publications, which are generally available in most libraries: Energy Research
Abstracts, (ERA); Government Reports Announcements and Index (GRA and I); Scientific and
Technical Abstract Reports (STAR); and publication, NTIS-PR-360 available from (NTIS) at
the above address.
DOE/PE-0096P
The Economics of Long-Term
Global Climate Change
A Preliminary Assessment
Report of an Interagency Task Force
DEPA RIMENT OF
STATES AMERICA
ENERGY OF
September 1990
United States Department of Energy
Office of Policy, Planning and Analysis
Washington, DC 20585
CONTENTS
List of Tables
iii
Executive Summary
iv
Introduction
X
I. Background
1
A. Greenhouse Gas Emissions
1
1. Carbon Dioxide
2
2. Methane
3
3. Chlorofluorocarbons
4
4. Nitrous Oxide
5
B. Potential Climate Changes
5
1. Uncertainties
5
2. Projections
6
C. Policy Alternatives
7
II. Adaptation: Living with Global Warming
9
A. Climate and the Economy
9
B. Agriculture
9
1. Potential Yield Effects
10
2. Economic Implications
10
3. Adaptation
11
C. Sea-Level Changes
12
1. Possible Impacts
12
2. Adaptation
12
D. Human Health
13
1. Possible Impacts
13
2. Adaptation
14
E. Other Potential Effects
14
1. Forestry
14
a. Possible Impacts
14
b. Adaptation
15
2. Fisheries
15
a. Possible Impacts
15
b. Adaptation
15
3. Water Resources
16
a. Possible Impacts
16
b. Adaptation
16
i
4. Biodiversity
16
a. Possible Impacts
16
b. Adaptation
17
III. Mitigation: Limiting Greenhouse Gas Emissions
18
A. Background
18
1. Global Action
18
2. Differential Impacts
19
3. Incentives and Market Failures
21
B. Carbon Dioxide
23
1. Economy-Wide Analyses of Emissions Limitation Costs
23
a. Energy/Economic Balance Analysis
24
b. Long-Term Energy and Energy-Economic Policy Models
25
c. Short-Run Economic/Energy Models
28
d. Energy Sector Impacts
29
2. Regulatory Adjustments
29
a. Reform of Electric Utility Ratemaking
29
b. Utility Demand-Side Management
30
c. Research and Information
30
d. Building and Appliance Standards
31
e. Transportation
31
f. Agricultural Policy
31
3. New Technologies
32
a. Electricity Generation
32
b. Energy End-Use Technologies
33
4. Forestation
33
a. Cost Analysis
34
b. Management
35
C. Methane
35
1. Animal Waste
35
2. Coal Mining
36
3. Landfills
36
4. Livestock
36
5. Rice
36
D. Chlorofluorocarbons and Related Substances
37
E. Nitrous Oxide
37
Bibliography
38
ii
LIST OF TABLES
I.1 Main Greenhouse Gases
1
I.2 Carbon Dioxide Anthropogenic Emissions (Percentage Shares)
2
I.3 Methane Anthropogenic Emissions (Percentage Shares)
3
I.4 Chlorofluorocarbon (CFC-11 + CFC-12)
Emissions (Percentage Shares)
4
I.5 Nitrous Oxide Anthropogenic Emissions (Percentage Shares)
5
II.1 Estimated Economic Welfare Effects in 2050 of
Climate-Induced Agricultural Yield Changes
11
II.2 Protecting Densely Developed Shoreline
Areas from Sea-Level Rise
13
III.1 Anthropogenic Greenhouse Gas Emissions
18
III.2 Global Effects of Unilateral Carbon Dioxide Emissions
Reductions by the United States or the OECD
19
III.3 OECD Carbon Dioxide Emissions Reductions Required To Achieve
Global Emissions Goals When Other Nations Take Lesser Actions
20
III.4 Carbon Dioxide Emissions Per Capita and Per Dollar of GNP, 1986
21
iii
EXECUTIVE SUMMARY
This report is intended to provide an overview of
Background
economic issues and research relevant to possible,
long-term global climate change. It is primarily a
Greenhouse Gas Emissions
critical survey, not a statement of Administration or
Possible climate change is not a one-gas or one-nation
Department policy.
problem. Carbon dioxide, chlorofluorocarbons (CFCs),
There are substantial gaps in current knowledge about
methane (CH₄), and nitrous oxide (N₂O) have
the economics and physical science of global climate
accounted for about 87 percent of the increase in
radiative (greenhouse) forcing in the 1980's.
change. In fact, almost all the quantitative projections
in this report, as well as many of the qualitative
Projections of future emissions of these gases are
assertions, are controversial. Projections of climate
uncertain, and comparisons of the effects of those
effects and costs in the distant future are inherently less
emissions are not completely straightforward.
reliable than forecasts of climate and policy costs in
the short run.
Carbon Dioxide. Given the projected expansion in
fossil energy use throughout the world, CO2 is
The Task Force recommends that a coordinated
expected to account for a larger share of increased
economic research program be undertaken, similar to
radiative forcing in the future than in the past. The
that in the climate sciences, that would evaluate the
United States now accounts for about 21 percent of
economic effects of possible future climate change and
total anthropogenic CO2 emissions, but that share is
expected to shrink to around 12 percent by the middle
the benefits of slowing such change, the costs and
of the next century.
effectiveness of various adaptive and emissions
reduction measures, and the effects of such measures
Methane. Emissions rates of major sources of CH₄ are
on U.S. and world trade and capital flows.
subject to significant uncertainty. Over half of total
anthropogenic emissions of methane are produced by
The remainder of this Executive Summary provides a
domestic animals (enteric fermentation) and rice
brief outline of our main findings. Readers with an
cultivation. Centrally planned and developing nations
interest in a particular topic, such as the impact of
account for the bulk of these emissions.
possible climate change on agriculture or estimates of
the economy-wide impacts of measures to limit carbon
Chlorofluorocarbons. The United States and other
dioxide (CO2) emissions, should note that the main
developed nations now account for well over half of
report, while lengthy, is structured to allow for a
emissions of CFCs and related gases, but the shares of
selective reading.
developing nations are expected to increase sharply as
reductions and phaseouts are implemented in accord
with the Montreal Protocol.
Nitrous Oxide. Most N₂O emissions are associated
with agricultural activity and animal husbandry. Data
iv
on natural and anthropogenic sources of nitrous oxide
Although the public discussion and most of the initial
emissions are poor.
scientific work has focused on the assessment of
changes in mean global surface temperature, many of
Scientific Background
the impacts of possible climate change considered in
While this report provides a brief discussion of the
this report could be more dependent on other climate
scientific background to this issue, that discussion
variables. Examples of such variables include changes
should not be interpreted as an attempt to address or
in soil moisture, in summer precipitation or extreme
evaluate the scientific uncertainties surrounding
temperature by region, and in the number of days in a
possible climate change.
row when the temperature exceeds a threshold value
important to particular activities or natural processes.
Projections of future emissions of greenhouse gases are
A greater focus on these variables will be important in
highly sensitive to future rates of population growth,
the effort to refine current impact estimates and
economic growth, and development of new
develop new ones.
technologies for energy production and use. The
inability to place narrow bounds on any of these
Policy Alternatives
factors necessarily places very wide bounds on any
Planned adaptation involves actions taken in
forecast of future emissions.
recognition of anticipated warming to deal with its
effects. Unplanned adaptation involves short-run
Even if future emissions are assumed to be known,
responses to actual warming as it takes place.
considerable uncertainty attaches to the climate changes
Mitigation policies are aimed at reducing the rate of
that would result from increased atmospheric
possible warming by reducing net emissions of
concentration of greenhouse gases. The effects of
greenhouse gases. Mitigation policies must generally be
greenhouse gases on global climate are forecast by
implemented well before adaptation policies. They
climate models, a relatively new tool. Present climate
must also be implemented on a global scale. The
models predict that a doubling of the concentration of
important economic implications of differences in
carbon dioxide relative to the preindustrial
timing between adaptation and mitigation costs can
atmosphere-or its equivalent in terms of a
only be revealed by discounting.
combination of greenhouse gases-would result in an
eventual global average warming of between 2°F and
Most studies of impacts and adaptation costs
9°F. If the atmosphere begins to warm, a transfer of
considered in this report provide estimates for at most
heat from the air to the oceans is expected to slow the
a small set of climate change scenarios. Differences in
rate at which air temperature actually rises. This effect
methods and assumptions preclude addition of costs
could delay the full impact of any given increase in the
across studies. Impacts and costs are almost always
concentration of greenhouse gases on observed air
estimated relative to a baseline of no climate change.
temperature for decades or even centuries, with wide
Such estimates necessarily overstate the reductions in
variations by region.
impacts and adaptation costs associated with mitigation
strategies, such as those considered in this report, that
Some models suggest a marked soil moisture decrease
do not stabilize atmospheric concentrations of
in mid-latitude continental regions during summer.
greenhouse gases and thus, under the assumptions of
Global sea-level increases by the year 2050 of 25 to
current climate models, do not forestall climate change
40 centimeters (a recent estimate of the Inter-
entirely.
governmental Panel on Climate Change, or IPCC)
could occur if warming of 2°F to 8°F occurred by the
Given that the implications of global warming are still
middle of the next century.
unclear, additional research is certainly called for.
Uncertainty also increases the attractiveness of
V
relatively inexpensive, flexible policies that can easily
Agriculture of a scenario in which the U.S. grain and
be reversed or expanded, and policies that can be
oilseed crop yields decrease by between 10 and
justified for reasons other than climate change.
15 percent shows slightly increased overall U.S.
welfare once the effects of increased export prices are
Adaptation: Living With Global Warming
factored into the analysis. This analysis suggests that
climate-induced changes in agriculture would not
produce major positive or negative economic effects by
Climate and the Economy
the middle of the next century. Yet, there could be
The direct economic effects of climate change would
significant regional dislocations in crop production.
be concentrated primarily in agriculture, forestry, and
possibly fisheries, which currently account for about
Sea-Level Changes
2 percent of U.S. gross domestic product (GDP) and
The adverse effects of possible sea-level rise on coastal
about 5 percent of world GDP. In addition, a rise in
infrastructure, recreation, and coastal ecology could be
the sea level could inundate valuable dry land. Apart
either large or small, depending on the rate and
from agriculture and sea-level rise, little quantitative
magnitude of any sea-level rise and on the extent of
research on climate impacts or adaptation costs has
planned adaptation. While densely developed shoreline
been done.
areas in the United States could be protected against
sea-level rises that might occur by 2050 for less than
The indirect effects of climate change will create
$10 billion (present value), significant net losses of
winners and losers throughout the United States and
drylands and wetlands could occur.
global economies as demand shifts occur. For example,
demand for air conditioners and summertime electricity
Human Health
could rise, while demand for space heating equipment
The impacts of a possible warming on human health
and fuels and could fall. Tourism might also be
are extremely controversial, and the scope for planned
affected. The costs of adaptation would depend
adaptation is unclear. Some studies show significant
critically on how rapidly warming occurs relative to the
possible increases in heat-related deaths, while others
economic lifetimes of major immobile assets.
argue that cities with appreciably different climates
show no climate-related differences in health risk.
Agriculture
Global warming would likely cause some vector-borne
Climate change could affect agricultural yields both
tropical diseases to spread northward, but the
positively and negatively through variations in regional
magnitude of this problem is unclear. On the other
temperature, seasonality, precipitation, and soil
hand, there could be a decline in cold-related deaths.
moisture. Estimates of these effects are very uncertain.
While increased CO2 concentrations alone would likely
Other Potential Effects
have a direct positive effect on efficiency of
Forestry. If significant warming occurs, changes in
photosynthesis and water use, the effects of higher
U.S. forests could be apparent in 30 to 80 years.
temperatures could reduce yields. Estimates of the
Significant changes in forest range are possible.
impact of future global change on U.S. cereal crop
Changes in forest distribution and composition could
yields range from an increase of 10 to 15 percent to a
have major impacts on timber production, runoff from
decrease of about the same magnitude.
forests, and recreational opportunities. Without human
intervention, rapid warming could move natural
Net economic effects on any country's agricultural
habitats of mid- and high-latitude forests poleward
sector depend on global yields and consequent impacts
faster than natural rates of forest migration could
on market prices and trade flows as well as on regional
accommodate. Today's forest management decisions
yield effects. Analysis by the U.S. Department of
vi
could have long-term impacts on the composition and
be obtained without bringing economic growth to a
location of forests.
halt. Even dramatic unilateral cuts by member states of
the Organization for Economic Cooperation and
Fisheries. Fishery resources are known to be sensitive
Development (OECD) would not be sufficient to
to climate variation. However, the qualitative effects of
achieve widely discussed global CO2 emissions goals
unless most other countries participate fully in
warming on fisheries are highly uncertain, and no
emissions reduction efforts. For example, even the total
quantitative economic analysis has, to our knowledge,
elimination of OECD emissions over the next 15 years
been attempted. Absent human intervention, ocean
would be insufficient to obtain a 20-percent global
species are likely to be less affected by any climate
emissions reduction by 2005 if the USSR and Eastern
change than freshwater species, since oceans would
Europe only stabilize emissions at their current levels
respond to atmospheric warming more slowly than
and developing countries take no action to curb CO2
smaller bodies of water. Both the need and the
emissions growth. Global action would also be
opportunity for planned adaptation in the commercial
necessary to control methane and nitrous oxide
fishing sector appears to be limited.
emissions, which result primarily from agricultural and
energy activities.
Water Resources. In general, it is difficult to predict
Differences in costs and benefits among nations may
the impacts of climate change on water resources with
make it difficult to obtain global agreement on specific
confidence because of uncertainties about regional
goals and policies. For example, countries planning to
precipitation. If significantly higher temperatures occur,
rely heavily on coal, which contains a relatively high
water supplies in California and the lower Great Lakes
amount of carbon per unit of energy, may have greater
could be reduced.
CO2 emissions than countries planning to rely more on
nuclear energy. These issues will have important
Biodiversity. The impacts of climate change on
implications for energy security and trade balances.
natural communities are difficult to predict. Possible
global warming could result in a decline in biodiversity
Incentives and Market Failures. An approach to
stemming from the loss or change of habitats that
limiting net anthropogenic greenhouse emissions that
result in the decline or loss of some animal and plant
encompasses all important greenhouse gases and gas
sinks as well as gas sources is preferable to one that
species.
considers each source of greenhouse gases individually.
Also, any set of nations should be free to develop a
Mitigation: Limiting Greenhouse Gas
joint strategy to meet their pooled ceilings, as long as
Emissions
net global emissions are not thereby increased and
existing treaty obligations are not thereby violated. An
The costs of reducing carbon dioxide and CFC
approach incorporating these elements was outlined in
emissions are under active study. Available estimates
a U.S. concept paper introduced at the IPCC.
of CO2 abatement costs remain preliminary and
controversial. Relatively little is known about the costs
All analysts agree that some reductions in greenhouse
of reducing emissions of other greenhouse gases. A
gas emissions can be obtained at low cost. The
revision of this section of the report a year or two from
phaseout in CFCs recently agreed to at the June 1990
now could rely on a much stronger research base
meeting of the parties to the Montreal Protocol falls
(particularly as regards CO2) and might well have
into this category. Current research has not been
different policy implications.
sufficient to detail the extent of low-cost opportunities
for limiting other greenhouse gases.
Background
Global Action and Differential Impacts. Global
Command-and-control efficiency standards have several
action is essential if meaningful reductions in the
significant disadvantages in comparison to
expected growth of any of the greenhouse gases are to
incentive-based systems-such as charges, user fees,
vii
and tradable emissions rights-or approaches that
the U.S. economy. The relative cost of energy would
address perceived market failures directly. When
increase substantially, increasing the relative price and
market failures limit the power of such approaches,
decreasing the consumption of energy-intensive
those failures can be addressed directly. The costs of
products. It is impossible to construct a scenario for
efficiency standards are often hidden rather than
substantial CO2 emissions reduction without a major
explicit.
adverse impact on the coal industry. General
equilibrium modeling suggests that an effort to limit
Carbon Dioxide
CO2 emissions significantly would cause large changes
Economy-Wide Analyses of Emission Limitation
in the sectoral composition of the U.S. economy. Such
Costs. Several studies of carbon dioxide reduction
sectoral changes, if gradual, might occur without a
costs using economy-wide models have recently been
drastic impact on the value of existing assets. However,
completed or are now in progress. These papers use a
a policy that resulted in rapid sectoral changes could
variety of modeling approaches, consider different
have a significant impact on the value of assets in
policies, and employ different baseline emissions
impacted industries and on the value of immobile
growth assumptions. These differences have important
assets, such as residential housing, in impacted
effects on cost estimates. All these results must be
communities.
considered preliminary.
Because the United States relies heavily on coal (the
In general, work to date finds that the costs of
fossil fuel with the highest amount of carbon per unit
stabilization or reduction of CO2 emissions by 2005
of energy) for electricity generation, U.S. electricity
will be high-at least 1 percent of the gross national
rates would be likely to rise more than those in other
product (GNP) per year for widely discussed
industrialized countries if concerted action were taken
objectives, such as stabilizing CO2 emissions at the
to curb CO2 emissions. Unless energy-intensive U.S.
present level or securing and maintaining a 20-percent
industries were able to increase their energy efficiency,
reduction from that level. Some estimates suggest that
they could be disadvantaged relative to major foreign
achievement of such objectives would involve
competitors who would be less affected by electricity
significant reductions in long-term growth. During the
rate increases.
1973-85 oil shock period, CO2 emissions were constant
but economic growth was slow. This experience offers
Regulatory Adjustments. There are a number of
a useful reference for comparison of likely impacts of
reasons why total U.S. investment in energy efficiency
policies to curtail fossil energy use sharply on output
may be suboptimal. Many analysts have called for a
and productivity growth.
variety of regulatory initiatives to increase the
efficiency of energy use and, thereby, to reduce CO2
Some recent analyses consider the use of a charge on
emissions.
the carbon content of fossil fuels to reduce CO2
emissions. This research generally concludes that
The elimination of electricity pricing distortions would
charges on the order of $100 per ton (which would
be as likely to yield increases in consumption and
amount to roughly a 180-percent increase in the
emissions as decreases. Many analysts have called for
delivered price of coal and a 70-percent increase in the
reform of electric and gas utility regulation to give
price of oil) would be needed to have a significant
utilities incentives to remove impediments to efficient
effect on emissions. Much lower carbon charges may
investment in energy conservation. While the
be of some value in the near term to compensate for
desirability of regulatory changes of these sorts is
known external effects of energy use, to test the
apparent, estimates of potential reductions in CO2
sensitivity of CO2 emissions to incentives, and to lay
emissions vary widely.
the foundations for higher future charges if they are
found necessary.
Energy-efficiency standards for buildings, appliances,
and automobiles represent another approach to limiting
The aggregate economic effects of CO2 emissions
energy consumption, and thus CO2 emissions.
reduction policies would not be felt evenly throughout
However, any information problems, institutional
viii
rigidities, or market failures that may exist can be
would depend on the type of forest planted and the
addressed directly, rather than through efficiency
current use of the land. The efficacy of forestation as
standards that can impose significant hidden costs on
a carbon management tool depends importantly on how
consumers and the economy at large.
the stock of accumulated carbon in mature forests is
managed, but the costs and carbon removal potential of
A number of changes in agricultural programs that
alternative management strategies have not been
would have other benefits can be expected to assist in
systematically analyzed.
reducing greenhouse gas emissions. These include
reducing commodity price support levels, encouraging
Methane
additional tree planting, and expanding conservation
Because the developed countries account for only about
programs.
25 percent of anthropogenic methane emissions,
significant, cost-effective reductions in CH₄ emissions
New Technologies. While new technologies offer
will require global action. Feasible reductions in the
significant CO2 emissions reduction potential after the
areas of animal waste, sizes of livestock herds, coal
year 2000, there is no simple "technological fix" to this
mining, natural gas production, transmission, and
problem. A variety of technologies for generating
distribution, landfills, and livestock and rice production
electricity are in various stages of development. The
add up to more than enough to stabilize atmospheric
next generation of nuclear reactors, based on simplified
CH₄ concentrations. While a number of approaches to
and standardized designs and passive safety features,
controlling these emissions are available, no systematic
may come into use after the year 2000. Advanced
policy design or costing analysis has been performed.
energy-use technology seems to have the potential to
contribute significantly to reducing CO2 emissions, but
Chlorofluorocarbons
estimates of the extent of the contribution vary widely.
The Montreal Protocol has been ratified by nations that
account for over 90 percent of global consumption.
Increases in research and development budgets for
The Protocol was renegotiated in June 1990 and now
end-user energy-efficiency improvements and for
provides for a phaseout of all CFCs by the year 2000.
programs that provide financial and technical assistance
With widespread participation, this phaseout will
to States, both of which have declined in recent years,
significantly reduce the increase in radiative forcing
would enhance conservation efforts. Most studies have
attributable to greenhouse gas emissions during the
found that the potential gains from widespread use of
next century. The costs of eliminating the use of CFCs
available "best practice" technology are significant,
in the United States will be approximately $3 billion
possibly up to 15 percent of current consumption.
(present value) over the next 10 years.
Forestation. Reforestation is a (comparatively)
Nitrous Oxide
short-term approach that could generate a substantial
No systematic attention seems to have been devoted to
decrease in net CO2 emissions for at least three to five
the design or cost of policies to reduce N₂O emissions
decades. Cost estimates in one study of a global
from fertilizer use or other sources, in part because the
strategy ranged from $4.29 to $8.03 per metric ton of
relevant science base is weak. The relationship of N2O
carbon removed, while those in another study for the
emissions to energy production and use have been
United States ranged from $17.71 to $102.63 per
questioned by recent research findings. Resolution of
metric ton depending on program size. The net
uncertainty in this area is a high priority.
ecological and recreational benefits of forestation
ix
INTRODUCTION
Work on this report began in the fall of 1989, when an
attempt to produce anything like a comprehensive
interagency task force was instructed to "identify,
benefit-cost analysis. (But see Nordhaus (1990a) for a
review, and inventory" work on the economics of
crude but interesting attempt.) Moreover, almost all
climate change in order to inform policy discussions.
the quantitative estimates regarding physical and
(The task force included representatives from the
economic effects in this report, as well as many of the
Council of Economic Advisors; the Departments of
qualitative assertions, are controversial.
State, Treasury, Commerce, Interior, Agriculture, and
Energy; the Environmental Protection Agency; the
Section I provides background on greenhouse gas
Office of Management and Budget; and the Office of
emissions and their likely climatic effects and on
Science and Technology Policy.) A preliminary report
available policy instruments. Section II considers the
was presented in March, 1990. The present document
costs of living with global change, assuming no
represents a refinement and limited updating of that
substantial efforts to reduce greenhouse gas emissions.
report. It is intended to provide an overview of current
Section III considers costs of reducing those emissions,
knowledge and key facts and is not a statement of
though the available literature does not contain
Administration or Department policy.
estimates of the costs of policies that would, on the
assumptions of current climate models, prevent climate
This report should serve to indicate that economic
change altogether. The individual sections are not
analysis of global change is in its infancy; few
entirely compartmentalized, but can be read
assertions about costs or benefits can be made with
independently if necessary.
confidence. The state of the literature precludes any
x
I. BACKGROUND
This section provides background material on current
et al., 1988). These gases are, accordingly, the focus of
and projected future greenhouse emissions and on
the rest of this subsection and of the mitigation
scientific opinion regarding the effects of those
strategies considered in Section III. The emissions
emissions on the global climate. The final subsection
projections for these gases in Tables I.2 to I.5 are
provides a brief, general discussion of adaptation and
based on the Rapidly Changing World scenario in
mitigation strategies, which serves as an introduction to
Lashof and Tirpak (1989); they should be treated as
the analysis of these strategies in Sections II and III,
providing rough orders of magnitude, not precise
respectively.
estimates.
A. Greenhouse Gas Emissions
Comparisons of the effects of future emissions of
various greenhouse gases are not completely
Increases in the atmospheric concentrations of at least
straightforward. Differences in atmospheric lifetimes
25 trace gases contribute directly or (via chemical
lead to different time patterns of effects, so that
reactions) indirectly to the retention of solar radiation
decisions regarding discounting may be important
by the earth (radiative forcing). Five greenhouse gases,
(Lashof and Ahuja, 1989). (Note also the uncertainty
described in Table I.1, have accounted for about 87
attached to the lifetime of nitrous oxide (N₂O).) And,
percent of the increase in radiative forcing in the
while the radiative forcing effects of changes in
1980s and about 92 percent of the increase over the
atmospheric concentrations of any trace gas are
1880-1980 period (Ramanathan, et al., 1985; Hansen,
apparently easy to calculate, the effects of changes in
Table I.1 Main Greenhouse Gases
Percentage Share
of Increased
Atmospheric
Forcing
Radiative Forcing
Lifetime
Index
Gas
in the 1980s
(years)
(molecular)
Carbon Dioxide (CO2)
49
250
1
Methane (CH₄)
19
10
30
Chlorofluorocarbons
14
60 & 75
22,000 &
(CFC-11 & CFC-12)
25,000
Nitrous Oxide (N₂O)
5
100-175
200
Sources: Hansen, et al. (1988); Department of Energy; Wuebbles and Edmonds (1988).
1
emissions on atmospheric concentrations depend both
Table I.2 provides historical and projected
on preexisting concentrations and on various
anthropogenic emissions data by region and by source
imperfectly understood geophysical feedbacks, which
assuming no mitigation. These projections are uncertain
also affect atmospheric lifetimes.
because of uncertainties about future population and
economic growth, sectoral composition of gross
1. Carbon Dioxide
national product (GNP), and sector-specific energy
Measurements of carbon dioxide (CO₂) levels show
efficiencies. Nonetheless, it is important to note that
atmospheric concentrations increasing from somewhere
because energy-related sources of CO2 emissions are
between 250 and 295 parts per million (ppm) at the
expected to grow comparatively rapidly, and
beginning of the 19th century to 346 ppm in 1986.
chlorofluorocarbons (CFCs) are expected to be
Good data are available on fossil fuel CO2 emissions
controlled significantly, CO2 is expected to account for
and (the far smaller) emissions from cement
a larger share of increased radiative forcing in the
production; data on the impacts of land-use changes
future than in the past.
(primarily tropical deforestation) are fair to poor. It is
important to keep in mind that natural flows of carbon
The U.S. now accounts for about 21 percent of total
into and out of the atmosphere are roughly ten to
anthropogenic CO2 emissions, but that share is
twenty times larger than the (anthropogenic) flows
expected to shrink to around 12 percent by the middle
associated with human activity.
of the next century. Despite the attention paid to
Table 1.2 - Carbon Dioxide Anthropogenic Emissions (Percentage Shares)
Projections
Source
1985
2000
2015
2050
Countries
United States
21
19
16
12
Rest of OECD
22
19
16
12
SSR & Eastern Europe
22
22
19
18
Centrally Planned Asia
10
13
161
Other Developing
25
28
32
37
100
100
100
100
Sectors
Commercial Energy
86
87
89
92
Tropical Deforestation
12
11
9
6
Other
2
2
2
2
100
100
100
100
Total Scenario Emissions
5.99
8.05
10.27
16.95
(10⁹ metric tons of carbon)
Average Annual Growth Rate
1.6%
Source: USEPA (1989) Rapidly Changing World Scenario
2
tropical deforestation, most anthropogenic CO2
CH₄ concentrations had increased to 1,675 ppb.
emissions are and will be the result of combustion of
Recently, atmospheric concentrations of methane have
fossil fuels. The United States has comparatively high
been increasing at an observed rate of about 1.1
CO2 emissions per capita from fossil fuel consumption
percent annually. The contributions of the different
and cement production, in part because it makes
sources of methane that together account for aggregate
relatively heavy use of coal. In the United States, coal
emissions remain uncertain. Anthropogenic emissions
burned by electric utilities accounts for 31 percent of
of CH₄ are thought to account for roughly two-thirds of
total fossil fuel CO2 emissions; the entire utility sector
all emissions. Table I.3 contains estimates of
accounts for 37 percent, and the transportation and
anthropogenic emissions; they should be treated as
industrial sectors account for 29 and 21 percent,
uncertain.
respectively.
The United States now contributes about 12 percent of
2. Methane
anthropogenic emissions of CH₄; this share is predicted
Atmospheric concentrations of methane (CH₄) were
to decline to about 8 percent. Over half of total
relatively constant prior to the middle of the last
anthropogenic emissions of methane are produced by
century at about 700 parts per billion (ppb); by 1987
domestic animals (enteric fermentation) and rice
Table 1.3 - Methane Anthropogenic Emissions (Percentage Shares)
Projections
Source
1985
2000
2015
2050
Countries
United States
12
11
9
8
Rest of OECD
13
12
12
10
USSR & Eastern Europe
13
14
14
15
Centrally Planned Asia
17
16
17
19
Other Developing
46
47
49
48
100
100
100
100
Sectors
Fuel Production
18
22
26
32
Enteric Fermentation
23
24
23
22
Rice Cultivation
34
31
29
24
Landfills
9
10
10
14
Tropical Deforestation
6
6
5
4
Other
9
7
7
5
100
100
100
100
Total Scenario Emissions
320.1
399.5
476.8
710.5
(10⁶ metric tons of CH₄)
Average Annual Growth Rate
1.2%
Source: USEPA (1989) Rapidly Changing World Scenario
3
cultivation. The centrally planned and developing
Note that global emissions of CFC-11 and CFC-12
nations account for the bulk of these methane
were projected to increase under the terms of the
emissions. Energy-related methane emissions occur in
Montreal Protocol as they existed prior to the June
coal mining, and when natural gas is gathered,
1990 revision. Emissions of related greenhouse gases
transmitted, distributed or vented.
(particularly CFC-22 and methyl chloroform) were also
projected to increase quite rapidly, but the revised
3. Chlorofluorocarbons
Protocol now covers some of these gases; for example,
CFCs are entirely man-made and were invented during
methyl chloroform, which had earlier been expected to
the 20th century. The concentrations of CFC-11 and
see increasing use, is now to be phased out by 2005.
CFC-12 were 226 parts per trillion (ppt) and 392 ppt,
Considering these related gases does not alter the
respectively, in 1986 and have been rising at 4 percent
message of Table I.4: the United States and other
annually. Table I.4 gives projected regional emissions
developed nations now account for well over half of
of these two gases assuming implementation of the
emissions of CFCs and related gases, but, even under
Montreal Protocol (aimed at reducing stratospheric
the original terms of the Montreal Protocol, the shares
ozone depletion) as it existed prior to June, 1990, with
of developing nations would have been expected to
100 percent participation by developed countries and
increase sharply. The recent revisions to the Protocol
75 percent participation elsewhere. In June 1990, the
will reduce the emissions of signatory nations by a
parties agreed to a total phaseout of CFCs by the year
substantial further amount. The extent of developing
2000 in place of the 50-percent emissions reduction
country participation in the phaseout of CFCs is
reflected in Table I.4.
uncertain and will significantly affect future shares and
quantities of emissions.
Table I.4 - Chlorofluorocarbon (CFC-11 + CFC-12) Emissions (Percentage Shares)
Assuming No Further Controls Beyond Original Montreal Protocol
Projections
Source
1985
2000
2015
2050
United States
24
18
17
12
Other Developed
41
24
24
21
USSR & Eastern Europe
16
14
14
13
0.2Kg Nations*
6
14
15
19
Other Developing
12
30
30
36
100
100
100
100
Total Scenario Emissions
642.1
837.8
755.1
828.5
(10³ tonnes CFC)
Average Annual Growth Rate
0.4%
*Nations with CFC use between 0.1 and 0.2 kilograms per capita and likely to reach the 0.3 kilogram per capita
limit in the Montreal Protocol prior to 1999.
Source: USEPA
4
4. Nitrous Oxide
supplies in many developing nations. The U.S. share of
Atmospheric concentrations of N2O averaged about 285
world N₂O emissions is only about 14 percent and is
ppb from 1600 to 1800, began to rise slowly at the
expected to fall below 10 percent by mid-century.
start of this century and more rapidly after 1940, and
are now around 310 ppb. Data on natural and
B. Potential Climate Changes
anthropogenic sources of N2O emissions are poor, and
the data in Table I.5 should be considered as
Formulating a realistic and responsible outlook on
approximate at best. The Department of Energy
possible climate effects associated with increasing
believes that N2O emissions associated with energy
atmospheric greenhouse gas concentrations requires
processes may be overestimated by an order of
providing answers to a sequence of increasingly
magnitude.
complex questions.
1. Uncertainties
As in the case of methane, most N2O emissions are
associated with agricultural activity and with
It is first necessary to project future emissions of
developing nations. Increased fertilizer use has both
greenhouse gases. As noted above, such projections are
raised N2O emissions and dramatically increased food
inevitably quite uncertain. Economics research has an
Table 1.5 - Nitrous Oxide Anthropogenic Emissions (Percentage Shares)
Projections
Source
1985
2000
2015
2050
Countries
United States
14
12
11
9
Rest of OECD
13
14
14
12
USSR & Eastern Europe
14
15
14
13
Centrally Planned Asia
13
16
14
15
Other Developing
46
47
47
52
100
100
100
100
Sectors
Coal Combustion
25
26
29
36
Fertilizer Use
38
43
44
41
Gain of Cultivated Land
10
8
8
6
Tropical Deforestation
13
11
10
9
Fuelwood & Ind. Biomass
5
4
3
2
Agricultural Wastes
10
8
7
6
100
100
100
100
Total Scenario Emissions
4.21
5.85
6.87
8.85
(10⁶ tonnes N₂O)
Average Annual Growth Rate
1.2%
Source: USEPA
5
important role to play in refining emissions forecasts.
eventually occur with given atmospheric concentrations
It is then necessary to predict how much of the
of greenhouse gases) for decades or even centuries.
assumed emissions will remain in the atmosphere after
accounting for the effects of natural processes. Typical
2. Projections
tentative scenarios, like those underlying the
Because of these multiple, compounding uncertainties,
projections of emissions shares in Tables I.2 to I.5,
quantitative model projections of greenhouse gas
assume that emissions will be sufficient to result in the
warming are subject to change as understanding
radiative equivalent of a doubling of atmospheric
progresses. All current climate models predict that
carbon dioxide (the combined effects of CO2 and other
doubling the concentration of CO2 relative to the
trace gas increases) between 2030 and 2070.
preindustrial atmosphere would result in an eventual
global average warming. Present quantitative
Once the greenhouse gas levels in the atmosphere are
predictions for actual (realized) average warming by
projected, the next step is to project associated changes
2050 vary over the range of 2°F to 8°F. (The low
in heating of the earth system as a whole. Such
(high) end of this range corresponds roughly to the
projections are highly sensitive to the treatment of
annual average difference between Washington, D.C.
feedback mechanisms that can either reduce or amplify
and Sacramento (Dallas).) However, some recent
the effects of a greenhouse gas buildup. Potentially
results from models using specifications of cloud
important positive and negative feedbacks which are
behavior believed to be more realistic have reduced
not fully understood are an important additional source
equilibrium warming projections by half. Modelers
of uncertainty in projections of earth system warming.
generally agree that seasonality will decrease, with
For example, the role of clouds is still in dispute.
winter temperatures rising more than summer ones.
The next question is more subtle and complex: At what
Possible changes in worldwide sea level are also
rate is the observed mean global surface temperature
subject to considerable uncertainty. Warming could
likely to change? The role of the ocean as a heat sink
raise sea level by thermal expansion of the upper layers
is a key element in the linkage between earth system
of the ocean and by the melting of land-based ice.
warming and global surface warming. Recent
However, recent measurements have found that
computations with one of the world's leading coupled
Greenland and Antarctic ice cover is currently
ocean/atmosphere models indicate that a 1-percent-per-
increasing, not melting away. An American
year carbon dioxide buildup (doubling by 2040;
Geophysical Union panel recently suggested a range of
redoubling by 2120) would produce a warming of
global sea-level increases by 2050 of between 10 and
3.8°F at the equator by 2050, increasing to around
70 centimeters. The present consensus within the
7.2°F at high northern latitudes. But in this
science group of the Intergovernmental Panel on
computation, the southern latitudes hardly warm at all
Climate Change (IPCC) is that a warming within the
because the high-latitude southern ocean absorbs
range projected by climate models might be
virtually all the heat from greenhouse warming (ocean
accompanied by a global sea-level rise of between
temperatures increase slightly). Under this model, the
25 and 40 centimeters by 2050.
earth system would clearly warm, but air temperatures
would scarcely be affected in the Southern Hemisphere.
While the public discussion and most of the initial
The particular configuration of the ocean, atmosphere,
scientific work has focused on the assessment of
and land surface in the Southern Hemisphere is
changes in mean global surface temperature, many of
responsible for this outcome. More generally, observed
the economic impacts considered in this report could
increases in air temperatures will lag behind
be more dependent on other climate variables.
equilibrium temperature increases (those that would
Examples of such variables include changes in soil
moisture, summer precipitation, or extreme temperature
6
by region, and in the number of days in a row when
Mitigation policies are aimed at reducing net emissions
the temperature exceeds a threshold value important to
of greenhouse gases. This can be done either by
particular activities or natural processes. There is
reducing gross emissions (by reducing the use of CFCs
general agreement among climate modelers that, while
or the burning of fossil fuels, for instance) or by
precipitation would increase globally in a global
increasing the removal of greenhouse gases from the
warming scenario, regional patterns of precipitation
atmosphere by natural processes (by reforestation, for
would probably change, leaving some areas
instance).
considerably wetter or drier. Translating these
precipitation changes into changes in soil moisture is
Because some greenhouse gases have long atmospheric
yet another question, since soil moisture is a function
lifetimes, and because any changes in climate are
of soil and vegetation characteristics as well as
predicted to lag changes in net emissions by many
precipitation, temperature, and humidity. Differences in
decades, mitigation policies must generally be
soil moisture and temperature could also affect the
implemented well before adaptation policies. Using a
soil's capacity to absorb greenhouse gases. Some
5-percent real discount rate, $100 billion spent on
models suggest a marked soil moisture decrease in
adaptation in 2050 is equivalent in terms of cost to
midlatitude continental regions during summer.
$4.2 billion spent on mitigation today. (If an
Coordination between climate modelers and experts in
investment yields a 9-percent rate of interest in dollar
impact assessment is required to assure that the efforts
terms, but prices rise at 4 percent per year, the real
of the former are directed towards the development of
purchasing power of invested funds grows by 5 percent
refined projections of those climate variables that are
annually.) A 5-percent real discount rate is used
most critical to the refinement of current impact
throughout this report, but the economic literature
estimates and the development of new ones.
contains arguments for both higher and lower rates.)
Because the time scales here are longer than in most
C. Policy Alternatives
issues, the important economic implications of
differences in timing between adaptation and
The next two sections of this report consider the two
mitigation can only be revealed by discounting.
basic types of policies available to deal with global
change: adaptation and mitigation.
The estimates of impacts and adaptation costs
discussed in this report reflect a wide range of analytic
Adaptation policies, which seek to lower the costs of
methods, assumptions regarding the magnitude and
global warming, come in two forms: planned and
timing of possible climate change, and time periods
unplanned. Planned adaptation involves actions taken
over which impacts are considered. These disparities
in advance of anticipated warming; examples include
rule out meaningful summation of estimated impacts
development of heat-resistant plant strains and
across studies. In general, impacts and adaptation costs
decisions not to undertake new construction on land
are estimated for either one or a small set of assumed
that may be inundated by sea-level rise. Unplanned
climate-change scenarios, with the latter characterized
adaptation involves reactions to actual warming, such
in terms of factors such as the change in mean
as the use of more air conditioning. For the most part,
temperature or mean sea level. Costs and other impacts
effective planned adaptation policies can be designed
are almost always estimated relative to an implicit or
and implemented at the local or national levels, while
explicit baseline involving no climate change. Such
unplanned adaptation mainly reflects decisions of
estimates could in principle be used to measure the
individual firms and households. If global warming
benefits of entirely forestalling climate change.
occurs over time, adaptation would also be a
However, they necessarily overstate the benefits of
continuing process.
mitigation policies that merely slow climate change.
the available literature on mitigation costs does not
7
even consider policies stringent enough to rule out
reduced in the future. The benefits and costs of
climate change entirely.
proposed policy actions should be evaluated under a
broad range of outcomes that reflect the significant
Effective policy design must reflect the fact that there
uncertainties that pervade the global climate issue.
are great uncertainties about future emissions, implied
Flexible policies that can easily be reversed or
climate changes and their effects, and the costs of
expanded, and policies that can be justified for reasons
reducing net emissions. It is of course important to
other than climate change should be highly valued.
support scientific and economic research to close the
This approach has been promoted by the United States
many gaps in our knowledge. But it is also important
in the international community since Secretary Baker's
to recognize that policies adopted today may vary
February 1989 address to the Response Strategies
significantly in their attractiveness as uncertainty is
Working Group (RSWG) of the IPCC.
8
II. ADAPTATION: LIVING WITH GLOBAL WARMING
This section considers the economic costs of global
their suppliers could face significantly higher demands.
warming as described in Section I.B, above. We begin
(The Environmental Protection Agency (EPA)
with an overview of the general effects of climate
estimates that a summer temperature increase of 6.7°F
change on the economy. The rest of this section then
would require an increase in electric generating
considers the specific effects and related planned
capacity of between 25 and 50 percent of current
adaptation policies on which most attention has been
capacity.) Demand for air conditioners and heat
focused, concentrating on the period between now and
exchangers would rise, benefiting producers of these
the middle of the next century.
products. Producers and distributors of space heating
equipment, heating fuels, and winter clothing would
likely face decreased demand. Using existing
A. Climate and the Economy
econometric models, it is not generally possible to
Climate change can affect economic activity both
translate qualitative assessments of this sort into
directly, by altering production possibilities, and
quantitative estimates.
indirectly, as adaptation to change and its direct effects
alters demands for and supplies of particular goods and
The costs of adaptation would depend critically on how
services. For example, warming would directly affect
rapidly warming occurs. Useful lives of plant and
operators of ski areas and indirectly affect
equipment tend to be substantially less than 50 years,
manufacturers of ski equipment.
so that even a steady change in climate over the next
century would permit considerable change in the
The direct economic effects of climate change would be
location and composition of economic activity without
concentrated primarily in agriculture, forestry, and
major disruptions. If sudden changes were required, the
fisheries, which currently account for about 2 percent
values of some immobile assets would drop sharply,
of U.S. gross domestic product (GDP) and about
and disruptions would occur. Sudden population shifts,
5 percent of world GDP. These effects are not all
for instance, would lead to the abandonment of
negative since, for example, the construction industry
buildings, roads, and infrastructure in some areas along
would benefit directly from reduced seasonality.
with the need for major new investments in other
Hydropower production would be affected by changes
areas.
in precipitation and runoff. The subsections that follow
focus on the most-discussed direct effects of global
B. Agriculture
warming. Because of gaps in both science and
economics, we have comprehensive impact cost
Climate change could affect U.S. agricultural markets
estimates only for agriculture and comprehensive
directly through changed domestic yields and indirectly
adaptation cost estimates only for sea-level rise.
through changed world prices and trade flows brought
about by changed crop production abroad. While a
The indirect effects of climate change will create
number of possible planned adaptation policies have
winners and losers throughout the United States and
been identified, their likely costs and effects have not
global economies. If energy use is not curbed to reduce
been fully analyzed.
greenhouse emissions, for instance, electric utilities and
9
changes affect agricultural prices and trade flows.
1. Potential Yield Effects
Because the United States is a large net agricultural
Unfortunately, as noted in section I.B, even given an
exporter, economic losses associated with domestic
assumed level of global warming, available predictions
declines in crop yields could be partially, fully, or
of regional temperature, seasonality change,
more than fully offset by producer gains from the
precipitation, and soil moisture vary greatly, leading to
higher agricultural prices that would occur if world
highly uncertain agricultural projections. In addition,
supply tightened. The same mechanism would, of
agricultural effects would vary over time if climate
course, operate to offset the economic gains stemming
continued to change with gradual increases in
from yield increases that some believe could follow
atmospheric trace gas concentrations.
from increases in atmospheric concentrations of CO2.
Recent studies of the effects of climate changes on
Kane et al. (1989) used the primary international
crop yields include Smith and Tirpak (1989), Parry, et
agricultural trade model of the U.S. Department of
al. (1988a, 1988b), and Santer (1985). These studies
Agriculture's (USDA) Economic Research Service
suggest that, in general, middle-latitude yields would
(Roningen, 1986) to estimate the economic effects of
fall and northern-latitude yields would rise with a
changes in agricultural yield induced by climate
doubling of CO2 levels and consequent warming. Most
change. That analysis, which deals only with major
results point to 10 to 20 percent declines in yields in
grain and oilseed crops and does not consider fruits,
the Southern United States and slight increases in the
vegetables, poultry, or livestock, has been updated by
Northern United States.
USDA for this report. The range of crop yield
estimates used reflects a synthesis of recent suggestions
These estimates do not incorporate important factors
(Parry, et al. 1988a, 1988b; Santer, 1985; Smith and
such as farm management response with existing
Tirpak, 1989; United Nations, 1989). These estimates
technology, the development of new crop varieties
(summarized in Table II.1) are largely illustrative
better suited to new climate and ambient CO2
because of the high degree of uncertainty concerning
conditions, and changes in hydrology and in the
the regional yield effects of climate change; note in
distribution of agricultural pests and diseases. The
particular that, in contrast to the National Climate
literature suggests that these factors are likely to be
Program Office exercise discussed above, the impact
important in determining the net effect of climate
on U.S. yield is negative.
change on agriculture (Hansen 1990; Rosenberg et al.
1989). A recent workshop (National Climate Program
This analysis predicts a climate-induced increase in
Office, 1989) that discussed some of these factors
world corn and soybean prices of about 10 percent,
concluded that the net effect of trace gas doubling
since most production of these crops occurs in
would be to increase yields in all countries by 15 to
mid-latitude countries that may be adversely affected
40 percent. On the other hand, some argue that the
by climate changes. The prices of all other primary
workshop assumed an optimistic change scenario (3.8°F
agricultural commodities are estimated to decline,
warming and a 15-percent increase in precipitation) and
though prices of oil and meal would rise.
did not consider changes in pest activity or possible
summer droughts.
As Table II.1 shows, these estimated price changes
would lead to small increases in net U.S. and global
2. Economic Implications
welfare. Global welfare rises because decreased
Because national agricultural markets are linked by
production in some regions is more than offset by
international trade, the net effect of climate change on
increases in others. From the perspective of an
any country will depend on how changes in regional
individual country, large domestic yield effects do not
climates affect global agriculture, and how these
necessarily translate into large welfare effects; welfare
10
effects depend on prices determined in world markets
Kane, et al. (1989) provide an informative sensitivity
and on flows of imports and exports. Thus, even
analysis. Only when assumed yield reductions in the
though yields are assumed to fall in the United States,
United States, Canada, and the European Community
U.S. net welfare is estimated to increase by just under
(EC) are set at very high levels (greater than
$200 million in 2050. (These estimates do not consider
40 percent), do welfare effects become greater than
adaptation costs, such as the possible need to increase
1 percent of GDP in the countries studied. Thus, even
irrigated acreage.)
with minimal planned adaptation, it appears that
climate-induced changes in agriculture should not
When these welfare effects are discounted to the
produce major national-level economic effects, positive
present, they are seen to be even less important than
or negative, by the middle of the next century.
Table II.1 might suggest. At a 5-percent annual rate of
However, the possibility of substantial variation in
discount, the present discounted value of the estimated
regional impacts cannot be ruled out.
$1.51 billion of net climate change benefits in world
agriculture in 2050 is just $81 million. Assuming linear
3. Adaptation
growth in net benefits to 2050, the present discounted
U.S. agriculture can improve its resilience to climate
value of all net benefits over the next 60 years is only
change through several adaptive strategies. These
$8.1 billion. To put these numbers in perspective,
include increasing irrigation and water-use efficiency,
another application of the model used here found that
developing and planting heat- and drought-resistant
trade-distorting agricultural policies imposed worldwide
crop varieties, enhancing soil and water retention
costs in 1986 alone of $31 billion.
through use of low tillage and crop rotation practices,
maintaining and enhancing the genetic and
technological diversity of agricultural systems, and
Table II.1 - Estimated Economic Welfare Effects in 2050
of Climate-Induced Agricultural Yield Changes
Assumed Percentage
Estimated Net
Changes in Yields
Welfare Change
Country/Region
of Major Crops
(1986 $millions)
United States
-10%
to
-15%
+194
Canada
-10%
to
+5%
-167
European Community
-5%
to
-10%
-763
Northern Europe
+10%
to
+30%
-51
Japan
-5%
to
+15%
-1,209
Australia
+10%
to
+15%
+66
China
+10%
+2,882
USSR
+10%
to
+15%
+658
Brazil
No change
-47
Argentina
No change
+95
Pakistan
No change
-50
Thailand
No change
-33
Rest of the World
No change
-67
11
improving pest control techniques in anticipation of
land (occupied by 5 percent of the population) in
possible northward migration of pests. Agricultural
Bangladesh. Egypt would lose 12 percent of its
policies and programs, such as price support and
habitable land, affecting 14 percent of its population.
acreage control policies, should be reviewed to
The cost to each nation could exceed 2 percent of
determine whether there exist modifications that would
GDP. No estimates are available for the effects of the
help ensure timely and efficient adjustment to possible
25- to 40-centimeter sea-level rise considered most
climate change and that would contribute to trade and
likely to occur by 2050 if significant warming occurs.
other policy goals.
A higher sea level would allow the saltfront of rivers
C. Sea-Level Changes
to travel further upstream than before and could also
allow high salinity water to contaminate groundwater.
The adverse effects of possible sea-level rise on coastal
Hull and Titus (1986) found that with a 1-meter rise in
infrastructure, recreation, and coastal ecology could be
sea level, reservoir capacity would have to be
either large or small. The severity of these effects will
significantly increased to allow Philadelphia to
be determined by the magnitude and rate of any
continue withdrawing its drinking water from the
sea-level rise and whether planned adaptation policies
Delaware River. New York City, which withdraws
are instituted. Unfortunately, only a few estimates of
water from the Delaware headwaters, would also be
the costs of sea-level rise or of adaptation policies are
affected. Less than $1 billion ($180 million to $908
available.
million) in present-value capital outlays would be
needed to compensate for this possible reduction in
1. Possible Impacts
water supply following from climate change. (The
A foot of sea-level rise can erode a typical beach 100
present values are derived from estimates of $2.8 to
to 300 feet; a 40-inch rise could translate into 900 feet
$14 billion in undiscounted 1986 dollars cited by the
of erosion. The U.S. coastline, as that of most other
EPA, assuming a 5-percent real discount rate with all
industrial maritime nations, has been extensively
expenditures incurred in 2050.)
developed, with buildings often within 100 feet of the
sea. Even if currently densely developed areas were
Without significant changes in its water management
protected, losses of dryland and coastal wetlands could
plans, Miami's primary source of drinking water would
be substantial if rates of rise were rapid.
be rendered unusable by salinity increases if a
one-meter rise in sea level occurred. Even with action,
The loss of land by erosion and flooding due to
the city would face reduced supply. Many other
accelerated sea-level rise would translate into lost
communities along the coast could feel similar effects
economic services. Gibbs (1984) estimated that the
on their drinking water supplies if such a large
present value (using a 3-percent discount rate and in
sea-level rise were to occur.
1980 dollars) of lost economic services to Charleston,
South Carolina, due to an 83 centimeter rise in sea
Storm surges would be likely to increase in height by
level could be $1.3 billion. However, planned
the amount of sea-level rise, making flood damages
adaptation could reduce this loss by 65 percent to $0.4
more frequent and severe. The size of flood plains
billion. The amount of rise considered in this analysis
would likely increase. As a result, flood insurance costs
is more than double the high end of the most recent
would probably go up, even with anticipatory policies.
IPCC estimate of likely sea-level rise by 2050 if
significant warming occurs.
2. Adaptation
It would not make economic sense to protect the entire
Other nations could also face losses from any sea-level
U.S. coastline against any substantial sea-level rise. If
rise. A 1-meter rise would inundate 7 percent of the
the sea level were to rise gradually and predictably.
12
substantial costs could be avoided by discouraging
D. Human Health
additional development or replacement construction in
The impacts of global warming on human health are
low-lying areas (perhaps in part by altering Federal
extremely controversial, and the scope for planned
flood insurance policy). Particularly for less developed
adaptation is unclear.
areas, discouraging development would allow beaches
to maintain their natural form, wetlands to migrate
1. Possible Impacts
landward if rates of sea-level rise are moderate, and
The consensus view of a recent National Research
flood and storm damage to be minimized.
Council Workshop (1987, p. 19) was that "...long-term
climatic changes in temperate latitudes are unlikely to
It might, however, also be necessary to nourish
have major health implications." Others have noted
recreational beaches with sand and to use levee
that even though Atlanta's climate is much warmer
systems to protect some densely developed shoreline
than New York's, there is no evidence of a
areas. Estimates from Smith and Tirpak (1989) of the
climate-induced difference in health risk.
costs of these actions through 2100 under alternative
sea-level rise assumptions, along with the resulting loss
On the other hand, a recent EPA report (Smith and
of drylands and wetlands, are shown in Table II.2. (To
Tirpak, 1989) finds that warming could lead to
put the estimated dryland losses in perspective, the
increases in summertime morbidity and mortality in the
land area of Florida, which would be particularly
United States and the rest of the world. The report
hard-hit by substantial sea-level rise, is about 54,000
mi².) As this table suggests, while densely developed
notes that any such effects would be more pronounced
in some regions than in others and that the extent of
shoreline areas could be protected against likely
acclimatization will play a large role in determining the
sea-level rises at moderate (present value) cost,
effects of any actual warming on health. The apparent
significant losses of drylands and wetlands would
occur.
Table II.2 - Protecting Densely Developed Shoreline
Areas from Sea-Level Rise
Sea-Level Rise by 2100
Baseline*
50cm
100cm
200cm
Cumulative Costs to 2100
(1986 $billions)
Present Value**
0.6 to 0.8
3.9 to 5.3
9.0 to 13.7
20.8 to 38.1
Undiscounted Sum
4.8 to 6.2
32 to 43
73 to 111
169 to 309
Dryland Lost
1,500 to 4,700
2,200 to 6,100
4,100 to 9,200
6,400 to 13,500
(mi²)
Current Wetland Lost
9 to 25
20 to 45
29 to 69
33 to 80
(percent)
*Assumes current rate of sea level rise, 12cm per century.
**Assumes rate of spending rises 1 percent per year; uses 5 percent real discount rate (continuous time).
13
absence of a climate-related difference in health risk
and biodiversity. While a variety of possible adverse
between northern and southern cities and the lesser
impacts have been identified in each of these areas,
effect of current heat waves on mortality in southern
little quantitative analysis has been attempted to date.
cities suggests that human populations could
acclimatize, especially if warming occurred over
1. Forestry
several decades. The EPA report also notes that any
Climate changes could have a significant impact on the
warming would probably reduce the number of
forestry industry. Unfortunately, no attempts have yet
weather-related deaths in winter months regardless of
been made to quantify the economic impact of such
the degree of acclimatization. The report concludes that
changes on producers or consumers. As in agriculture,
it is not clear what the net effect of these two
both yield and price effects are relevant.
offsetting trends may be, but one of the underlying
papers suggests that an overall increase in mortality is
a. Possible Impacts. If significant warming occurs,
most likely.
climate-induced changes in U.S. forests could be
apparent in 30 to 80 years. Forest ranges could shrink
Several vector-borne diseases, such as yellow fever,
considerably. The southern boundary of forests in the
dengue fever, and malaria, have the potential to spread
eastern United States could move several hundred to
northward if the climate warms. For example, the
one thousand kilometers north under plausible global
vector of dengue fever breeds year-round in the United
change scenarios. The potential northern range could
States only in southern Florida, but it could move
shift by as much as 600 to 700 kilometers over the
northward by several hundred miles. The National
next century under these scenarios, but slow rates of
Research Council Workshop (1987, p. 19) concluded
natural forest migration could limit the actual
that the expansion of ranges of tropical disease vectors
movement to as little as 100 kilometers. Northward
"would mostly affect developing countries." Public
migration may also be limited by less fertile soils and
health facilities in these nations could not readily
decreased sunlight availability in the North. These
handle a dramatic increase in infectious disease with
projections do not account for the favorable effects of
their current resources. Their future ability to cope
CO2 on water-use efficiency and rates of
would depend largely on the rate of improvement in
photosynthesis, reductions in freeze damage, or human
living standards.
intervention in the forest migration process.
2. Adaptation
Changes in forest distribution and composition could
A national watch/warning system could be developed
have major impacts on timber production, runoff from
(much like the systems that now warn of hurricanes
forests, and recreational opportunities. Dieback along
and severe snowstorms) to advise people when stressful
the southern limits of U.S. forests could result in
weather conditions are imminent. Immunization
productivity declines in present dominant species of
programs could be conducted in anticipation of the
46 to 100 percent under some plausible scenarios. This
spread of certain vector-borne diseases into new areas.
estimate does not account for human intervention, such
An improved health-screening program could be
as species transplantation. The response of forests to
developed for immigrants. Finally, improved
climate change could also modify runoff patterns and
surveillance systems could provide better data on the
increase the potential for soil erosion.
incidence and spread of infectious diseases.
Forests in other regions of the world would also be
E. Other Potential Effects
affected by significant warming. A recent analysis for
the IPCC (Government of Finland, 1989) suggests that
This subsection considers the implications of possible
boreal forests will become more productive if
global warming for forestry, fisheries, water resources,
significant warming occurs. Others believe that these
14
same forests would be especially hard hit, since most
uncertain due to the complexities surrounding ocean
climate models suggest that any warming that occurs
circulation, which until recently has not been explicitly
would be greatest in high latitudes. While temperature
considered in climate models, heat uptake by the
increases may be smaller in the tropics, tropical forests
ocean, and future patterns of nutrient upwelling. One
could be significantly affected by changes in rainfall
study found that many Gulf Coast fish and shellfish
and land-use pressures that may impede forest
would be unable to tolerate much higher temperatures.
migration to more suitable locations.
If there is rapid sea-level rise and resulting saltwater
b. Adaptation. Today's forest management decisions
intrusion and wetlands loss, changes in the distribution
could have long-term impacts on the composition and
and size of many estuarine species would be possible.
location of forests. Planned adaptation measures that
Any losses of coastal wetlands would adversely affect
could be considered include maintaining forest
fish. Species that are less salt-tolerant would tend to
diversity and extensiveness to enhance the ability of
migrate upstream towards suitable habitat, ceding
forests to respond to a range of climatic conditions;
present habitats to species that are more salt-tolerant.
developing and testing fast-growing and heat- and
In lakes, streams, and estuaries, declines in water
drought-resistant species; preparing for dieback along
quality due to reduced dissolved oxygen levels at the
southern boundaries with plans for rapid harvesting and
higher temperatures in some scenarios could adversely
removal of dead trees and replacement with better
affect many recreational species.
adapted species or nonforest systems; improving
capabilities for monitoring changes in forest growth
In the tropics, species dependent upon coral reefs could
and composition; and modifying pest and fire control
experience significant adverse effects. Coral reef
strategies to reflect likely changes in the frequency and
ecosystems could be vulnerable both to increased
nature of these disturbances.
thermal stress and to sea-level rise, if it were rapid
enough to inundate and kill the coral species.
2. Fisheries
The effects of global warming on fisheries depend
b. Adaptation. Both the need and the opportunity for
primarily on changes in regional climates and ocean
planned adaptation appears to be limited. Commercial
circulation and on the pace at which they occur. The
fishing occurs primarily in the ocean, where effects of
qualitative effects of warming on fisheries are thus
possible climate changes are especially uncertain.
highly uncertain, and no quantitative economic
Changes in species location and composition could
analysis has, to our knowledge, been attempted.
require some adjustments, but commercial fisheries
now make similar adjustments in response to
a. Possible Impacts. The impacts of any significant
overfishing and the natural movement of species.
change in temperature on fish populations would vary
Travel time to specific commercial fisheries may rise
across species. Some would experience increased
or fall, and changes in available species may raise or
habitat and associated expansion of range. Adaptation
lower equipment cost. If equipment adjustments were
would be easier for fish in large bodies of water,
made gradually, as durable assets were replaced, their
including the oceans, than for those constrained in
costs would be relatively small.
small water bodies. Total productivity of fishing
grounds in the Great Lakes and oceans could increase.
Management of water flow to lakes and streams could
Under some scenarios, phytoplankton and fishery
affect fish populations in those water bodies.
productivity could increase in the Great Lakes by
Restocking, which already plays an important role in
1.6 to 2.7 fold, but there is the potential for a decrease
recreational fisheries, and new species introduction
in diversity due to intensified species interactions.
could aid in adaptation to climate change. Reducing
Climate change effects on the ocean are particularly
15
water pollution could offset adverse warming impacts
Illinois shoreline alone. (Note that a $500 million
on some species.
outlay required in 2020 could be financed from the
proceeds of an investment of only $116 million today,
3. Water Resources
assuming a 5-percent real rate of return on invested
Even if an assumed rise in regional temperature is
funds.)
taken as given, it is difficult to predict the impacts of
climate change on water basins with much confidence
The implications for water quality are mixed.
because of uncertainties about regional precipitation.
Dissolved oxygen levels could be lower because
The quantitative estimates that follow assume a U.S.
oxygen is less soluble in higher temperature water and
temperature increase of 5.4°F to 9°F and an annual
because higher temperatures may increase primary
precipitation increase of 1 to 3 inches.
aquatic productivity, which increases the demand for
oxygen. Summer stratification could be lengthened in
a. Possible Impacts. Such higher temperatures would
some lakes, which, combined with higher demand for
likely reduce snowpacks by shortening the snow season
oxygen, would reduce dissolved oxygen levels and
and causing more precipitation to fall as rain. This
harm aquatic life. These factors could lead to lower
could have a significant effect on the operation of such
water quality in some basins. However, reduced use of
water systems as the Central Valley Project and the
chemicals to cope with ice and snow would contribute
State Water System in California. With no change in
to improved water quality in some northern areas.
infrastructure, earlier snowmelt would raise flood
probabilities in the winter. Management response to
b. Adaptation. A number of measures could be taken
this would reduce annual deliveries by 7 to 16 percent.
to increase the resiliency of water resources to climate
Similar problems could be expected in other Western
change. Water conservation could be promoted by
water management systems.
reducing or eliminating subsidies for water use or
allowing trading of market rights. Water resource
Because of uncertainties about rainfall, it is hard to
managers could be encouraged to explore ways to
estimate the direction of change in water supply in
transfer water between neighboring systems during
many regions. This is especially true for rivers that are
droughts and to consider plausible climate change in
not fed by snowpacks, such as many rivers in the
sizing new long-lived facilities. New drought-resistant
Southeast. Higher temperatures could lower many lake
species could be developed to help cope with any
and reservoir levels through the effects of increased
water shortages in agricultural areas.
evaporation that was not offset by increased rainfall.
For example, the levels of the Great Lakes could fall
4. Biodiversity
by an average of 0.5 to 2.5 meters, which could,
Other effects of possible global warming include a
among other things, reduce dilution capacity. On the
possible decline in biodiversity stemming from the loss
other side of the coin, the Great Lakes would benefit
or change of habitats that result in the decline or loss
from a longer shipping season and a reduction in water
of some animal and plant species. While the relevant
pollution due to reduced use of salt and other
mechanisms can be described, their effects under
chemicals to cope with ice and snow.
different climate change scenarios have not been
estimated.
If adverse developments occur, future costs would be
incurred. For example, the future costs of building
a. Possible Impacts. Changes in climate would harm
additional reservoirs for the California systems could
some species but benefit others. The ability of a natural
be over $500 million (undiscounted) and the costs of
community to adapt to changing climatic conditions
dredging harbors and making other adjustments could
would depend on the rate and character of climate
cost $270 to $540 million (undiscounted) along the
change, the size of species ranges, the dispersal rates of
16
individual species, and whether or not barriers to
examples include mammals isolated in refuges and
migration are present. A species' ability to adapt to
prairie species blocked by expansive agriculture.
changing climatic conditions would be heavily
influenced by dependencies upon or competition with
b. Adaptation. Existing programs that focus on the
other species within the ecosystem. For this reason, the
protection of endangered species and preservation of
impacts of climate change on natural communities are
genetic diversity could be adjusted if the number of
difficult to predict.
species at risk grows. Expansion of reserves and crea-
tion of migratory pathways between areas of suitable
In general, communities near the edge of a species
habitat could enhance our ability to preserve species. It
range and arctic communities would be at particular
may be useful to develop forest management practices
risk from significant climate change, as would species
that allow product extraction while minimizing any
that migrate slowly, that are already threatened or
reductions in an area's future use as wildlife habitat.
endangered, that are specialized to small and isolated
Areas that may become suitable future habitat for
environments (such as montane and alpine
threatened and endangered species, such as lowland
communities) or that have narrow habitat requirements.
areas adjacent to current wetlands, could be identified
In some cases, man-made barriers may limit migration:
and considered for protection.
17
III. MITIGATION: LIMITING GREENHOUSE GAS EMISSIONS
As indicated in Section I, the analysis of mitigation
A. Background
strategies must consider emissions of multiple gases
arising from many different economic activities in
Two points are basic to any discussion of mitigation
many nations. The first subsection provides some basic
policies. First, global action is essential if meaningful
assumptions and principles about alternative policies
results are to be obtained without bringing economic
for reducing greenhouse emissions. Estimates of the
growth to a halt in some regions. Second, as in other
costs of reducing emissions of each of the main
regulatory arenas, mitigation policies should minimize
greenhouse gases are then discussed. The costs of
costs by relying on incentives to the maximum possible
reducing carbon dioxide and chlorofluorocarbon
extent and by providing flexibility.
emissions have received the most attention. Estimates
1. Global Action
of carbon dioxide abatement costs remain preliminary
and controversial. Relatively little is known about the
Table III.1 summarizes some key data from Section I.
costs of reducing emissions of other greenhouse gases.
Anthropogenic emissions of methane and nitrous oxide
Major studies of mitigation policies are under way
are mainly agricultural in origin and are mainly
within the Federal Government (in DOE, EPA, DOI,
produced by the developing nations; it is clear that
and OTA; a CBO study will be published in August
global action, concentrating on agriculture, would be
1990), within foreign governments, and in the private
necessary if a decision were taken to control CH₄ and
and nonprofit sectors (work is under way at EPRI,
N2O emissions. While current CFC emissions are
Harvard, MIT, and Stanford). A revision of this section
mainly produced by the Organization for Economy
a year or two from now could rely on a much deeper
Cooperation and Development (OECD) member states
research base and might have different policy
(which have already pledged significant reductions and
implications.
are likely to commit to a near total phaseout), CFC
emissions of other nations are predicted to rise rapidly
in the future if no additional controls are put in place.
Table III.1 - Anthropogenic Greenhouse Gas Emissions
Percentage Share
Percentage Share of 1985 Emissions
of Radiative Forcing
OECD
USSR/East
CP Asia/
Gas
in the 1980s
Nations
Europe
Developing
Carbon Dioxide (CO2)
49
43
22
35
Methane (CH₄)
19
25
13
66
Chlorofluorocarbons (CFCs)
14
65
16
18
Nitrous Oxide (N₂O)
5
27
14
59
18
Finally, while the OECD nations are now the single
Table III.3 considers the implications of meeting the
largest source of anthropogenic carbon dioxide
emission policy targets of Table III.2 on a global basis
emissions, emissions of other nations, which already
if nations outside the OECD take actions that are
account for more than half of total emissions, are
significant but less than proportional to the targets. The
expected to increase rapidly absent serious mitigation
table shows that without full participation by other
efforts. The OECD share of CO2 emissions is projected
nations, the OECD member states would have to make
to fall below 25 percent by 2050. Taking account of
dramatic or impossible cuts to meet widely discussed
expected future emissions patterns, the need for global
global CO2 emissions goals.
action is evident for these gases as well.
2. Differential Impacts
Table III.2 considers the effect on global CO2
While global action may be essential for effective
emissions in 2025 of the unilateral adoption by the
mitigation, differences in costs and benefits among
U.S. or by all OECD nations of four frequently
nations may make it difficult to obtain global
discussed emission limitation targets: reduction of
agreement on specific policies. Table III.4 shows that
emissions growth by 50 percent, stabilizing emissions
CO2 emissions per capita and per dollar of GNP vary
at 1985 levels by the year 2000, reducing emissions 20
substantially. Among those countries for which GNP
percent below 1985 levels by 2005, and reducing
estimates are available, higher-income nations tend to
emissions 50 percent below 1985 levels by 2025.
have higher emissions per capita but lower emissions
Though the underlying global and regional emission
per dollar of GNP. The USSR and Eastern European
scenarios on which the calculation is based are
countries have particularly high emissions. These
necessarily uncertain, the basic message of this table is
variations make it easy to imagine an international
fairly robust: even drastic reductions by all OECD
replay of the "clean states V. dirty states" debates that
nations cannot prevent substantial increases in world
have marked Congressional consideration of acid rain
CO2 emissions by 2025. Unilateral actions by the U.S.
proposals. The stakes for oil-exporting nations may be
have even smaller effects.
particularly high (Whalley and Wigle, 1989).
Table III.2 - Global Effects of Unilateral Carbon Dioxide Emissions
Reductions by the United States or the OECD
(Global Emissions in 1985=100)
Global Carbon Dioxide Emissions in 2025
if Policy Adopted by
Emissions Policy
U.S. Only
All OECD
Base Case (No intervention)
207
Reduce Growth by 50%
203
198
Stabilize by 2000
203
198
Reduce 20% by 2005
194
182
Reduce 50% by 2025
188
169
Note: Based on RCW scenario in Lashof and Tirpak (1989), using 1985 emissions as the baseline.
19
The United States has a relatively high per capita CO2
competitors who would be less affected by electricity
emissions rate for two reasons. First, U.S. energy
rate increases.
intensity (as measured by British thermal units
consumed per constant dollar of GNP) is higher than
In addition, because the United States has an
that of most of our major competitors. It is double that
abundance of coal reserves, and very little undeveloped
of Japan and 75 percent above than of Western Europe.
economical hydroelectric potential, limits on coal use
Second, coal provides about 27 percent of total U.S.
would likely result in larger imports of oil and gas,
energy requirements. Among major industrial countries,
which will have implications for our balance of trade
this share is exceeded only by the U.K. (32 percent)
and energy security. All of this presents a marked
and West Germany (29 percent). The United States
contrast to the 1973 and 1979 oil shocks, where our
also relies less heavily on nuclear power than do many
greater self-sufficiency in energy provided an
other industrialized countries.
advantage relative to most other industrialized nations.
On the other hand, our more energy-efficient
Because the United States relies heavily on coal (the
competitors may find it relatively harder to reduce
fossil fuel with the highest amount of carbon per unit
emissions in the future, since they have already
of energy) for electricity generation, U.S. electricity
undertaken cheap efficiency measures that we have not.
rates would be likely to rise more than those in other
industrialized countries if concerted action were
Since adaptation costs are likely to vary substantially
taken-for example, by imposing the same charge on
among nations, so may interest in investing in
the carbon content of fossil fuel-to curb CO2
mitigation. Existing models suggest greater warming in
emissions. Unless energy-intensive U.S. industries were
high northern latitudes, and less warming in latitudes
able to greatly increase their energy efficiency, they
where most developing nations are located. There is
could be disadvantaged relative to major foreign
likely to be considerable regional variation in
Table III.3 - OECD Carbon Dioxide Emissions Reductions Required To Achieve
Global Emission Goals When Other Nations Take Lesser Actions
(Base case global emissions = 100 in 1985, 207 in 2025)
Action Assumed Taken by
Required
Global Goal
USSR/E. Europe
Developing Nations
OECD Reduction
Cut Growth 50%
Growth cut 25%
None
98% by 2025
Growth cut 25%
Growth cut by 25%
33% by 2025
Stabilize by 2000
Growth cut 50%
Growth cut by 25%
41% by 2000
Growth cut 50%
Growth cut by 50%
29% by 2000
Cut 20% by 2005
Stabilize
None
Exceeds 100%
Stabilize
Stabilize
46% by 2005
Cut 50% by 2025
Cut 20% by 2025
None
Exceeds 100%
Cut 20% by 2025
Cut 20% by 2025
89% by 2025
Notes: Based on RCW scenario in Lashof and Tirpak (1989), using 1985 emissions as the baseline. Developing
Nations include Centrally Planned Asia.
20
Table III.4 - Carbon Dioxide Emissions Per Capita and Per Dollar of GNP, 1986
Per Capita
Per Dollar of GNP
(metric tons of carbon
(kilograms of
Country
per capita)
carbon per dollar)
United States
5.005
0.28
Canada
4.094
0.29
Japan
2.109
0.16
West Germany
3.066
0.25
Australia
3.853
0.32
France
1.794
0.17
United Kingdom
2.938
0.33
Italy
1.655
0.19
Spain
1.284
0.26
Poland
3.321
1.60
Mexico
0.909
0.49
South Africa
2.785
1.51
Brazil
0.379
0.21
China
0.527
1.76
India
0.187
0.64
East Germany
5.499
n.a.
Czechoslovakia
4.212
n.a.
USSR
3.593
n.a.
Romania
2.408
n.a.
Notes: From Department of Energy and World Bank Development Report, 1988. Top set of countries listed from
highest to lowest GNP per capita. Includes emissions from fossil fuel combustion and cement production only.
n.a.= means GNP not available in the sources employed.
agricultural effects. Nations differ substantially in their
sinks as well as gas sources is more promising than
vulnerability to sea-level rise. A higher share of GNP
one that considers each source of greenhouse gases
originates in climate-sensitive activities in developing
individually. An international limitation agreement
nations, but these nations generally lack resources for
based on the comprehensive approach, for example,
adaptation. In short, while global action is essential to
would allow each nation to devise a strategy that
limit greenhouse emissions significantly, differences
reflects its own situation regarding opportunities for
among nations may make it difficult to find universally
emissions reduction and sink enhancement. The
acceptable emissions targets or ways of sharing the
Administration also feels that any set of nations should
costs involved.
be free at any time to develop a joint strategy to meet
their pooled ceilings, as long as net global emissions
3. Incentives and Market Failures
are not thereby increased. An approach incorporating
Consistent with its approach to domestic regulatory
these principles was outlined in a U.S. concept paper
issues, this Administration feels that an approach to
introduced at the IPCC.
limiting net anthropogenic greenhouse emissions that
encompasses all important greenhouse gases and gas
21
Even if a comprehensive approach with provision for
burden of meeting standards cannot be reallocated
pooling were accepted, opinions are divided on how
across industries or across the different greenhouse
individual nations-in particular the United States—
gases in private cost-saving transactions. Second, in the
should set domestic policy to meet net emission
absence of price increases for fossil fuels, standards
limitation targets. Most economists argue that primary
can increase the demand for energy-using services.
reliance should be placed on incentive-based
Finally, standards reduce the range of products
approaches-including charges, user fees, and tradable
available to meet diverse consumer needs.
emissions rights. This view follows from the
presumption that households and firms generally
The costs of efficiency standards are often hidden
respond rationally to incentives, so that regulatory
rather than explicit. For example, a higher average fuel
goals are met at least cost by providing proper
economy standard might be met by forcing consumers
incentives and maximal flexibility to respond at all
to buy only the more fuel-efficient and generally
points along the production-consumption chain.
cheaper vehicles in the existing product line, actually
reducing their purchase and gasoline costs. However,
A second school of thought tends nonetheless to favor
out-of-pocket costs do not reflect costs imposed on
the use of efficiency standards and other command-
consumers by denying them the option to purchase
and-control techniques. Adherents of this school point
other valued attributes such as safety, performance, and
to apparent widespread deviations from best practice in
spaciousness. Higher fuel efficiency without higher fuel
energy use and to reports of large payoffs from utility
prices also lowers the per-mile cost of driving,
conservation programs as indications of market failure.
encouraging additional trips, fuel consumption, and
They contend that government regulation can reduce
emissions. Since fuel economy labels already provide
CO2 emissions, in particular, at low or even negative
good information to auto purchasers, and there are few
cost by helping or forcing individuals to take actions
apparent institutional rigidities in this market, the
that are, in fact, in their own self-interest.
economic rationale for stringent vehicle efficiency
standards is doubtful at best.
Market failures do not, of course, provide an automatic
justification for regulation. Market failures, where they
More generally, assertions that efficiency
exist, can be addressed directly. For example, since
improvements are cost saving or nearly costless raise
utility profits under traditional State rate regulation are
the classic question of why these improvements are not
often linked directly to the level of electricity sales, a
automatically taking place. Such assertions must be
utility faced with capacity constraints would usually
examined to see if the claimed efficiency gains involve
prefer to increase supply rather than reduce demand.
tradeoffs with other product attributes that were
Regulatory changes at the State level could be made to
excluded from the analysis.
place the alternatives of demand reduction and supply
augmentation on a more even footing. Public
Efficiency standards based on national average values
information programs, promotion of efficient
may actually serve to restrict the choices of only those
appliances by utilities, and changes in mortgage
consumers who face low energy prices or have low
qualification rules to reflect appliance operating costs
usage rates (and thus energy consumption) for the
are other steps that could be used to deal with market
product. Those with high usage rates or those who face
failures directly.
high energy prices would purchase high-efficiency
products even in the absence of mandatory standards.
Efficiency standards and other command-and-control
Taking this self-selection into consideration, an
regulations have several significant disadvantages
efficiency standard that appears to save money on the
relative to incentive-based systems or approaches that
national level may actually impose costs on many
address perceived market failures directly. First, the
consumers.
22
Economic models populated by perfectly rational firms
1. Economy-Wide Analyses of Emissions
and households participating in perfect markets that are
Limitation Costs
always in equilibrium clearly do not provide a fully
realistic characterization of the U.S. economy. But the
Several recent studies, and work now in progress on
alternative extreme assumption, of widespread private
which we have been briefed, attempt to estimate the
waste easily corrected by regulation but untouchable by
costs of efficient reductions in CO2 emissions levels,
market incentives or direct correction of market
using three distinct economy-wide modeling
failures, seems at least as far off the mark. The
frameworks. Energyleconomic balance analysis focuses
question of where truth lies between these extremes is
on the long-term relationship between energy use and
ultimately empirical, and it cannot be answered here.
output, without explicit consideration of substitution
possibilities within the energy sector or the economy as
It is important, however, to point out that essentially all
a whole. Energy policy models also focus on the long
analysts agree that some reductions in greenhouse gas
run but explicitly incorporate substitution possibilities
emissions can be obtained at low cost. Disagreements
among fuels and the responsiveness of overall energy
focus on how fast the marginal cost of abatement rises
demand to changes in energy prices and income levels.
and on how the initial, low-cost reductions can best be
These models often incorporate a crude feedback from
obtained.
energy to GNP, but the main causality runs from the
economy to the energy sector rather than vice versa.
B. Carbon Dioxide
Energy-economic models, which exist in both short-and
long-term variants, attempt to incorporate a fuller
Carbon dioxide accounted for about 49 percent of the
two-way link between the energy sector and the
increase in radiative forcing in the 1980's and is
economy at large, but they tend to include less detailed
expected to account for a larger share in the future.
treatment of energy production and consumption.
The Administration's acid rain proposals, by providing
While all of these approaches have clear weaknesses
incentives to conserve electricity, will reduce CO2
that point out the need for further research and the
emissions from electric utilities by around 2 percent-
development of more comprehensive models, each
and will thus reduce total U.S. fossil-fuel CO2
provides some useful information, and all are
emissions by around 0.7 percent. The higher corporate
considered here.
average fuel economy (CAFE) standards adopted last
spring will be likely to slow the increase in CO2
Costs are estimated in models of the latter two varieties
emissions from automobiles.
by comparing economies with and without emissions
reductions. Assumptions about emissions growth in the
Below, we begin by considering the estimated costs of
no-policy baseline case vary widely and contribute to
CO2 emissions reductions produced by economy-wide
the diversity of results obtained. Assumed annual
models. These models generally assume that markets
growth rates in CO2 emissions through 2050 vary from
work well, so that incentive-based approaches
0.61 percent (Edmonds, et al., 1986) to 2.27 percent
minimize the costs of emission reduction. We then
(Edmonds and Reilly, 1983). Even small differences in
consider analyses of the ability of regulatory initiatives
baseline annual emissions growth rates (BAEGRs) can
to reduce emissions. These analyses tend to be sector
have a major effect on levels of emissions over the
specific and focus on market or policy failures. The
long time intervals considered in global climate
final two subsections focus on the potential of new
analysis. For example, an increase of average annual
technologies and of forestation policies.
emissions growth from 0.6 percent to 1.6 percent
translates into a 43 percent increase in annual
emissions levels by 2050. Higher BAEGRs translate
23
into higher, sometimes much higher, costs of meeting
Under these assumptions, a CO2 emissions growth rate
particular target emissions levels.
of -1.0 percent, which is necessary to implement a
20-percent cut in emissions by 2005, is associated with
For high BAEGRs, even quite draconian policies do
world output growth of 0.4 to 1.0 percent per year.
not significantly shift the date at which atmospheric
Over the last several decades, output has grown at 4 to
CO2 concentrations double from preindustrial values.
5 percent annually, and population has grown at a
For lower BAEGRs, policies to stabilize emissions
2-percent rate. Thus, these calculations suggest a drop
appear to be more feasible. The different scenarios
in output growth of 3 to 4 percentage points per year,
evaluated in the models considered below are best
leading to an almost certain decline in per capita
thought of as illustrative scenarios-possible sets of
income. The long-run effect on the world economy of
internally consistent future developments-rather than
a drop in output growth of even a tenth of the size
as definitive forecasts.
suggested by Kaya's work would be staggering.
While the studies discussed below differ in many
Fortunately, our experience following the 1973 and
respects, and their shortcomings point up the need for
1979 oil shocks indicates that the relationship between
further economic research, they all suggest that the
economic growth and energy use may be less rigid
costs of stabilization or reduction of CO2 emissions
than Kaya's framework suggests. Between 1973 and
will be high-at least 1 percent of GNP per year for
1985, the price of energy rose by 47 percent relative to
commonly discussed goals such as the indefinite
nonenergy products at the consumer level and by
stabilization of emissions between 80 and 100 percent
80 percent at the industrial level. Partly as a
of present levels. One percent of current world GNP is
consequence, the ratio of energy use to real GNP fell
about $150 billion; if world GNP grows at an average
by 2.4 percent annually in the United States and 1.9
annual rate of 3 percent, the total cost to 2050
percent annually in the OECD countries. CO2 per unit
(discounted at 5 percent) of 1 percent of GNP per year
of energy also fell during this period, as usage of
would come to about $5.2 trillion. If economic growth
natural gas and nuclear power increased rapidly, and
is significantly slowed, costs could be much higher.
U.S. and OECD CO2 emissions were essentially
constant between 1973 and 1985.
a. Energy/Economic Balance Analysis. Kaya (1989)
and Kaya, et al. (1989) work from the following
This was not a period of economic boom, however;
identity:
growth rates of U.S. output and productivity over the
1973-85 period, 2.3 percent and 1.0 percent
Growth rate of CO2 emissions =
respectively, were far below the corresponding rates of
growth rate of CO2 emissions per unit of energy use
3.7 percent and 2.9 percent for the 1948-73 pre-shock
+ growth rate of energy use per unit of output
period. While most of the slowdown in growth can be
+ growth rate of output
attributed to other factors, higher energy prices played
an important role. The rise in energy prices led to a
A -1.0-percent growth rate of energy use per unit of
substitution of other inputs for energy and a diversion
output is assumed, along with a growth rate of CO2 per
of investment that might otherwise have been used to
unit of energy use of between -0.4 and -1.0 percent.
increase labor productivity.
The former estimate may be viewed as somewhat
pessimistic, especially if a substantial rise in energy
Moreover, part of the decline in the energy/GNP ratio
prices occurs. The latter estimate is rather optimistic
during 1973-85 reflects the increased relative
given the likelihood of increasing reliance on coal and
importance of the service sector. One cannot count on
coal-based synthetic fuels that are highly carbon
comparable increases in the future, especially as the
intensive.
United States moves from being a large net importer of
24
manufactured products to a large net exporter in order
end-users cannot significantly alter the relationship
to balance its current account and repay international
between fuel carbon content and CO2 emissions, and an
borrowing.
economical carbon scrubbing technology is not
anticipated in the near future, there is no efficiency
While the use of natural gas could continue to expand
advantage in applying the charge to end users. Sellers
in the near term, the absence of nuclear projects in the
in long-term energy contracts (especially coal
pipeline and current strong public resistance to this
contracts) should not be forced to absorb the charge to
form of power in the United States suggest it will be
fulfill their existing contracts. This problem can be
harder to substitute nuclear for fossil energy in the
avoided by imposing the charge on the buyer in the
future than in the 1973-85 period. On the other hand,
first transaction. Depending on other nations'
many have argued that macroeconomic policies and
mitigation actions, coal destined for export might be
energy regulation contributed significantly to the poor
exempted from the charge, and a refundable credit for
economic performance of that period and that some of
petrochemical and other uses of fossil fuels that
these mistakes could be avoided in the future.
sequester verifiable amounts of carbon could be
Moreover, revenues from a carbon charge (discussed
considered. In principle, imports of electricity
below) could be used to lower other taxes, while much
generated from fossil fuels should pay a charge based
of the increased spending on oil in the 1973-85 period
on the carbon content of the input fuel, though this
flowed abroad.
could conflict with our free trade agreement with
Canada.
Despite these caveats, the period of the oil shocks
provides a useful reference for consideration of the
Unlike an ordinary tax, which distorts private decisions
likely impact of CO2 emission-reduction policies on
such as the choice between work and leisure, an
output and productivity growth. Energy remains a
appropriate carbon charge can actually improve
major input to the U.S. economy, and studies discussed
resource allocation and raise welfare by closing the gap
below suggest that energy price increases at least as
between the private and social costs of carbon-emitting
large as those experienced between 1973 and 1985
activities. A carbon charge would affect decisions
would be required to achieve widely discussed targets
ranging from the choice among alternative technologies
for CO2 emissions reduction. On balance, there is no
for generating electricity, to the energy efficiency of
reason to believe that any attempt to reduce energy use
cars, buildings, and industrial equipment, to the
significantly today would be substantially less
demand for automobile travel and products made from
economically disruptive than were the oil shocks of the
steel. Because a carbon charge provides incentives that
1970's.
affect decisions at all points along the
production-consumption chain and across all industries,
b. Long-Term Energy and Energy-Economic Policy
it automatically focuses on those activities where CO2
Models. These models allow for explicit analysis of
emissions reductions can be achieved at least cost. The
policies that raise the price of fossil fuels to discourage
least-cost property of charges when markets work well
their use. The most natural (and easily analyzed)
is useful in placing a lower bound on the economic
policies of this sort involve imposition of a carbon
implications of particular greenhouse gas emissions
charge.
targets, even if other tools would actually be used for
implementation. A carbon charge does not, of course,
A charge levied on the carbon content of primary fossil
provide the full flexibility and efficiency of a
fuels at their first sale or entry into the distribution
comprehensive charge system applied across all
system would provide an administratively simple
greenhouse gas sources and sinks.
means of reflecting the social undesirability of
greenhouse emissions in fossil fuel prices. Because
25
Existing economy-wide studies generally imply that
at $29 per ton of carbon but rises sharply after the year
carbon charges on the order of $100 per ton or more
2000 before stabilizing at $250 per ton by the middle
would be needed to have a significant long-run effect
of the century. Initially, the emissions limit is met by
on carbon dioxide emissions. At current prices, and not
fuel switching from coal to natural gas. Natural gas,
allowing for fuel market responses, a carbon charge of
which accounted for 12 percent of electricity
$100 per metric ton would increase the average price
generation in 1985, accounts for 27 percent by 2010.
of coal delivered to electric utilities by 178 percent, the
The rapid runup in charge rates after 2000 reflects the
average price of natural gas by 49 percent, and the
difficulty of securing a 20-percent emissions reduction
average price of oil by 70 percent. These impacts are
by 2020 in the face of exhaustion of natural gas
comparable on average to the energy price increases
supplies and prior to the large-scale deployment of
caused by the oil price shocks of the 1970's. Electricity
advanced technology alternatives to fossil fuels. Costs
rates would immediately rise by up to 30 percent,
build to about 5 percent of GNP by 2030 and maintain
15 times the average increase that would be produced
that value through 2100.
by the Administration's controversial acid rain
proposals.
However, the costs of meeting the emissions target are
significantly reduced if the BAEGR turns out to be
Nordhaus (1990a) provides an explicit (albeit
lower than the 1.7 percent they assume. For example,
necessarily crude) analysis of the costs and benefits of
a 1-percent autonomous (not linked to prices)
reductions in greenhouse gas emissions. His highly
improvement in energy efficiency reduces losses to
uncertain point estimate of the future costs of warming,
about 3 percent of GNP. The further addition of an
based on selected EPA estimates of its effects on sea
optimistic forecast of future energy technology lowers
level, electricity demand, and agricultural productivity
estimated losses to a little more than 1 percent of GNP.
is 0.25 percent of future GNP. Even this small impact
is sufficient to justify low cost measures, such as
The autonomous rate of increase in energy efficiency
significant curtailment of CFCs and a small $3 per ton
(AEEI), and the cost difference between
carbon charge. At the high end the range of effects that
carbon-producing technologies and carbon-free
is likely to contain the true effect (anywhere from a
replacements are key inputs to the model. Hogan and
benefit of 1.75 percent of GNP to a cost of 2.25
Jorgenson (1990) argue that, because technological
percent of GNP), a carbon charge of as much as
advance as a whole has been energy-using rather than
$30 per ton might be justifiable. Both of these
energy-saving, the AEEI is negative. Williams (1989,
estimates are for a real discount rate 1 percent higher
1990) argues that the availability of low-cost
than the output growth rate. The optimal taxes are
conservation and alternative energy technologies
higher (lower) at lower (higher) discount rates. This
implies both a higher AEEI and a much lower required
analysis suggests that if carbon charges are found
carbon tax than that assumed by Manne and Richels.
desirable in principle, serious consideration should be
As noted in Section III.A.3, assertions that available
given to using charges substantially lower than those
efficiency improvements are cost-saving or nearly
employed in the modeling exercises discussed here.
costless raise the classic question of why these
Once a carbon charge system is in place, the rate can
improvements are not automatically taking place. The
be raised-or lowered-as scientific and economic
availability of low-carbon technologies that were truly
uncertainties are resolved in the future.
attractive to consumers would, of course, significantly
lower carbon emissions in the absence of any policy
Manne and Richels (1989) simulate policies capable of
action.
stabilizing U.S. CO2 emissions at their 1990 level
through 2000 and then reducing them to 80 percent of
Another Manne and Richels paper (1990) applies the
this level by 2020. Their policy is a charge that begins
same basic framework on a world scale. The policy
26
simulation holds emissions beyond 2020 to 80 percent
considered in the original Edmonds-Reilly paper is
of 1990 levels in the OECD countries, Eastern Europe,
sufficient to stabilize CO2 emissions at or slightly
and the Soviet Union. Emissions in China and the
below current levels in the second half of the
developing world are stabilized at twice the present
21st century with a 0.95-percent world BAEGR. The
level. Autonomous efficiency increases in the OECD
Congressional Budget Office (CBO) analysis of carbon
and China are set to 0.5 percent and 1.0 percent
charges (CBO, 1990, forthcoming) presents runs with
respectively prior to 2050; worldwide convergence to
a 2.0-percent world BAEGR. In these runs, a global
a 0.5-percent annual AEEI rate after 2050 is assumed.
$100-per-ton carbon charge cuts a baseline 350-percent
GDP losses from the carbon constraint over the 2030
increase in CO2 emissions by 2050 to a 250-percent
to 2100 period average 3 percent for the U.S. and 1 to
increase. The difference between these results and
2 percent for other OECD countries. Eastern Europe
Cline's highlights the importance of the BAEGR in
and the Soviet Union losses are slightly higher than
driving the results regarding effectiveness of taxes in
those for the U.S. GDP losses for the developing
meeting a target emissions level.
countries are largest, with China facing GDP losses
ranging from 9 to 11 percent between 2040 and 2100.
Some general observations apply to all runs of this
model. First, while some substitution among primary
In an early paper, Edmonds and Reilly (1983) use an
energy sources does occur, the primary mechanism for
energy policy model to consider the application of
cutting emissions is a reduction in overall energy use.
carbon charges in the United States alone and to the
Second, the burden of greenhouse policy always falls
entire world. These cases may be viewed as bracketing
heavily on the coal sector and on net exporters of fossil
the outcomes under an international agreement with
fuels (and, by implication, energy-intensive products).
special provisions for developing countries and/or
For example, in Cline's runs, coal use increases
incomplete participation. The application of stiff carbon
between 2000 and 2050 in the baseline case but falls
fees throughout the world (100 percent charge on coal,
by more than two-thirds when the global charge is
78 percent on oil, 56 percent on natural gas, and 115
applied. Third, while global policies are clearly
percent on synfuels, roughly reflecting the different
preferable in CO2 limitation terms, they are likely to
carbon content of the different fuels) beginning in 1985
put much more pressure on the world savings-
is found to reduce global carbon emissions by
investment balance. Crowding out of other productive
40 percent from base case levels by 2050. However,
investment becomes a larger problem as more countries
given the high BAEGR employed (2.27 percent) global
attempt to increase investment in energy efficiency at
CO2 emissions are still three times the current level in
the same time. Indeed, for developing countries with
2050. A fee program in the United States alone is
limited access to capital markets, concern over
much less effective, reducing 2050 global emissions by
crowding out could pose a serious barrier to any
only 15 percent. Carbon charges in the United States
participation in CO2 limitation efforts. Finally, the
alone depress the world market prices of fossil fuels,
Edmonds-Reilly model is not useful for estimating the
leading to an increase in fossil energy use overseas
effects of greenhouse policy on GNP, since the role of
that significantly offsets the greenhouse benefits of
energy in the production function and tradeoffs
reduced energy demand and fuel switching in the
between energy and nonenergy investment are not
United States.
explicitly modeled.
In subsequent work, Edmonds (1989), Reilly and
Ongoing work at the CBO will also report on runs of
Edmonds (1985), Reilly, et al. (1987), and others have
the Jorgenson general equilibrium model with a
used the same model with a lower BAEGR. Cline
unilateral $100 per ton carbon charge imposed in the
(1989) finds that a somewhat higher global charge
year 2000 (CBO, 1990, forthcoming). This policy is
(approximately $100 per ton of carbon) than that
estimated to reduce real GNP by 1 percent. The
27
Jorgenson model essentially involves a "de novo"
economy with an open capital market, the investments
solution that does not take into account constraints
needed to achieve the emissions target may be possible
imposed by current fixed assets and labor force skills
without driving up interest rates or crowding out other
on the composition of the economy 10 years from now.
investment.
The Jorgenson model solution entails radical shifts in
the composition of electricity supply and large
Short-run economic modeling for the U.S. economy
interindustry shifts in the composition of the economy.
shows that a carbon charge of $100 per ton would have
Sectors such as textiles, agriculture, and leather grow,
a significant effect on both CO2 emissions and
while chemicals, mining, and plastics decline.
economic growth rates even if it were phased in over
a 10-year period (CBO, 1990, forthcoming). One
Because Jorgenson's model describes an economy in
widely used macroeconometric model shows a
2000 that is very different from today's economy and
depression of 2 percent in real GNP from baseline
because adjustments involve costs, such radical shifts
levels over the next decade; effects on the overall price
are unlikely to occur over this time interval. Such
level are approximately 2 percent during the phase-in
shifts would necessarily entail significant dislocations.
period.
Because of these adjustment costs, actual structural
changes and thus actual emissions reductions, would
The same study notes that the transition could be much
likely be lower than these results indicate.
more difficult if carbon charges were imposed
Alternatively, much higher economic costs, including
suddenly. This is true even if the full amount of the
significant labor force dislocations and sharp
carbon charges was returned to the economy through
reductions in the value of existing immobile assets,
reductions in other taxes. (At 1988 energy consumption
would be required to achieve the level of emissions
levels, a $100 charge would raise approximately $130
reduction obtained in the Jorgenson model solution.
billion annually. However, additional debt service costs
and higher federal expenditures for cyclically sensitive
The sectoral shifts envisioned by Jorgenson would
programs would almost fully offset this additional
nonetheless occur over time if significant policies to
revenue in the near term.) Reductions in other taxes
discourage CO2 emissions were adopted. These large
would lose some of the CO2 reduction benefits
distributional effects are thus a reminder that the
associated with a weaker economy.
aggregate economic effects of CO2 emissions reduction
policies, variously estimated at between 1 and
Morris et al. (1990) use a linear programming model to
5 percent of GNP for carbon charges in the $100 per
consider the potential for short-term CO2 reductions in
ton range, would not be felt evenly throughout the
the United States. Energy-saving technologies are
economy.
applied based on engineering estimates of their
cost-effectiveness (comparing higher initial cost and
c. Short-Run Economic/Energy Models. A recent
lower operating cost) evaluated at a 7-percent real
detailed analysis considered the cost to Australia of
discount rate. Many low- or no-cost technologies are
achieving a 20-percent reduction in CO2 emissions by
identified using this criterion, which does not consider
2005 (Marks, et al., 1989). In some respects, such as
other relevant product attributes. Some of these
the significant use of coal in electricity generation, the
technologies, such as improved insulation retrofit
Australian situation is similar to that of the United
options, represent one-time reductions-emissions
States. Using very conservative methodology,
growth continues from a lower base once they are
attainment of a 20-percent emission reduction is
installed. All chosen technologies are assumed to be
estimated to slow economic growth and cause GNP in
applied from 1985 onwards, but no mechanism for
2005 to be at least 1.2 percent below the no-policy
implementing the technologies selected by the model
baseline GNP levels. Since Australia is a small
either prospectively (or retrospectively) is identified.
28
The marginal cost of a 20-percent reduction in
2. Regulatory Adjustments
emissions from 1990 levels, assuming significant new
There are a number of reasons why total U.S.
investment in nuclear power, is $39 per ton. Without
investment in energy efficiency may be suboptimal.
new nuclear power, the marginal cost of a 20-percent
First, many costs associated with the production,
reduction is $130 per ton.
transportation, and conversion of fuels-including air
and water pollution, storage of nuclear wastes, and
d. Energy Sector Impacts. Because coal is at the
reduced energy security-are not fully reflected in
same time this country's (and the world's) most
retail prices for fuels and electricity. Second, electricity
abundant fossil fuel, as well as the fossil fuel with the
prices tend to be based on average cost rather than on
highest carbon emissions per unit of energy, it is
marginal cost, which is often higher. Third, it is often
difficult for buyers to acquire or analyze information
impossible to construct a plausible scenario for
on available energy-efficiency options. It has been
substantial CO2 emissions reduction without a major
argued that this difficulty leads industrial buyers to
adverse impact on the coal industry.
ignore energy use implications of relatively small
purchases-such as lighting. Similarly, since it is
The Department of Energy provided some rough
difficult to estimate future utility bills, it has been
calculations of possible impacts. They find that halving
argued that builders and homeowners tend to focus
CO2 emissions growth could produce a 25-percent
excessively on the initial capital costs of appliances
decline in coal industry employment (relative to
and space heating systems, rather than on discounted
baseline assumptions) by 2025, while stabilizing
life-cycle costs. At least one often-cited econometric
emissions could require a 40-percent decline over this
study (Hausman, 1979) finds that, consistent with this
hypothesis, consumers act as if they have abnormally
35-year period. Global commitment to a 20 percent
high discount rates when making appliance purchase
emissions cut could lower employment by about half;
decisions.
unilateral OECD commitment to this global goal would
eliminate the U.S. coal industry, as would global or
Based on these and related arguments, and on studies
OECD-only commitment to a 50-percent reduction in
that suggest that cost-effective conservation could
CO2 emissions.
reduce U.S. energy use by 20 percent or more (Pirkey
and Scheer, 1988), many analysts have called for a
It is important to recognize, however, that elimination
variety of regulatory initiatives to increase the
of coal-mining jobs gradually over time does not
efficiency of energy use and, thereby, to reduce CO2
necessarily imply increased general unemployment, in
emissions.
the case of an expanding economy though there may
be persistent regional problems. A shift to other energy
a. Reform of Electric Utility Ratemaking. It must be
sources would create jobs. In the short run, jobs will
understood at the outset that average cost is not always
likely be created in the natural gas industry. In the
below marginal cost and that electricity prices are not
longer run, three regional studies of biomass energy
always set by simply averaging costs. The prospect of
use sponsored by the Department of Energy's Regional
self-generation by some large industrial customers, in
Biomass Energy Program (Council of Great Lakes
particular, may serve to keep industrial prices near
Governors, 1985; Chamberlin and High, 1986;
marginal cost.
Tennessee Valley Authority, 1989) suggest that a shift
from fossil to biomass energy would on balance create
The literature on this issue is thin, but a recent study
jobs. Similarly, a study conducted for the California
by Wenders (1986) provides an instructive empirical
Energy Commission (1986b) suggests that renewable
analysis of electricity prices charged by five major
energy technologies are generally more labor-intensive
utilities throughout the United States. Using 1980 and
than oil and gas.
1981 data, he finds that prices were on average below
marginal cost, but the pattern of deviations from
marginal cost was complex. Prices were above
(long-run) marginal cost in peak periods and below
29
marginal cost otherwise; residential prices were below
California, and Wisconsin. Bidding selection criteria
marginal cost, while some utilities charged commercial
could also include environmental externalities to allow
and industrial customers prices above marginal cost.
environmentally clean projects to compete favorably
with lower cost but less environmentally attractive
This complexity, the likelihood that price elasticities
proposals. A step in this direction has recently been
vary by customer class and between peak and off-peak
taken in the New York State Energy Plan (1989).
periods, and the variability of rate structures within
Wenders' small sample suggests that the elimination of
While the desirability of regulatory changes of these
electricity pricing distortions would be as likely to
sorts is apparent, estimates of potential achievable
yield increases in consumption and emissions as
savings of electricity range from 4 percent to
decreases-though such reform would on balance
75 percent. Industry sources such as the Electric Power
improve resource allocation.
Research Institute (1989) estimate potential savings of
20 percent between 1977 and 2010. The uncertainty
b. Utility Demand-Side Management. Many analysts
surrounding these estimates is evident from the size of
have called for reform of electric and gas utility
the range. According to the Northwest Power Planning
regulation to give utilities incentives to remove
Council, which has extensive experience in
impediments to efficient investments in energy
demand-side efforts, hard quantifiable experiences are
conservation. The basic rationale is that existing
extremely limited." The New England efforts discussed
regulation discourages utilities from promoting energy
above may remedy this in a few years.
efficiency, because lower demand generally reduces
earnings, and that there are information-related entry
c. Research and Information. During the past
barriers to third-party providers of "energy services"
8 years, DOE's R&D budgets for end-user
(Moskovitz, 1988). Two approaches to reform have
energy-efficiency improvements have declined
been widely discussed.
significantly. DOE's 1989 conservation budget in
constant dollars is less than a third of its 1980 level.
The first approach is to permit utilities to increase their
However, DOE's budget for supply efficiency has
earnings by making cost-effective investments in
increased. As a proportion of the total national energy
conservation-even if those investments are on their
R&D budget (including expenditures by DOE, NRC,
customers' premises. Programs of this sort are newly
EPRI, and GRI), energy efficiency accounts for only 9
in place or under development for eight New England
percent. Expanded funding would permit DOE to work
electric utilities, which account for about 75 percent of
more closely with industry to demonstrate new
the region's power demand (Foy, 1989). A key feature
energy-efficient technologies, assess the long-term
of these efforts is close attention to evaluation and
performance (durability) of energy-efficient
monitoring; this should result in a rapid accumulation
technologies, and revive research on the patterns and
of useful data. Based on preliminary experience, the
determinants of energy-related decisionmaking and the
Conservation Law Foundation estimates that programs
barriers to adoption of energy-efficiency actions.
of this sort could reduce annual U.S. anthropogenic
CO2 emissions by between 0.7 and 0.8 percent (Foy
Similarly, funding for DOE programs that provide
1989, 1990).
financial and technical assistance to States has
decreased by two-thirds in recent years. (These
A second, complementary approach is to integrate
programs include the State Energy Conservation
conservation into the competitive bidding process for
Program, the Energy Extension Service, and a small
meeting new electricity supply requirements, which has
Least-Cost Utility Planning Program.) There are a
been adopted in 18 States and is under active
number of areas where DOE could sponsor
consideration in at least 15 more. Cicchetti and Hogan
demonstration of energy-efficient equipment and work
(1989) describe an economically efficient approach to
with trade associations to encourage dealers to stock
doing this; see also Joskow (1990). The beginnings of
energy-efficient systems and building managers to
such a comprehensive program can be found in such
install them.
diverse States as Maine, Massachusetts, New York,
30
d. Building and Appliance Standards. Experience
model year 1995 to be feasible in this sense. The
with energy-efficiency standards throughout the country
Department of Energy (Stuntz, 1989) points to a 29- to
(especially in California and the Pacific Northwest)
31-mpg range for that year, and 36 mpg by 2000. The
shows that they can reduce energy consumption, and
OTA estimates that by 2010 a 33-mpg standard would
thus CO2 emissions. If imposition of Federal standards
reduce U.S. fossil fuel CO2 emissions by 0.5 percent
is deemed inappropriate, DOE could assist State and
(and world emissions by 0.1 percent) and U.S. fuel use
local governments on code development and training
by 5 percent. Oil imports would also be cut.
and could assist builders on design and construction
techniques aimed at cost-effective conservation. These
The difficulty of assessing the costs and benefits of
and related objectives would be furthered by increasing
increases in the CAFE standard was discussed in
DOE's budget for building standards and guidelines,
Section III.A.3, above. Benefits will be reduced if
currently only $700,000 a year.
higher prices than would otherwise obtain reduce new
car sales and thus slow the improvement in
The National Appliance Energy Conservation Act of
fleet-average economy. Benefits will also be reduced if
1987 requires DOE to review appliance efficiency
lower per-mile costs lead to more miles per car. Cost
standards on a regular basis and to promulgate more
analysis must also consider impacts on diverse
stringent standards where technically and economically
consumers, not just on national averages, and must take
feasible. The pace of the statutorily required review
into account foregone performance improvements as
could be accelerated. DOE could also review the
well as the reductions in safety and spaciousness that
feasibility of expanding efficiency standards to other
could occur if manufacturers meet higher standards in
products, including incandescent and fluorescent lamps.
part by downsizing. Since fuel economy labels provide
However, as noted above, incentives or direct
good information, it is not clear that CAFE standards
correction of market failures provide attractive
would remedy any market failure that could not be
alternatives to the imposition of command-and-control
addressed more efficiently by employing a carbon
standards.
charge or gasoline tax.
e. Transportation. The corporate average fuel
f. Agricultural Policy. A number of changes in
economy law was enacted in 1975 and established a
agricultural programs that would have other benefits
fleet-average goal of 27.5 mpg for 1985 and beyond.
can be expected to assist in reducing emissions of
That goal has been achieved, and the average fuel
greenhouse gases. These include reducing commodity
economy of the new car fleet has been quite stable at
price support levels, encouraging additional tree
around 28 mpg for several years. Increases in fuel
planting, and conservation cross compliance.
economy have produced essentially proportional
reductions in CO2 emissions per vehicle mile. The
This and the preceding Administration have sought to
CAFE program is controversial and was opposed by
reduce price support levels for program crops in order
the previous Administration, though the standard was
to increase the efficiency of resource use within the
increased by this Administration in the spring of 1989.
agricultural sector. Reducing agricultural subsidies will
tend to reduce total acreage in program crops and
Further increases in the CAFE standard are
change the mix of crops grown. Corn and wheat, the
technically feasible and would likely reduce CO2
two most widely grown program crops, account for
emissions; estimates of the costs of such increases are
57 percent of nitrogen fertilizers used. As is discussed
controversial. It seems clear that widespread use of
in Section III.E, below, the use of these fertilizers is
currently available and likely future technologies would
associated with emissions of N₂O, a greenhouse gas
permit increases in the average fuel economy of the
with a relatively high radiative forcing index. Reducing
new car fleet without reducing performance below
income support can be expected to reduce the acreage
recent levels (but perhaps below levels planned in the
devoted to corn and wheat and, possibly, to increase
absence of tighter CAFE standards). The Office of
the acreage devoted to soybeans, which fix their own
Technology Assessment (OTA) (Plotkin, 1989)
nitrogen from the air. In addition, reducing income
considered standards in the 32- to 33-mpg range for
31
support is likely to reduce per-acre use of all inputs,
actual energy use that is due to any single causal
including nitrogen fertilizers (Miranowski et al., 1989).
factor, including new technology. Thus the discussion
below can only be indicative of the likely role of new
Reducing agricultural support prices should also slow
technology; further research may well change its
the rate of conversion of forest and woodlands to
conclusions.
cropland. It should also encourage the conversion of
marginal cropland into forestland, particularly in areas
Progress in reducing CO2 emissions depends on
where commercial forestry opportunities exist. This
installing and using new technologies in a host of
could result in a significant increase in CO2 removal
applications. Key determinants of the penetration of
from the atmosphere. The key point is that less support
new technologies are sectoral rates of growth and
would allow farmers to respond to market changes
average economic lifetimes of capital assets. Lifetimes
induced by climate change.
vary considerably, from motor vehicles (8 to 14 years)
to residential (30 to 80 years) and non-residential
Conservation Compliance denies farm program
(31 to 48 years) structures. Electric generating
payments to farmers who cultivate highly erodible land
equipment (10 to 55 years), other transportation
who fail to have a Soil Conservation Service approved
equipment (16 to 28 years), and industrial equipment
conservation plan by 1990 or fail to fully implement
(14 to 27 years) have intermediate lifetimes. Moreover,
the plan by 1995. These plans for the most part require
it can take years for economical new technologies to
the use of conservation tillage, which reduces
become accepted. Thus new energy technologies may
mechanical soil preparation and mechanical cultivation.
not come into widespread use even in new installations
Consequently, the number of tractor passes through the
for years-or even a decade or more-after they are
field and the total tractor operating hours per acre are
commercially available.
reduced. This should result in a reduction in CO2 and
N2O emissions. But it also could mean increased use of
a. Electricity Generation. By 2010 an estimated 400
herbicides and pesticides, leading to other potential
gigawatts (GW) of new electric generating capacity
problems.
may be needed to meet demand increases and to
replace existing capacity that will retire. New
3. New Technologies
technologies can, therefore, play a significant role in
This section considers the role of advanced technology
limiting CO2 emissions from new electric generating
in reducing CO2 emissions in the electric generation
sources. But it must be recognized that only 65 GW of
and energy end-use sectors. Of particular interest is
this total will replace retired capacity; about 655 GW
how much can be gained by broader use of currently
(91 percent) of existing capacity will not retire until
available technologies that enjoy only limited
after 2010. CO2 emissions may also be reduced as
commercial use because they are new and/or expensive,
existing generating units are repowered and reboilered
as well as advanced technologies that only require
with more efficient technologies or with equipment
modest additional development for widespread
designed to burn fuels with lower carbon content.
application. While new technologies offer significant
CO2 emissions reduction potential after 2000, there is
A variety of new technologies that produce electricity
no simple "technological fix" to this problem.
from coal, oil, natural gas, and methane with improved
Regulatory barriers may affect the economics and
efficiency in the conversion of fossil energy into
introduction of some technologies.
electrical energy are in various stages of development.
By reducing the amount of fossil fuel burned to
At any given time, a combination of technological,
generate a given amount of electricity, these
behavioral, market, regulatory, and macroeconomic
technologies can reduce CO2 emissions per unit of
factors interact to determine patterns of energy use, the
electricity produced. Renewable resources, primarily
introduction of new technologies into widespread
hydropower and wood, provided 8 percent of the
acceptance, and the further deployment of technologies
nation's energy in 1988. Newer renewable resource
already in use. Even in the analysis of high-quality
technologies, including wind, solar thermal electric,
historical data, it is difficult to identify the portion of
geothermal electric, photovoltaic, and biomass
32
technologies, will make increasing contributions in
indicates that over the 1972-86 period, technology
coming decades.
improvements have played particularly significant roles
in reducing energy use in all sectors, particularly
The future use of nuclear power both worldwide and in
industrial and transportation but also including
the United States will continue to depend on many
commercial and residential buildings.
factors, including relative cost, national security
considerations, third world development, progress in
The contributions from new technology to
dealing with nuclear waste disposal and nuclear
energy-efficiency gains are potentially substantial,
weapons proliferation, continued safe operation of
particularly after 2010. Of course, the eventual levels
existing nuclear plants, and establishment of a stable
of application depend heavily on fuel prices and the
and certain licensing process. The goal of the DOE
economic lifetimes of capital stock. Because of lower
nuclear reactor program is to develop nuclear reactors
lifetimes, the prospects for near-term stock turnover are
with simplified and standardized designs and passive
highest for transportation vehicles, appliances, and
safety features, designs which hold the promise of
some light industrial equipment. Most residential,
revitalizing the nuclear power industry through the
commercial, industrial and utility structures and large
simplification of the licensing process and resulting
equipment technologies require much longer time
reduction in costs and financial risks. In addition, an
periods to be replaced.
NRC rulemaking procedure is in place to preapprove
standardized nuclear plant designs so that parties
On balance, advanced energy use technology seems to
interested in purchasing a plant have assurance that
have the potential to contribute significantly to
there will be no intractable licensing problems. Final
reducing CO2 emissions, but estimates of the extent of
designs will be ready for demonstration or
the contribution vary widely. For example, a recent
commercialization in the 1990's and, if public attitudes
study (EPRI, 1990) found that instantaneous
and regulatory changes reduce business risks, the next
replacement of the entire stock of electric end-use
generation of reactors may come into use after 2000.
equipment with the most energy-efficient alternatives
available could reduce electricity use by 24 to
On balance, while important gains in generation
44 percent from projected levels in the year 2000.
efficiency are possible, they are not likely to penetrate
Exclusion of technologies that are not cost-effective
the market substantially in the near term based on
and relaxation of the instantaneous replacement
market forces alone. The potential for advanced
assumption, which does not seem to approximate any
technology to reduce generation-related CO2 emissions
feasible policy, would significantly change these
appears to increase substantially after 2000, but this
estimates. Most energy projections indicate that energy
potential has wide uncertainty bounds.
efficiency gains on the order of 12 percent can occur
by 2010 through the operation of market forces if fuel
It is technically possible to "scrub" carbon from
prices rise as projected. Substantial additional gains in
combustion waste gases, but it is very expensive. One
energy efficiency could occur by more widespread
study concludes that collection and disposal of
application of "best practice" technologies, but
powerplant CO2 emissions would at least double the
extensive policy interventions or much higher fuel
cost of coal-fired electric power (Steinberg, 1983).
prices are essential to achieve them. Significant
There has also been some discussion of methods of
technical potential for efficiency improvements and
utilizing only the hydrogen in fossil fuels (Steinberg
fuel switching beyond 2010 exist, but increased efforts
and Cheng, 1987). These ideas are in their infancy and
to develop and commercialize new technology are
are many years away from commercial application.
required in the near term to achieve these gains.
b. Energy End-Use Technologies. Many estimates of
4. Forestation
conservation potential indicate that new technologies
Reforestation and afforestation policies may remove
could produce significant savings over expected energy
CO2 from the atmosphere and store the carbon in the
use, even by the year 2000. These estimates are
woody parts of living trees. By preventing the release
buttressed by analysis of historical data, which
of such carbon, policies that limit deforestation reduce
33
net emissions of CO2. However, reforestation may
program size. The lower estimated per ton costs for the
affect microclimates and the soil's ability to absorb
larger worldwide sequestering program flow from more
CO2. As a forest grows, an annual flow of carbon is
optimistic assumptions about both carbon absorption
removed, but it is generally assumed that carbon
and land costs. These assumptions may be justified on
release from decay balances carbon uptake from new
the availability of less expensive land outside the
growth in mature forests. Reforestation is a
United States and faster forest growth rates on tropical
(comparatively) short-term approach that may cause a
sites. However, the smaller program with more
substantial decrease in net CO2 emissions for three to
pessimistic assumptions is probably a more reliable
five decades (Sedjo and Solomon, 1988). After this
guide to costs for U.S. reforestation programs.
period, a large effort would be required to keep the
absorbed carbon sequestered. However, even short-term
Forestation programs of moderate size can be
sequestration could allow time for the development and
implemented in a wide variety of ways to minimize
adoption of new technologies that emitted less carbon,
impacts on land costs. Several options have been
possibly including the substitution of timber-based
outlined by the U.S. Forest Service (1989), including
fuels for fossil fuels to create a zero net carbon energy
volunteer urban tree planting programs, cost-sharing
cycle with continuous replanting.
and technical assistance programs, and land leasing
programs. For example, enhancing forest growth on
a. Cost Analysis. Sedjo and Solomon (1988) provide
sparsely forested land would not increase competition
cost estimates for a global reforestation plan designed
for land but would increase carbon uptake. Urban tree
to sequester the entire flow of net additions of carbon
planting would not raise land costs and, by providing
to the atmosphere. Carbon absorption is highest for
shade, may reduce fossil fuel consumption by reducing
recently planted fast-growing species on tropical sites.
demand for air conditioning. Land leasing forestation
Plantations with these characteristics are estimated to
programs or programs that only involve cost sharing in
sequester 2.3 metric tons of carbon annually per acre.
the costs of planting, improving, and managing lands
If such sites were used, an estimated 1.1 trillion acres
for timber production are two alternatives for
of land would be required, while if slower growing
increasing forestation on private nonurban land. On a
trees were planted on sites in temperate zones, over
large scale, such programs could reduce expected
7.4 trillion acres would be required. These are large
stumpage prices and thus lead to reduced forestation in
requirements; 1.1 trillion acres is 50 percent greater
current commercial forests.
than the current forested area in the United States and
more than 15 percent of the forested areas in the
The net ecological and recreational benefits of
world. A forestation program on this scale would
forestation would depend on the type of forest planted
require a worldwide search for suitable and inexpensive
and the current use of the land. All types of forest
land.
would tend to have soil erosion benefits when
established on erodible cropland. However, fast-growth
Estimated total costs of absorbing global net carbon
forest plantations, with repeated harvest of small trees
emissions range from $372 to $697 billion. Based on
for fiber or energy, would have few recreational
total program costs and assuming a 30-year rotation,
benefits and offer habitat for limited species of
the cost ranges from $4.29 to $8.03 per metric ton of
wildlife. Frequent harvests and replanting of
carbon removed. In addition, future harvest of the large
fast-growth stands might result in added erosion if such
quantity of trees required for significant carbon
forests replaced natural forest land or grasslands.
sequestering could disrupt timber markets and
Grassland, sparse forest land, mixed-use forest
dramatically reduce incentives for planting on private
(including grazing use), and old growth forests offer
forestland.
diverse and unique wildlife habitats and ecosystems.
Because the greatest intake of CO2 occurs in young,
Moulton and Richards (1989) examine a more modest
fast-growing stands, enhancing the carbon storage
carbon sequestering program in the United States. They
properties of land in such current uses would
conclude that marginal costs per-ton range from
dramatically change the ecosystem, and widespread
$17.71 to $102.63 per metric ton depending on
34
forestation with the sole goal of carbon storage could
reductions in CH4 emissions will require global action.
significantly decrease biodiversity.
While a number of approaches to controlling these
emissions are available, no systematic policy design or
b. Management. Because new forests represent a
costing analysis seems to have been performed. There
growing stock of carbon, the efficacy of forestation as
are ongoing efforts within the Administration to better
a carbon management tool depends importantly on
quantify the costs of methane reductions and to
how the stock of accumulated carbon in mature forests
develop, refine, and demonstrate best management
is managed. If new forests are allowed to mature,
practices within the areas discussed below: animal
significant carbon removal would occur only over a
waste, coal mining, landfills, livestock, and rice.
30 to 40 year period. To continue carbon removal
through forestation would require forest establishment
1. Animal Waste
on increasingly large areas of the Earth's surface.
Animal wastes are estimated to generate about
4 percent of anthropogenic CH₄ emissions. In
If forest land is cleared for other uses in the future, the
developed countries, where these wastes are managed
carbon stored during forest growth is then released to
in lagoons, the most promising technology for
the atmosphere. If forest carbon is somehow stored so
abatement of this methane is decomposition in
that decay and release to the atmosphere does not
anaerobic digesters to produce methane gas, which, like
occur, a continuous flow of carbon can be removed.
natural gas, can be used to produce electricity and/or
(Solidwood products are estimated to contain only
shaft power or be burned in boilers as a heat source.
about 0.5 percent of the carbon in living trees, however
This approach is most promising at sites with large
(Rotty, 1986).) More plausibly, forests might be used
animal herds such as feedlots and dairy farms. Full
as an energy source. In this case, net carbon removal
recovery at these sites would reduce these emissions by
would occur while new forest growth is established,
over 50 percent. USDA estimated in 1978 that
and a continuing carbon reduction benefit would occur
approximately 50 million tons of "economically
to the extent that biofuels replaced fossil fuels. Since
collectable" livestock and poultry residue, when
biomass and other renewable energy programs can also
converted through anaerobic digestion, could generate
produce large demands for land, analysis of
CH₄ equal to 7 percent of the natural gas consumed in
afforestation programs requires careful coordination
the United States in 1988.
with energy system analysis.
Fewer than 100 anaerobic digesters currently are
Each of these management options has quite different
operating on farms in the United States, however. Most
effects on economic cost and on carbon removal.
of these are producing electricity to power farm
Unfortunately, the costs and carbon removal benefits of
equipment. Excess electricity often is sold to the utility
these options have not been systematically analyzed.
grid system. Poor economics, management problems,
and infrastructural barriers have restricted widespread
C. Methane
adoption of this technology. Most of the plants are one
of a kind and expensive. Typical costs of electricity
Methane accounted for about 19 percent of the
generated are 5 to 7 cents per kilowatthour (kWh).
increase in radiative forcing in the 1980s. The rise in
Additional research should enable the development of
atmospheric CH₄ concentrations over the last century
standardized facilities that are substantially cheaper and
is due to a relatively small imbalance between sources
more efficient. Currently, farmers receive 2 to 3 cents
and sinks. Current assessments indicate that
per kWh for electricity they provide to utilities except
atmospheric stabilization will require only a 10- to
in a few areas, notably California where 9 to 11 cents
20-percent reduction in annual emissions.
per kWh is paid. Many power companies are reluctant
to accept power from farmers and establish major road
As Table I.3 showed, the developed countries account
blocks adding to the cost of an intertie.
for only about 25 percent of anthropogenic CH₄
emissions, in part because over half these emissions are
produced in agriculture. Thus significant, cost-effective
35
2. Coal Mining
research aims at enhancing the economic viability of
Methane from coal mining is estimated to contribute
methane recovery.
13 percent of anthropogenic emissions. This methane
is pipeline quality and can be recovered as a resource,
EPA hopes to promulgate regulations limiting CH₄
thereby both reducing CH₄ emissions and use of other
emissions from large landfills in the United States.
fossil fuels. It is technically feasible to reduce
EPA believes that these regulations have the potential
60 percent of these methane emissions through
to reduce total anthropogenic CH₄ emissions by about
premining degasification. This recovery would be
1.5 percent. Controls applied in other countries could
performed at a limited number of sites, since about
produce further reductions.
10 percent of the world's mines generate most of the
4. Livestock
methane. These mines are concentrated in the
9 countries that produce the bulk of the world's coal.
Livestock generate about 20 percent of anthropogenic
CH₄ emissions. Intensive (grain-fed) animal production
Economic assessments show that methane recovery can
systems used in developed countries result in
be profitable with existing technology. Indeed, several
significantly less methane per unit of output than do
recovery operations are running profitably in the
extensive (grass-fed) systems prevalent in developing
United States. An important limitation to more
countries. Production methods that enhance efficiency
recovery in the United States is that gas companies
of livestock enterprises also reduce methane emissions
typically own the rights to the methane in coal mines.
per unit of output. Through changes in diet and
The coal companies can only profit from methane
management of smaller herds due to increased
recovery by buying rights to this methane or setting up
productivity, emissions may be reduced by 25 to
some sort of joint venture operation.
75 percent. Other options for methane reduction
include increased use of hormones and lower price
Preliminary assessments also show that mining
supports. The costs of these changes will be small.
methane could be profitable in countries such as China
and Poland. For example, analysis suggests that it is
In developing countries, many of the cattle are nutrient
less expensive for China to derive energy from mining
deficient. By supplying nutrient supplements, methane
methane than coal. Much of China's coal is deep-mine
emissions can be reduced, but the costs and potential
coal that is expensive to bring to the surface, and gas
benefits of this approach are not well understood. In
pipelines are less expensive to build than the railroads
general, while it is possible to reduce methane
necessary to transport the coal. Despite these analyses,
emissions from intensive livestock production systems,
methane mining has not been implemented on a large
relative gains will be small and may not be achieved
scale, and a continued rise in coal mining activity is
without significant technological advance. Further
planned to meet China's growing energy needs. Since
development of best-practice livestock management
the USSR, China, East Germany, and Poland are major
systems and diffusion of those systems into practice
coal producers, transfer of methane recovery and
seem the most promising steps in this area.
methane mining technologies to these countries could
5. Rice
produce substantial benefits.
Rice cultivation accounts for about 34 percent of
3. Landfills
anthropogenic CH₄ emissions. Recent work shows that
Landfills, mainly in developed countries, are estimated
methane emissions may be reduced by decreasing use
to contribute 10 percent of anthropogenic CH₄
of animal manures as fertilizer, but there is still
emissions. Of the 6,584 municipal solid waste landfills
considerable uncertainty regarding the cost and volume
in the United States, only 123 (1.9 percent) now
of reductions that can be achieved in this manner.
recover methane for energy use. Under current market
conditions, methane recovery is only viable for large
sites with a suitable gas user nearby or at which
electricity can be generated and sold into the grid.
Regulatory barriers also exist in many areas. Ongoing
36
D. Chlorofluorocarbons and Related
could be substantially reduced, along with CO2
Substances
emissions, if industry can move to more energy-
efficient refrigerants. For example, if the use of
Chlorofluorocarbons accounted for about 14 percent of
HFC-152a as a refrigerant proves acceptable, cost
increased radiative forcing in the 1980s. In the absence
savings from improved energy efficiency could reduce
of any control measures, CFCs would account for a
the costs of a phaseout in these applications by
much larger share of future increases. However, the
57 percent over the next 10 years. EPA and other
Montreal Protocol on Substances that Deplete the
agencies are working with several industry groups to
Ozone Layer represents a commitment to significant
examine technological, environmental, and institutional
controls. While primarily aimed at limiting CFCs and
issues related to the use of a wide array of more
halons because of the threat they pose to the ozone
energy-efficient, low-greenhouse alternatives.
layer, this treaty also results in substantial benefits in
terms of greenhouse gas emissions. The Montreal
Protocol has now been ratified by 49 nations and the
E. Nitrous Oxide
European Community. These nations account for over
Nitrous oxide accounted for about 5 percent of the
90 percent of the global consumption of CFCs.
increase in radiative forcing in the 1980s. As Section
I noted, data on sources of N2O emissions are quite
In response to recent scientific evidence that the risks
poor. The primary anthropogenic source seems to be
of ozone depletion from CFCs and other
the use of nitrogenous fertilizers, which is increasing at
ozone-depleting substances are greater than previously
1.3 percent per year in industrialized countries and 4.1
thought, the Protocol was amended in June 1990 to
percent per year in developing nations.
expand its coverage to additional ozone-depleting
substances and to provide for the complete phaseout of
From the point of view of policy design, it is
CFCs by 2000. The CFC phaseout will significantly
unfortunate that the nitrogen content of fertilizer is not
reduce the increase in radiative forcing in the next
the primary determinant of N2O emissions. Emissions
century.
of N₂O vary by one to two orders of magnitude among
different types of nitrogenous fertilizers. Other factors
Significant technological advances made during the
affecting emissions include the rate and timing of
past several years make such a phaseout feasible. In the
fertilizer application, the placement of fertilizer (deep
near term, substantial emission reductions are being
or shallow), water management (particularly in rice
achieved through increased recycling and improved
cultivation), tillage and herbicide use, and the use of
housekeeping (particularly by electronics companies in
legumes as a nitrogen source. No systematic attention
their use of CFC-113). Development of chemical and
process substitutes has also progressed rapidly and has
seems to have been devoted to the design or cost of
allowed major firms and industries to establish goals
policies to reduce N2O emissions from fertilizer use or
for eliminating their use of CFCs ahead of the likely
other sources, in part because the relevant scientific
Montreal Protocol schedule. For example, IBM and
base is weak, though some of the agricultural policy
AT&T have a phaseout goal by 1994 and the
changes discussed in Section III.B.2.g., above, would
likely reduce N2O emissions from U.S. farms.
electronics industry as a whole, through its major trade
association, has established the goal of an 80 percent
reduction by 1997 and a phaseout by 2000. Similarly,
New technologies that improve fertilization efficiency
the rigid foam insulation industry has established a
also tend to reduce N2O emissions, but little appears to
be known about their cost-effectiveness. Advances in
goal of a complete phaseout by 1995.
biotechnology, particularly the development of
The costs of eliminating the use of CFCs and halons
weed-resistant crop varieties and nitrogen-fixing cereal
crops, may reduce N2O emissions in the future.
will be approximately $3 billion over the next ten years
(1989 dollars, discounted at 5 percent). These costs
37
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*Yoshino, M., T. Horie, H. Seino, H. Tsujii, T. Uchijima, and Z. Uchijima, 1988. "The Effects of Climatic
Variations on Agriculture in Japan," Part VI in the Impact of Climatic Variations on Agriculture, Vol.1
Assessments in Cool Temperate and Cold Regions, M.L. Parry, eds.
49
UNITED STATES
DEPARTMENT OF ENERGY
WASHINGTON, D.C. 20585
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE, $300
PE-3
THE WHITE HOUSE
will Me
WASHINGTON
July 18, 1990
MEMORANDUM FOR FRED BERNTHAL
global Clerity
STEVE DANZANSKY
CHRIS DAWSON
MIKE DELAND
Change
THERESA GORMAN
BOB GRADY
BOYDEN GRAY
HENSON MOORE
BILL REILLY
DICK SCHMALENSEE
DICK STEWART
FROM:
D. ALLAN BROMLEY
Allan
SUBJECT:
Global Change Strategy Task Force Meeting
The Global Change Strategy Task Force will meet on Friday, July
20, at 10:00 in Room 180 of the Old Executive Office Building.
We will focus our attention on the upcoming IPCC meeting in
Sundsvall, Sweden, which begins on August 27. That meeting will
take up the final IPCC report. Copies of the draft IPCC
executive summary and draft overview and conclusions document
accompany this memorandum. Although I do not believe we will be
able to go through the documents in any great detail on Friday,
please begin your review of them and provide comments to Nancy
Maynard of my staff by the close of business on Friday, July 27.
We will also discuss the IPCC's future after the August meeting.
A paper on this issue prepared by the State Department following
interagency discussions will be distributed at the meeting.
Also accompanying this memorandum is a draft of the ministerial
declaration for the Second World Climate Conference, which begins
in Geneva on November 6. We need to discuss the U.S. strategy
for this meeting and for the other upcoming meetings on climate
change, which include a meeting in Geneva from September 24 to 26
to begin preparations for the negotiations of a framework
convention, expected to start in the U.S. in February 1991.
We also hope to hear from Dick Stewart on the status of research
being conducted on the comprehensive greenhouse gas approach and
a possible emissions trading system by the OECD and by CEES.
Please contact Linda Ricci at 456-6630 and advise her whether you
will be able to attend the meeting.
Attachments
THE WHITE HOUSE
WASHINGTON
GLOBAL CHANGE STRATEGY
TASK FORCE MEETING
July 20, 1990
AGENDA
1. IPCC Meeting - Sundsuall, Sweden (August 27, 1990)
2. Future of IPCC
3. Second World Climate Conference
4. Comprehensive Approach - Status
WORKING GROUP ON CLIMATE
July 13, 1990
Department of State
AGENDA
A. Houston Economic Summit (Environment Portion) (handout)
B. Preparations for IPCC Fourth Plenary, August 27-30,
Sundsvall, Sweden
1. Logistics
2.
Final RSWG Report (handout available)
3.
Comments on Bolin executive summary and overview and
conclusions document (handout available)
4. Revised executive summary (handout)
5.
Revised overview and conclusions (not yet available)
6. Future of IPCC (handout)
7.
U.S. Pledge for 1991
C. WMO and Anticipated UNEP Resolutions
1.
Obasi/Tolba Letter of July 10 (handout)
2.
WMO resolutions (handout)
3.
UNEP Governing Council Special Session, August 1-3,
Nairobi
D. Organizational Meeting to Prepare for Negotiations -
September 24-26, Geneva
E. Second World Climate Conference Preparations
1.
Draft ministerial declaration (handout - comments due
July 20)
2.
Prepcom - September 27-29, Geneva
NEXT MEETING: Tentatively -- Wednesday, August 1, 10:00 a.m. to
12:00 noon, Department of State
HOUSTON ECONOMIC DECLARATION
July 11, 1990
1. We, the Heads of State and Government of the seven major
industrial democracies and the President of the Commission of the
European Communities, meeting in Houston for our annual Economic
Summit, celebrate the renaissance of democracy throughout much of
the world. we welcome unreservedly the spread of multiparty
democracy, the practice of free elections, the freedom of
expression and assembly, the increased respect for human rights,
the rule of law, and the increasing recognition of the principles
of the open and competitive economy. These events proclaim loudly
man's inalienable rights: when people are free to choose, they
choose freedom.
2. The profound changes taking place in Europe, and progress toward
democracy elsewhere, give us great hope for a world in which
individuals have increasing opportunities to achieve their economic
and political aspirations, free of tyranny and oppression.
3. We are mindful that freedom and economic prosperity are closely
linked and mutually reinforcing. Sustainable economic prosperity
depends upon the stimulus of competition and the encouragement of
enterprise -- on incentives for individual initiative and
innovation, on a skilled and motivated labor force whose
fundamental rights are protected, on sound monetary systems, on an
open system of international trade and payments, and on an
environment safeguarded for future generations.
4. Around the world, we are determined to assist other peoples to
achieve and sustain economic prosperity and political freedom. We
will support their efforts with our experience, resources, and
goodwill.
734 JACKSON PUCE * WASHINGTON, D.C. 20503 * (202)406.0290 Fax (202)408-0295
2000 SATH STREET Houston. Tow 77002 * (713)653-0500 * FNI (713)653-0655
- 2 -
THE INTERNATIONAL ECONOMIC SITUATION
5. In recent years, substantial progress has been achieved in
promoting a stronger world economy through sound macroeconomic
policies and greater economic efficiency. The economic expansion
in our countries, now in its eighth year, has supported notable
income growth and job creation in the context of rapid growth of
international trade. However, unemployment remains high in a
number of countries. Inflation, although considerably lower than
in the early 1980s, is a matter of serious concern in some
countries and requires continued vigilance. External imbalances
have been reduced in the United States and Japan, whereas in other
'cases they have increased. Continuing adjustment remains a priority
in order to counter protectionist pressures, alleviate
uncertainties in financial and exchange markets, and contribute to
avoiding pressures on interest rates. Sound domestic macroeconomic
policies, which may differ according to conditions in each country,
will make a major contribution to further external adjustment.
6. In the developing world, the experience of the late 1980s varied
widely. Some economies, particularly in East Asia, continued to
experience impressive domestic growth rates. The economies of a
number of other developing countries have been stagnant or
declined. Nonetheless, serious efforts -- in some cases by new
leadership -- to implement economic adjustment and market-oriented
policies have begun to yield positive results and should be
continued.
INTERNATIONAL MONETARY DEVELOPMENTS AND POLICY COORDINATION
7. At a time of growing economic interdependence, the Summit
countries have developed a cooperative process based on & common
appreciation of the need for market-oriented policies and the
importance of sound domestic budgetary and monetary policies. This
process has contributed importantly to the strengthened performance
of the world economy and to improved stability of exchange rates
by concentrating attention on multilateral surveillance and close
coordination of economic policies, including cooperation on
exchange markets. It is important to continue and, where
appropriate, to strengthen this cooperative and flexible approach
to improve the functioning of the international monetary system and
contribute to its stability.
8. To sustain the present economic expansion to the benefit of all
countries, each nation must pursue sound policies. Balanced
expansion of demand with increasing productive capacity 1s key,
while external imbalances and structural rigidities require
correction. Price pressures warrant continued vigilance.
- 3 -
9. Countries with sizable current account deficits should
contribute to the adjustment process by the reduction of fiscal
deficits, and undertake structural reforms to encourage private
saving and increase competitiveness.
10. Countries with large external surpluses should contribute to
the adjustment process by sustained non-inflationary growth of
domestic demand with structural reform in order to improve the
underlying conditions for growth and adjustment and to promote
increased investment relative to saving.
11. The investment needs of the world as a whole are expected to
grow in the coming years, particularly in Central and Lastern
Europe and in developing countries undertaking market reforms, as
well as in some industrial countries. To meet these needs,
industrial and developing countries alike should foster saving and
discourage dissaving.
12. The market-oriented restructuring of Central and Eastern
European economies should stimulate their growth and increase their
integration into the global economy. Me support these changes and
seek to assure that this difficult transformation will contribute
to global growth and stability.
13. Within the European Community, the European Monetary System is
leading to a high degree of economic convergence and stability.
He note the European Community's decision to launch the
Intergovernmental Conference on Economic and Monetary Union and the
beginning of the first stage of that union. During this first
stage, closer surveillance and coordination of economic and
monetary policies will contribute toward non-inflationary growth
and a more robust international economic system.
14. We welcome the prospect of a unified, democratic Germany which
enjoys full sovereignty without discriminatory constraints. German
economic, monetary, and social union will contribute to improved
non-inflationary global growth and to a reduction of external
imbalances. This process will promote positive economic
developments in Central and Eastern Europe.
15. We call on the member countries of the International Monetary
Fund (IMF) to implement the agreement by the IMF to increase quotas
by 50 percent under the Ninth General Review of Quotas and to
strengthen the IMF arrears strategy.
Measures Aimed at Economic Efficiency
16. Considerable progress has been made over the past few years in
supplementing macroeconomic policies with reforms to increase
economic efficiency. we welcome the progress in the realization
of the internal market in the European Community and the continuing
to reduce structural rigidities in North America and Japan.
Nonetheless, efforts we emphasize the widespread need for further steps to
- 4 -
promote regulatory reform and liberalize areas such as retail
trade, telecommunications, transport, labor markets, and financial
markets, as well as to reduce industrial and agricultural
subsidies, improve tax systems, and improve labor-force skills
through education and training.
27. we welcome the major contributions of the Organization for
Economic Cooperation and Development (OECD) in identifying
structural policy challenges and options. We encourage the OECD
to strengthen its surveillance and review procedures, and to find
ways of making its work operationally more effective.
THE INTERNATIONAL TRADING SYSTEM
18. The open world trading system is vital to economic prosperity.
A strengthened General Agreement on Tariffs and Trade (GATT) is
essential to provide a stable framework for the expansion of trade
and the fuller integration of Central and Eastern Europe and
developing countries into the global economy. We reject
protectionism in all its forms.
19. The successful outcome of the Uruguay Round has the highest
priority on the international economic agenda. Consequently, we
stress our determination to take the difficult political decisions
necessary to achieve far-reaching, substantial results in all areas
of the Uruguay Round by the end of this year. He instruct our
negotiators to make progress and in particular to agree on the
complete profile of the final package by the July meeting of the
Trade Negotiations Committee.
20. we confirm our strong support for the essential broad
objectives of the negotiations: reform of agricultural policies;
a substantial and balanced package of measures to improve market
access; strengthened multilateral rules and disciplines; the
measures, and intellectual property protection within the GATT
incorporation of new issues of services, trade-related investment
framework; and integration of developing countries into the
international trading system.
21. As regards agriculture, achieving the long-term objective of
the reform of agricultural policies is critical to permit the
greater liberalization of trade in agricultural products.
Experience has shown the high cost of agricultural policies which
tend to create surpluses. The outcome of the GATT negotiations on
agriculture should lead to a better balance between supply and
demand and ensure that agricultural policies do not impede the
effective functioning of international markets. We therefore
reaffirm our commitment to the long-term objective of the reform,
1.e., to allow market signals to influence agriculture production
and to establish a fair and market-oriented agricultural trading
system.
22. The achievament of this objective requires each of us to make
substantial, progressive reductions in support and protection of
agriculture -- covering internal regimes, market access, and export
subsidies -- and develop rules governing sanitary and phytosanitary
measures. Variations among countries in the mechanisms of
agrícultural support reflect differences in the social and economic
conditions of farming. The negotiations on agriculture should
therefore be conducted in a framework that includes a common
instrument of measurement, provides for commitments to be made in
an equitable way among all countries, and takes into account
concerns about food security. The framework should contain
specific assurances that, by appropriate use of the common measure
as well as other ways, participants would reduce not only internal
support but also export subsidies and import protection in a
related way.
23. Agreement on such a framework by the time of the July meeting
of the Trade Negotiations Committee is critical to the successful
completion of the Uruguay Round as a whole. Accordingly, we commend
to our negotiators the text submitted by the Chairman of the
Agrícultural Negotiating Group as a means to intensify the
negotiations. We intend to maintain a high level of personal
involvement and to exercise the political leadership necessary to
ensure the successful outcome of these negotiations.
24. Negotiations on market access should achieve agreement on a
substantial and balanced package of neasures. As regards textiles,
the objective is to liberalize the textile and clothing sector
through progressive dismantling of trade barriers and its
integration, under a precise timetable, into GATT on the basis of
strengthened GATT rules and disciplines.
25. Negotiations on multilateral rules and disciplines should
strengthen GATT rules in areas such as safeguards, balance of
payments, rules of origin, and updated disciplines for dumping and
antidumping measures. Concerning subsidies, rules are needed which
will effectively discipline domestic subsidies so as to avoid trade
distortions, competitive subsidization, and trade conflicts.
Improved disciplines must also cover countervailing measures so
that they do not become barriers to trade.
26. As regards the new areas, the aim is to develop new rules and
procedures within the GATT framework, including: a framework of
contractually enforceable rules to liberalize services trade, with
no sector excluded a priori; an agreement to reduce trade
distorting effects of trade-related investment measures; and an
agreement to provide for standards and effective enforcement of
all intellectual property rights.
27. A successful Uruguay Round is essential for industrialized and
- 6 -
developing countries alike. We seek the widest possible
participation of developing countries in the Round and their
further integration into the multilateral trading system. TO
achieve this.objective, developed countries are prepared to accept
greater multilateral disciplines in all areas and to offer improved
market access in areas of interest to developing countries such as
textiles and clothing, tropical products, and agriculture.
28. For their part, developing countries should substantially
reduce their tariffs and increase the percentage of tariffs that
are bound; subscribe to balanced and affective restraints on all
forms of exceptions, including measures imposed for
balance-of-payments difficulties; and participate meaningfully in
agreements covering the new areas. The end result should be a
single set of multilateral rules applicable to all GATT contracting
parties, although some developing countries, especially the least
developed, may need longer transition periods or other transitional
arrangements on a case by case basis.
29. The wide range of substantive results which we seek in all
these areas will call for a commitment to strengthen further the
institutional framework of the multilateral trading system. In
that context, the concept of an international trade organization
should be addressed at the conclusion of the Uruguay Round. We
also need to improve the dispute. settlement process in order to
implement the results of the negotiations effectively. This should
lead to a commitment to operate only under the multilateral rules.
DIRECT INVESTMENT
30. Free flows of investment increase global prosperity by
complementing the open international trade system. In particular,
foreign direct investment can help restructure the economies of
developing and Central and Eastern European countries, create new
jobs, and raise living standards.
31. All countries should therefore seek to reduce their barriers
to investment and resist protectionist pressures to discourage or
discriminate against such investment. The OECD and the GATT should
continue to promote investment liberalization. The multilateral
development banks and the IMF should require investment
liberalization in their programs in Central and Eastern Europe and
developing countries.
EXPORT CREDITS
32. We welcome the important negotiations that are underway in the
OECD on a balanced package of measures to strengthen multilateral
disciplines on trade- and aid-distorting export credit subsidies.
This package, to be completed by spring of 1991, should reduce
substantially, through improved discipline and transparency,
distortions resulting from the use of officially supported
commercial and aid credits. It is also important to avoid
introducing trade distortions in financial flows to the nations of
Central and Eastern Europe.
REFORM IN CENTRAL AND EASTERN EUROPE
33. We welcome the polítical and economic reforms taking place in
Central and Eastern Europe. At the recent Conference on Security
and Cooperation in Europe (CSCE) in Bonn and by the agreement to
establish the European Bank for Reconstruction and Development
(IBRD), the participating countries of the region accepted the key
principles underpinning market economies. However, the degree of
implementation of economic and political reform varies widely by
country. Several countries have taken courageous and difficult
measures to stabilize their economies and shorten the transition
to a market economy.
34. We and other countries should assist Central and Eastern
European nations that are firmly committed to economic and
polítical reform. Those providing help should favor countries that
implement such reforms.
35. Foreign private investment will be vital in the development of
Central and Eastern Europe. Capital will flow to countries with
open markets and hospitable investment climates. Improved access
for their exports will also be important for those Central and
Eastern European countries that are opening up their economies.
Western Governments can support this process by various means,
including trade and investment agreements. The recent decision by
the Coordinating Committee for Multilateral Export Controls (COCOM)
to liberalize export controls is a positive step.
36. We commend the work done by the Commission of the European
Communities on the coordination by the Group of 24 (G-24) of
assistance to Poland and Hungary inaugurated at the Summit of the
Arch, which has made a significant contribution to helping these
countries lay the foundation for self-sustaining growth based on
market principles. We welcome the decision of the G-24 to enlarge
the coordination of assistance to other emerging democracies in
Central and Eastern Europe, including Yugoslavia.
37. He recognize that these countries face major problems in
cleaning their environment. It will be important to assist the
countries of Central and Eastern Europe to develop the necessary
policies and infrastructure to confront those environmental
problems.
38. We also welcome the recent initiatives in regional cooperation,
e.g., in transport and the environment, that will make a positive
contribution to economic progress and stability in the reçion.
- 8 -
39. We expect the new EBRD to play a key role in fostering
investment in those countries and to contribute to orderly
transitions toward market economies and a sound basis for
democracy. Me urge the rapid entry into force of the Bank.
40. The Center for Cooperation with European Economies in
Transition at the OECD will encourage reforms and strengthen
relations between these countries and the OECD, as will the OECD's
follow up work from the CSCE Economic Conference in Bonn.
41. we invite the OECD to consider a closer relationship with those
Central and East European countries that are committed to political
and economic reform.
THE SOVIET UNION
42. He discussed the situation in the Soviet Union, and exchanged
views regarding the message that Soviet President Gorbachev sent
us several days ago on his economic plans. we welcome the efforts
underway in the Soviet Union to liberalize and to create a more
open, democratic, and pluralistic Soviet society, and to move
toward a market-oriented economy. These measures deserve our
support. The success of perestroika depends upon the determined
pursuit and development of these reform efforts. In particular,
we welcome President Gorbachev's suggestion for a sustained
economic dialogue.
43. We have all begun, individually and collectively, to assist
these reform efforts. we all believe that technical assistance
should be provided now to help the Soviet Union move to a
market-oriented economy and to mobilize its own resources. Some
countries are already in a position to extend large scale financial
credits.
44. we also agreed that further Soviet decisions to introduce more
radical steps toward a market-oriented economy, to shift resources
substantially away from the military sector and to cut support to
nations promoting regional conflict will all improve the prospect
for meaningful and sustained economic assistance.
45. We have taken note of the decision of the European Council in
Dublin on June 26. we have agreed to ask the IMF, the World Bank,
the OECD and the designated president of the EBRD to undertake, in
consultation with the Commission of the European Communities, for
a close detailed study of the Soviet economy, to make recommendations
its reform and to establish the criteria under which Western
economic assistance could effectively support these reforms. This
work should be completed by year's end and be convened by the IMF.
46. We took note of the importance to the Government of Japan of
the peaceful resolution of its dispute with the Soviet Union over
the Northern Territories.
47. The host Government will convey to the Soviet Union the results
of the Houston Summit.
THE DEVELOPING NATIONS
48. He reiterate that our commitment to the developing world will
not be weakened by the support for reforming countries in Central
and Eastern Europe. The poorest of the developing nations must
remain the focus of special attention. The International
Development Association replenishment of SDR 11.6 billion, agreed
to last December, will provide needed resources for these
countries, and marks the incorporation of environmental concerns
into development lending. It is our intention to take a
constructive part in the Paris Conference on the least developed
countries in September.
49. The advanced industrial economies can make a number of major
contributions to the long-run development of the developing
countries. By sustaining economic growth and price stability, we
can offer stable, growing markets and sources of capital for the
developing world. By providing financial and technical support to
developing countries undertaking genuine political and economic
reform, we can reinforce their ongoing liberalization. The
industrialized nations should continue to make efforts to enhance
their development aid and other forms of assistance to the
developing countries, including reinforcing the effectiveness of
the aid.
50. In the developing world, there is a growing acceptance of the
view that growth can be encouraged by a stable macroeconomic
framework, sectoral reform to provide more competition, and an
opening of markets. Open, democratic, and accountable political
systems are important ingredients in the effective and equitable
operation of market-oriented economies.
51. Important contributions to a hospitable investment climate can
be made by the protection of intellectual property, and by
liberalization of investment regimes, including transparent and
equitable investment rules, and equality of treatment for foreign
and domestic investors.
52. The recent Enterprise for the Americas initiative announced by
the U.S. President will support and encourage more market-oriented
policies in Latin America and the Caribbean. we believe that such
U.S. efforts hold great promise for the region and will help
- 10 -
improve prospects for sustained growth in the Americas through the
encouragement of trade, open investment regimes, the reduction of
U.S. bilateral concessional debt and the use of debt for equity and
nature swaps.
53. In a number of countries, sustainable development requires that
population growth remains in some reasonable balance with expanding
resources. Supporting the efforts of developing countries to
maintain this balance is a priority. Improved educational
opportunities for women and their greater integration into the
economy can make important contributions to population
stabilization programs.
54. In the Mediterranean basin, the initiatives of economic
integration, which are underway, deserve encouragement and support.
THIRD WORLD DEBT
55. Significant progress has been made during the past year under
the strengthened debt strategy, which has renewed the resolve in
a number of debtor countries to continue economic reforms essential
to future growth. In particular, the recent commercial bank
agreements with Chile, Costa Rica, Mexico, Morocco, the
Philippines, and Venezuela involve significant debt and
debt-service reduction. Important financial support for debt and
debt-service reduction is being provided by the IMF and the World
Bank, as well as by Japan. The Paris Club has agreed, in order to
support medium term IMF-supported reform and financing programs,
to provide adequate restructuring agreements, notably through
multiyear reschedulings and through lengthening of the repayment
period. The combination of debtor reform efforts and commercial
bank debt reduction has had a notable impact on confidence in
debtor economies, as clearly demonstrated through flows of both new
investment and the return of flight capital to Mexico, in
particular.
56. These measures represent major innovations in the case by case
debt strategy and are potentially available to all debtor nations
with serious debt-servicing problems which are implementing
economic adjustment policies.
57. The adoption by debtor nations of strong economic reform
programs with the IMF and World Bank remains at the heart of the
debt strategy, and a prerequisite for debt and debt service
reduction within commercial bank financing packages. It is vital
that debtor countries adopt measures to mobilize savings and to
encourage new investment flows and the repatriation of flight
capital to help sustain their recovery. In this connection, the
- 11 -
recent U.S. Enterprise for the Americas initiative to support
investment reform and the environment in Latin America needs to be
given careful consideration by Finance Ministers.
58. For countries implementing courageous reforms, commercial banks
should take realistic and constructive approaches in their
negotiations to conclude promptly agreements on financial packages
including debt reduction, debt-service reduction and new money.
59. Creditor nations will continue to play an important role in
this process through ongoing contributions to the international
financial institutions, rescheduling of official debt in the Paris
Club, and new finance. He encourage the Paris Club to continue
reviewing additional options to address debt burdens. In the case
of the lower middle-income countries implementing strong reform
programs, we encourage the Paris Club to lengthen the repayment
period, taking account of the special situations of these
countries. We welcome the decisions taken by France with respect
to Sub-Saharan Africa and by Canada with respect to the Caribbean
to alleviate the debt burden of the lower middle-income countries.
60. Creditor governments have also provided special support for
the poorest countries through the implementation of Toronto terms
in Paris Club reschedulings. All of us have cancelled official
development assistance (ODA) debt for the poorest countries. We
encourage the Paris Club to review the implementation of the
existing options that apply to the poorest countries.
61. We note and will study with interest the Craxi Report on debt
commissioned by the UN Secretary General.
THE ENVIRONMENT
62. One of our most important responsibilities is to pass on to
future generations an environment whose health, beauty, and
economic potential are not threatened. Environmental challenges
such as climate change, ozone depletion, deforestation, marine
pollution, and loss of biological diversity require closer and more
effective international cooperation and concrete action. we as
industrialized countries have an obligation to be leaders in
meeting these challenges. We agree that, in the face of threats
of irreversible environmental damage, lack of full scientific
certainty is no excuse to postpone actions which are justified in
their own right. We recognize that strong, growing,
market-oriented economies provide the best means for successful
environmental protection.
63. Climate change is of key importance. we are committed to
undertake common efforts to limit emissions of greenhouse gases,
such as carbon dioxide. We strongly support the work of the
- 12 -
Intergovernmental Panel on Climate Change (IPCC) and look forward
to the release of its full report in August. The Second World
Climate Conference provides the opportunity for all countries to
consider the adoption of strategies and measures for limiting or
stabilizing greenhouse gas emissions, and to discuss an effective
international response. He reiterate our support for the
negotiation of a framework convention on climate change, under the
auspices of the United Nations Environment Program (UNEP) and the
World Meteorological Organization (WMO). The convention should be
completed by 1992. work on appropriate implementing protocols
should be undertaken as expeditiously as possible and should
consider all sources and sinks.
64. We welcome the amendment of the Montreal Protocol to phase out
the use of chlorofluorocarbons (CFCs) by the year 2000 and to
extend coverage of the Protocol to other ozone depleting
substances. The establishment of a financial mechanism to assist
developing countries to tackle ozone depletion marks a new and
positive step in cooperation between the developed and developing
worlds. We applaud the announcement in London by some major
developing countries, including India and China, that they intend
to review their position on adherence to the Montreal Protocol and
its amendments. we would welcome their adherence as a crucial
reinforcement of the effectiveness of the Protocol, which would
ultimately lead to a worldwide phase out of ozone depleting
substances. we urge all parties to ratify the amended Protocol as
quickly as possible.
65. we acknowledge that enhanced levels of cooperation will be
necessary with regard to the science and impacts of climate change
and economic implications of possible response strategies. We
recognize the importance of working together to develop new
technologies and methods over the coming decades to complement
energy conservation and other measures to reduce carbon dioxide and
other greenhouse emissions. We support accelerated scientific and
economic research and analysis on the dynamics and potential impact
of climate change, and on potential responses of developed and
developing countries.
66. we are determined to take action to increase forests, while
protecting existing ones and recognizing the sovereign rights of
all countries to make use of their natural resources. The
destruction of tropical forests has reached alarming proportions.
We welcome the commitment of the new Government of Brazil to help
arrest this destruction and to provide sustainable forest
management. we actively support this process, and we are ready for
a new dialogue with developing countries on ways and means the to
support their efforts. we are ready to cooperate with
- 13 -
Government of Brazil on 1 comprehensive pilot program to counteract
the threat to tropical rain forests in that country. We ask the
world Bank to prepare such a proposal, in close cooperation with
the Commission of the European Communities, which should be
presented at the latest at the next Economic Summit. He appeal to
the other concerned countries to join us in this effort.
Experience gained in this pilot program should immediately be
shared with other countries faced with tropical forest destruction.
The Tropical Forestry Action Plan must be reformed and
strengthened, placing more emphasis on forest conservation and
protection of biological diversity. The International Tropical
Timber Organization action plan must be enhanced to emphasize
sustainable forest management and improve market operations.
67. We are ready to begin negotiations, in the appropriate fora,
as expeditiously as possible on a global forest convention or
agreement, which is needed to curb deforestation, protect
biodiversity, stimulate positive forestry actions, .and address
threats to the world's forests. The convention or agreement should
be completed as soon as possible, but no later than 1992. The work
of the IPCC and others should be taken into account.
68. The destruction of ecologically sensitive areas around the
world continues at an alarming pace. Loss of temperate and
tropical forests, developmental pressures on estuaries, wetlands
and coral reefs, and destruction of biological diversity are
symptomatic. TO reverse this trend, we will expand cooperation to
combat desertification; expand projects to conserve biological
diversity; protect the Antarctic; and assist developing countries
in their environmental efforts. Me will work within UNEP and other
fora to achieve these objectives, and will participate actively in
UNEP's work to protect biodiversity.
69. Efforts to protect the environment do not stop at the water's
edge. Serious problems are caused by marine pollution, both in the
oceans and in coastal areas. A comprehensive strategy should be
developed to address land-based sources of pollution; we are
committed to helping in this regard. We will continue our efforts
to avoid oil spills, urge the early entry into force of the
existing International Maritime Organization (IMO) Convention, and
welcome the work of that organization in developing an
international oil spills convention. He are concerned about the
impact of environmental degradation and unregulated fishing
practices on living marine resources. We support cooperation in
the conservation of living marine resources and recognize the
We call on all concerned countries to respect the conservation
importance of regional fisheries organizations in this respect.
regimes.
70. TO cope with energy-related environmental damage, priority must
be given to improvements in energy efficiency and to the
development of alternative energy sources. For the countries that
make such a choice, nuclear energy will continue to be an important
- 14 -
contributor to our energy supply and can play a significant role
in reducing the growth of greenhouse gas emissions. Countries
should continue efforts to ensure highest worldwide performance
standards for nuclear and other energy in order to protect health
and the environment, and ensure the highest safety.
71. Cooperation between developed and developing countries is
essential to the resolution of global environmental problems. In
this regard, the 1992 UN Conference on Environment and Development
will be an important opportunity to develop widespread agreement
on common action and coordinated plans. we note with interest the
conclusions of the Siena Forum on International Law of the
Environment and suggest that these should be considered by the 1992
UN Conference on Environment and Development.
72. We recognize that developing countries will benefit from
increased financial and technological assistance to help them
resolve environmental problems, which are aggravated by poverty
and underdevelopment. Multilateral development bank programs
should be strengthened to provide greater protection for the
environment, including environmental impact assessments and
action plans, and to promote energy efficiency. He recognize that
debt-for-nature swaps can play a useful role in protecting the
environment. We will examine how the World Bank can provide a
coordinating role for measures to promote environmental protection.
73. In order to integrate successfully environmental and economic
goals, decisionmakers in government and industry require the
necessary tools. Expanded cooperative scientific and economic
research and analysis on the environment is needed. we recognize
the importance of coordinating and the sharing the collection of
satellite data on earth and its atmosphere. We welcome and
encourage the ongoing discussions for the establishment of an
International Network. It is also important to involve the private
sector, which has a key role in developing solutions to
environmental problems. He encourage the OECD to accelerate its
very useful work on environment and the economy. of particular
importance are the early development of environmental indicators
and the design of market-oriented approaches that can be used to
achieve environmental objectives. We also welcome Canada's offer
to host in 1991 an international conference on environmental
information in the 21st Century. We support voluntary
environmental labelling as a useful market mechanism which
satisfies consumer demand and producer requirements and promotes
market innovation.
74. we note with satisfaction the successful launching of the Human
Frontier Science Program and express our hope that it will make
- 15 -
positive contributions to the advancement of basic research in life
science for the benefit of all mankind.
NARCOTICS
75. We urge all nations to accede to and complete ratification of
the UN Convention Against Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (the Vienna Convention), and to apply
provisionally terms of the Convention.
76. we welcome the conclusion of the UN Special Session on Drugs
and urge the implementation of the measures contained in the
Program of Action it has adopted.
77. We support the declaration adopted at the ministerial meeting
on drugs convened by the United Kingdom that drug demand reduction
should be accorded the same importance in policy and action as the
reduction of illicit supply. Developed countries should adopt
stronger prevention efforts and assist demand reduction initiatives
in other countries.
78. we endorse the report of the Financial Action Task Force (FATF)
and commit our countries to a full implementation of all its
recommendations without delay. As agreed at the May meeting of
Task Force Finance Ministers, the FATE should be reconvened for a
second year, chaired by France, to assess and facilitate the
implementation of these recommendations, and to complement them
where appropriate. All OECD and financial center countries that
subscribe to the recommendations of the Task Force should be
invited to participate in this exercise. The report of the new
FATE would be completed before we next meet. He also invite all
other countries to participate in the fight against money
laundering and to implement the recommendations of the FATF.
79. Effective procedures should be adopted to ensure that precursor
and essential chemicals are not diverted to manufacture illicit
drugs. A task force similar to the FATE should be created for this
purpose, composed of Summit participants and other countries that
trade in these chemicals, with the involvement of representatives
of the chemical industry. The task force should address the
problems which concern cocaine, heroin and synthetic drugs and
report within a year.
80. We support a strategy for attacking the cocaine trade as
outlined in particular in the Cartagena Declaration. We recognize
the importance of supporting all countries strongly engaged in the
fight against drug trafficking, especially Colombia, Peru, and
Bolivia, with economic, law enforcement, and other assistance and
advice, recognizing the need to make contributions within the
framework of actions against drug trafficking carried out by the
producer countries.
- 16 -
81. The heroin problem is still the most serious threat in many
countries, both developed and developing. All countries should
take vigorous measures to combat the scourge of heroin.
82. he should support an informal narcotics consultative
arrangement with developed countries active in international
narcotics control. Such a group could strengthen efforts to reduce
supply and demand, and improve international cooperation.
83. We welcome the current review of UN drug abuse control agencies
and urge that It result in a more efficient structure.
NEXT ECONOMIC SUMMIT
84. We have accepted the invitation of Prime Minister Thatcher to
meet next July in London.
SECOND WORLD CLIMATE CONFERENCE
13 July 1990
Corpus 30 Cobobow 7 November 1000
DRAFT MINISTERIAL DECLARATION
PREAMBLE
1.
wo, the Ministore from
countrico representing the world community
met in Geneva, Switzerland, from 6 to 7 November 1990 at the Second
World Climate Conference.
3.
our Meeting following the IPCC Report is a demonstration or our
intention to take active and constructive step in the global response to
the global climate change issue. It is also the expression of our will
to fully contribute to the preparation for the 1992 UN Conference on
Dnvironment and Development.
3.
Ever since the dawn of history, man's lite on earth has been largely
dependent on the environmental processes which we call weather and
climate. The world climate system consists of a delicately balanced
combination of many interactive components which include the atmosphere
and the biosphere, as well as the land, sea and ice surfaces.
4.
Climate has varied in the past. But the temperature increase which is
predicted to occur in the decades to come due to the increasing
accumulation of the greenhouse gases in the atmosphere has not been
encountered in the last 100,000 years at least; nor has the past
rapidity of change been as fast as that predicted. The groenhouse gases
result from a host of human activities such as the burning of fossil
fuel, deforestation, mining operations and wacte management.
5.
Recognising that climate chango is a common concern of mankind United
Nations General Assembly's Resolution 43/53 urged the intergovernmental
and non-governmental organisations and scientific institutions, to treat
climate change as a priority issue, and to co-operate in research and
action-oriented programmes so as to increase the understanding of the
causes and effects of climate change.
6.
The Wants Climate Drogrammer undertaken jointly by the world
Meteorological Organisation, the International Council of Ocientific
Unions with the co-operation of its Scientific Committee on Oceanic
Research, and UNESCO and its International Oceanographic Commission and
UNEP have endeavoured during the last decade to promote a quantitative
understanding of climate, and predictions of global and regional climate
changes on all time scales and on their potential impacts. Through its
three major projects the study of Tropical Ocean and Global Atmosphere,
the Global Energy and Water Cycle Experiment, and the World Ocean
Circulation Experiment, the World Climate Research Programme has
succeeded in providing valuable information on the causes, processes and
some of the effects of climate change.
- 2 -
The Intergovernmental Panel on Climate Change (IPCC) established by
U.N.E.P. and W.M.O. has undertaken to study the problem of climate
change including global warming. Through the work of its various
working groups and their sub-groups the I.P.C.C. has produced a
comprehensive report on the causes and effects of climate change. It
has also proposed strategies to delay, limit or mitigate the impact of
climate change, and at the request of United Nations General Assembly
has proposed the elements for inclusion in a convention on climate.
DEFINITION OF PROBLEM AND RISKS
8. Global warming poses environmental threat of a magnitude the world has
never known before. Human activities which have lead to the emissions
of greenhouse gases into the atmosphere have so far committed the
Global Commons to an irreversible warming so far. In order to stem an
unprecedented global warming likely to lead to serious environmental
consequences such as a rise in sea level of about 20 cm by the year 2030
and 65 cm by the end of the next century urgent action should be taken
now. Carbon dioxide has been responsible for over half the enhanced
greenhouse effect in the past and is likely to remain so in the future.
It is therefore important that emissions of greenhouse gases especially
CO2 and other long lived greenhouse gases be reduced as soon as
possible. This is urgent because changes in emission rates of these
gases lead to a slow rate of change in their concentration in the
atmosphere. If action is delayed, it will take much longer and much
greater reductions at greater economic sacrifice to stabilize
concentrations at today's levels. The long lived gases (C02 and N20)
would require at least 60% reductions in cmissions, and methane 15-20 %
reduction in emissions in order to stabilise their concentrations in the
atmosphere at today'c lovels. The other gases of concern, namely the
CFC are addressed under the Montreal Protocol on Substances that Deplete
the Ozone Layer.
GLOBAL STRATEGY
9. We consider therefore that a global response must he decided and
implemented without further delay based on the best available knowledge
such as those resulting from the IPCC assessment.
Recognizing that the principle of equity should be the basis of any
global response to the climate change phenomena industrialized
countries, which are responsible for most of the observed increase in
the groenhouse gases' concentration in the atmosphere must take the
lead, commit themselves to immediate action and provide resources and
assistance to developing countries to help them in addressing climate
change in a way compatible with their development needs. [To this end
the industrialized countries will support developing countries with now,
additional and specific contributions.] [To this end there is a nood to
negotiate the necessary support needed by developing countries) [To this
end there is a need to provide the necessary support, including
additional and specific financial assistance to the developing countries)
ACKNOWLEDGMENT OF THE CONCLUSIONS OF LONDON CONFERENCE ON THE MONTREAL PROTOCOL
10. [Short text to be included after the conclusions of the London Meeting]
- 3 -
ENDORSMENT OF THE CONCLUSION OF THE SCIENTIFIC PART OF SWCC
11. We are highly appreciative of the work done by IPCC.
We accept and are highly appreciative of the conclusions and
recommendations of the scientific part of the Second World Climate
Conference as presented in the annex 1 of this Declaration. Their
implementation should be strongly supported by governments.
THEREFORE:
I. ROLE OF SCIENCE IN IMPROVING OUR UNDERSTANDING, CAPACITY OF PREDICTION AND
OUR RESPONSE TO CLIMATE CHANGE
12. We reaffirm that, in order to reduce uncertainties, to increase our
ability to prodict (including early identification of as yet unknown
climate-related problems) and to design scientifically sound response
strategies, there is a need to strengthen both national and
international activities in research, monitoring, and data and
information exchange related to climate change.
13. Recognizing that climate changes are of a complex interdisciplinary
character, we urge the full participation of ccientists dealing with the
atmosphere, the oceans and land, as well as with the physical, chemical
and biological processes needed for a deeper understanding of climate
issues. Given the intrinsically global nature of climate and climate
research, we stress the need to strenghten international cooperation.
The magnitude or the problem being addressed is such that no nation can
undertake it alone. It is imperative therefore, that, to the extent
feasible, national research programmes on climate be planned in such a
way that they form integral parts of international research programmes.
We urge that special resources to sustain such programmes are made
available to less developed countries in order to insure their full
participation in the international research effort and the response
strategies based upon the results.
14. We including: stress that special efforts be directed to key areas of uncertainty,
the role of clouds, ocean and greenhouse gases; ecosystem responses to
global change; effects of land-use changes in the hydrological cycle;
climate changes on a regional scale and the socio-economic and cultural
dimensions and impacts of climate change.
15. We consider that research programmes must be accompanied by long-term
monitoring programmes so designed as to provide continuous and
comprehensive coverage of climate-influencing variables as well as those
useful in detecting climate change. We agree that long term
governmental commitments are necessary to sustain these monitoring
programmes. We ask further-more that obstacles to the free flow of
relevant data and information be removed.
- 4 -
16. We reaffirm that there is no need to establish new international
coordination mechanisms, but rather urge all countries and relevant
organizationo to contribute through their national efforts and to
increase financial support and assistance in kind on a sustained basis
to important existing programmes such as the World Climate Programme
including the WMO/ICSU World Climate Research Programme, the ICSU
International Geosphere-Biosphere Programme, and the climate-related
components of programmes of WMO, UNEP, Unesco and its IOC and FAO. We
further urge that these programmes be better supported in order to
continue to strengthen their interdisciplinary approach, to include the
participation of all nations, and to increase coordination in order to
achieve still greater efficiency.
II. POLICY TARGET FOR URGENT POLICY ACTION
(Precautionary measures)
17. In order to achieve sustainable development, we must base ourselves on
the precautionary principle. Environmental measures must anticipate,
prevent and attack the causes of environmental degradation. Where there
are threats of serious or irreversible damage, lack of full scientific
certainty should not be used as a reason for postponing measures to
prevent cnvironmental degradation.
18. We note that a mechanism is being set up by WMO and UNEP to undertake
the necessary intergovernmental negotiations on global warming.
(Stabilization and reduction of greenhouse gases)
19. We recognise the fundamental need to conserve the global climate, and
protect it from anthropogenic interference. Taking into account that
the increase of greenhouse gas concentrations in the atmosphere threaten
the natural variability of climate, we agree that the ultimate global
objective should be to stabilize and reduce thoco concentrations.
20. We stress, as a first step, the need to stabilize, while ensuring stable
development of the world economy, emissions of greenhouse gases not
controlled by the Montreal Protocol. We note with appreciation the
unilateral commitments of some industrialised countries to stabilize
emissions at present level or reduce them by the year 2000.
21. We agree that stabilization of greenhouse gas emissions should be
achieved by industrialized countries by the year [2000] and should be
set at [present] emission levels.
22. We urge industrialized countries to ostablich greenhouse gases reduction
programmes aiming at achieving at least 20% reduction of their current
contribution to global warming potential, possibly by the year 2005 and
in any case not later than the year 2010;
23. We recommend that the specifications of the obligation to stabilize and
reduce greenhouse gases emissions be realized in the form of separate
Protocols to the Climate Convention. Some of these protocols could be
negotiated concurrently with the framework convention.
- 5 -
(Economic situation of certain countries)
24. We recognize that developing countries with, as yet, relatively low
energy requirements, which can reasonably be expected to grow in step
with their development, may have laryets that accommodate that
development. We also recognize that additional financial resources
[will] [may] have to be made available LO developing countries to enable
them to limit their net emissions of greenhouse gases while ensuring a
steady development or their economies;
(Fund (Climate Fund))
25. We recommend that existing institutions for development and financial
assistance including the World Bank and other Multilateral Development
Banks, Bilateral Assistance Programmes, the relevant United Nations
organisations and specialized agencies, and scientific and technological
organisations should give greater attention to climate change issues
within their environmental and other relevant programmes by providing
expanded funding including concessional funding. In addition, regional
and subregional co-operation should be reinforced and funded so as to
address and implement the required action at that level.
26. We commend that consideration should be given to the need for funding
facilities including a clearinghouse mechanism and a possible new
international fund and their relationship to cxisting funding
mechanisms, both multilateral and bilateral. Such funding should be
related to the implementation of the climate convention and associated
protocols. In the meantime the donor community is urged to provide
assistance to developing countrics to support immediate actions
addressing climate change without waiting for the Convention.
27. We recommend that additional resources should progressively, be
mobilized to help developing countries take the necessary measures to
address climate change consistent with their development needs.
28. We recommend further that the scope of resources needed be assessed.
Such assessments should include inter alia country studies and the
capabilities of existing institutions and mechanisms to meet the
financing noods idontified, similar to the approaches developed under
the Montreal Protocol.
29. We recommend that, initially, international funding be directed towards
(i)
conducting research and monitoring;
(ii) promoting public awareness, education and institutional and
manpower development.
(111) promoting efficient use of energy, including appropriate end use
technologies, increasing the use of non-fossil fuels and
switching to energy sources with lower greenhouse gas emissions,
and the use of renewable energy sources;
- 6 -
(iv) increased financial support for forest protection and forest
management improvement, for example through the Tropical Forestry
Action Plan (TFAP), the Plan of Action to Combat Desertification,
the International Tropical Timber ORganization (ITTO) and other
relevant international organizations;
(v)
arranging for technology transfer to and technology development
in developing countries;
(vi) assisting developing countries in planning how to address
problems posed by climate change;
(vii) supporting developing countries to enable their full
participation in international meetings on the subject of climate
change.
The use of financial resources could subcoquontly be outended inter alia
to major energy sources with little or no environmentally damaging
characteristics and for steps to reduce other global man-made emissions
of greenhouse gases due to human activities.
(Economic instruments)
30. We recognise that an environmentally sound development must include
policies which will achieve a sustainable energy system and take the
environmental costs and benefits of energy fully into account. We are
convinced that promoting energy efficiency is the most cost effective
immediate measure for reducing energy-related emissions of atmospheric
pollutants, in particular C02.
31. We recommend that now policies at national level be established making
extensive use of economic instruments in order to increase energy
efficiency and reduce energy consumption.
Such instruments could include:
(i)
taxes on environmentally damaging activities and energy
inefficient product
(ii) emission trading (tradeable permits/allowances)
(111) reduction or, wherever possible, elimination of subsidies to
energy intensive and other activities that induce climate change
(iv) other measures such as emission changes and fees deposit refund
systems and fiscal incentive
- 7 -
Such action should in particular affect energy prices with the aim to
reflect onvironmental costs and bonofito and provide incentives to
reduce energy consumption. They should also modify production and
consumption pattern and encourage production and use of energy efficient
technologies.
(Technology development)
32. We agroo that technological broakthrough in a wide range of fields
covering energy, industry and other sectors related to the emission and
absorption of CO2 and other greenhouse gases is the key element of any
long-term strategy Lial deals with climate change in a way that meets
the goal of sustainable development. To this end, we urge all
countries, the industrialized countries in particular, to intensify
their individual efforts and international cooperation in technology
development concerning, inter alia, low-energy and low-GHG production
processes and products (e.g. chlorofluorocarbor substitutes with little
or no global warming potential), and CO2 fixation and reutilization.
(Transfer of technology)
Alternative 1]
33. We urge that relevant technology be utilized by all sectors in all
countries to the full extent possible. We recognize that there are
great disparities in energy efficiency, even among the industrialized
countries, and further urge all countries, industrialized and
developing, to identify and take effective measures to remove barriers
to the dissemination of the best available technology. This requires,
in the case of developing countries, effective measures to aid their
efforts in meeting the specific needs arising, to a great extent, from
their lack of human and financial resources and other elements necessary
for the continuous development and diccomination of the most appropriate
technology. The East European countries, which are currently suffering
the consequences of inefficient use of energy and other resources, also
require special attention. To this end, we also urge all industrialized
countries and relovant international institution to step up their
contributions to the effective transfer and dissemination of relevant
technology in ways that address the constiainte Clial all these
countries face.
[Alternative 2]
33. We consider important that this expansion of development employ
appropriate and environmentally sound technology in order that the
problem of global warming and climate change not be exacerbated.
Consequently, the transfer and development of such technologies must
assume a high priority. Tt will he important for the inductrial nations
to respond to this priority and assign sufficient recources to assure
technological transfer, development and establishment of mechanisms for successful
- 8 -
(Forestry)
34. We recognize that the conservation of the world's forests 18 of crucial
importance for global climatic stability, particularly having regard to
the important contribution of forest destruction to global warming
through the emission of carbon-dioxide, methane and other trace gases.
We stress the need to reduce the rate of deforestation and to enhance
the potential of the world's forests as a sink for greenhouse gases,
through vigorous programmes of reforestation and afforestation.
We endorse the target included in the Noordwijk Declaration of achieving
net global forest growth of 12 million hectares per year, through
conservation of existing forests and through agressive programmes of
reforestation and afforestation.
We call on all countries to:
(i)
Adopt clear objectives for the conservation, reforestation and
custainablo management of Corcolo 1.. national development plans.
(ii) Amend national policies to minimize forest loss and their human
disturbance associated with public and private development
projects logging). (e.g. roads, dams, resettlement projects, mining,
(iii) Integrate forest management solutions with policies on
environment, landlessness. ayficulture, transportation, energy, poverty and
(iv) Strengthen, support and extend the Tropical Forestry Action Plan
(TFAP) process to all countries with tropical forests, and expand
support for immediate implementation of completed plans.
(v)
Strengthen the role of the International Tropical Timber
Organization (ITTO) in supporting the sustainable utilization of
forest resources.
(vi) Strengthen the role of development banks, IMP, FAO, UNEP, and
other multilateral and bilateral organizations in helping
developing countries achieve conservation and sustainable
development of forests by:
a) Requiring analyses of climate change implications, potential
greenhouse gas emissions, and response programmes in their review of
project proposals involving forests;
b) Expanding greatly aid and investment flows to the forest sector as
well as for the production of energy from biomass.
c) Expanding debt relief via renegotiation of debt, and debt for
conservation exchanges; and
d) Linking structural adjustment measures to alleviation of climatic
impacts and reduction of gas emissions.
- 9 -
35. We call finally for the development of a World Forost Conservation
Protocol or Convention, covering temperate, boreal and tropical forests,
in the context of or in association with a Climate Convention which also
addresses energy supply and use. The specific elements of such a
protocol or convention are a matter for international negotiations-which
should begin at an early date. These elements may include: fundamental
research, tropical forest planning, measures to use, protect and
reforest, international trade, financial assistance and possible
afforestation. national and international targets for conservation, reforestation and
(Desertification and drought)
36. We recommend that regional and/or sub-regional studies on these subjects
be fields: undertaken to cover the impacts of climate change in the following
(i)
Drought;
(ii) Desertification;
(iii) Water resources and their evolution;
(iv) Agriculture (positive and negative impacts);
(v) Energy;
(vi) Forests.
Those studies should lead Lo the development of scenarios and chort,
medium- and long-term measures for mitigation of drought and stopping
and reversing desertification for the attention of economic and
political decision makers.
III. GLOBAL CONVENTION
37. We welcome the resolutions of the Executive Council of the WMO and
Special Governing Council or UNEP authorising their Secretary General
and Executive Director to begin negotiations for a Climate Convention,
and associated Protocols. We call for such negotiations to begin
without delay. We endorse the WMO and UNEP Governing Bodies Decisions
in this respect. We urge all countries to join in these negotiations,
with the aim of completing negotiations to ensure adoption of a Climate
Convention by the time of the UN Conference on Environment and
Development in 1992;
38. We recommend that such negotiatione take account of the possible
elements compiled by the IPCC, and that the Climate Convention be framed
countries. in such a way AS to gain the support of the largest possible number of
- 10 -
39. We welcome the offer of the Covernment of the United States to host the
first negotiating meeting of a Working Group on the elaboration of a
Climato Convention. We also welcome the possible invitation of Italy to
host the first meeting of the Working Group for the elaboration of an
Energy Protocol. We urge that these two meetinge bc convened at the
beginning of 1991.
40. We recommend further that the Climate Convention and associated
Protocols contain specific obligations and address in particular:
(1) the enhancement of research and systematic observation of climate.
(ii) the control of greenhouse gas emissions
(111) the adaptation to the adverse effects of climate change in
coastal areas
(1v) The needs of developing countries for financial assistance in
their development efforts and transfer of technology
(v) appropriate institutional and decision-making procedures.
IV. INFORMATION AND PUBLIC AWARENESS
41. We believe that a well informed public is essential for addressing and
coping with as complex an issue as climate change and urge countries to
(i) encourage wide participation of all sectors of the population in
addrossing olimate change issues and developing appropriate
responses
(11) provide guidance for positive practices to limit/or adapt to
climate change
(iii) incorporate in the curricula of their educational systems
environmental education
(iv) establish national committees or clearing houses to collect,
develop issues. and disseminate accurate information on climate change
- 11 -
V INSTITUTIONAL MATTERS
42. We congratulate the IPCC for the outstanding achievement of producing in
a very short time its first report on the state of the science of
climate change, the socio-economic impact and policy options. we
recognize that the IPCC structure can provide an invaluable mechanism
for periodic assessments, perhaps every five years, of the evolving
knowledge from research and impact studies. We urge that the IPCC
continue its analysis of risks of action and inaction, policy options
and economic aspects of alternative measures for limiting greenhouse gas
emissions, mitigating or adapting to climate change. We also urge that
a further report on these issues should be produced during 1991 to
support the then ongoing negotiations of a Climate Convention on Climate
Change.
43. We further express our appreciation to WMO and UNEP for initiating the
IPCC and providing an efficient Secretariat. We urge that this
arrangement bc continued and that countries continue to provide
resources to support the Sccretariat and participation of developing
countries in the work of IPCC.
WORLD METEOROLOGICAL ORGANIZATION
UNITED NATIONS ENVIRONMENT PROCRAMME
ORGANISATION METEOROLOGIQUE MONDIALE
PROGRAMME DES NATIONS UNIES POUR L'ENVIRONNEMENT
ORGANIZACION METEOROLOGICA MUNDIAL
ВСЕМИРНАЯ МЕТЕОРОЛОГИЧЕСКАЯ ОРГАНИЗАЦИЯ
Téléphone: (41.22) 730 81 11
Téléphone: 333930 or 520600
Télégrammes: METEOMOND GENEVE
Télégrammes: UNITERRA NAIROBI
Telex: 23260 OMM CH
Telex : 22068 UNEP KE
Facsimilé : (41 22) 734 09 54
Facsimilé: (2542) 520711
Case postale n° 2300
CH-1211 Genève, Suisse
No. 29785/S
GENEVA, 10 July 1990
Annex: 1
Sir,
We have the honour to recall to your attention
Resolution 44/207 of the forty-fourth session of the UN General
Assembly on the protection of global climate for present and future
generations of mankind, which, inter alia, supports the request made
by the Governing Council of the United Nations Environment Programme,
in its decision 15/36 that the Executive Director of the Programme, in
co-operation with the Secretary-General of the World Meteorological
Organization, begin preparations for negotiations on a framework
convention on climate, taking into account the work of the
Intergovernmental Panel on Climate Change, as well as the results
achieved at international meetings on the subject.
May we further recall to your attention the decisions of a
number of ministerial and other international meetings that
negotiations on a framework convention on climate change begin as soon
as possible, after the completion of the interim report of the
Intergovernmental Panel on Climate Change, (IPCC). In this
connection, you may recall the offer of President George Bush of the
United States of America to host the first negotiation session.
We take this opportunity to inform you that the IPCC is
expected to complete its interim report (First Assessment Report) in
late August of this year. Its working groups on science, impacts and
response options and its Special Committee on the Participation of
Developing Countries have completed their respective parts of the
Report.
Further, the Executive Council of WMO, in its forty-second
(1990) session, has authorized its Secretary-General to convene
jointly with the Executive Director of UNEP an open-ended ad hoc
Working Group of government representatives to prepare for the
Convention (vide copy of Resolution, attached). The Governing Council
of UNEP, in its Special Session, is expected to adopt a parallel
decision.
To: Ministers of Foreign Affairs of Members of the United Nations
Ministers of Foreign Affairs of Members of WMO
- 2 -
In keeping with the progress of events since the adoption of
Resolution 44/207, we now wish to inform you that we are jointly
convening - in Geneva from 24 to 26 September 1990 - a session of an
open-ended ad hoc working group of government-nominated legal and
technical experts with a mandate to prepare for the Convention. By
this letter, we invite your Government to nominate your
representative(s) to the session. We are doing so without awaiting
the formal action by the UNEP Governing Council in order to give
sufficient time for identifying your representative( (s) and for the
necessary preparations. You may wish to consider including on your
delegation those who are familiar with the work of IPCC and the
contents of the reports of its working groups and Special Committee.
The session of the open-ended ad hoc Working Group will take
place in Salle II of the Centre International de Conférences de Genève
(CICG), 15 rue de Varembé. The agenda and documentation will follow
under separate cover.
Accept, Sir, the assurances of our highest consideration.
(G.O.P. Obasi)
(M.K. Tolba)
Secretary-General
Executive Director
World Meteorological Organization
United Nations Environment Programme
ITEM 4.1, EC-XLII/PINK 47, APPENDIX B
Resolution
Res. 4.1/1 (EC-XLII) - FRAMEWORK CONVENTION ON CLIMATE CHANGE
THE EXECUTIVE COUNCIL,
NOTING:
(1) Resolutions 43/53 and 44/207 of the UN General Assembly on the
"Protection of global climate for present and future generations of mankind",
(2) Resolution 44/228 of the UN General Assembly "United Nations
Conference on Environment and Development",
(3) The relevant parts of declarations and decisions adopted at
various intergovernmental and non-governmental meetings during 1989 and 1990,
(4) Decisions of the WMO Executive Council on the Second World
Conference, Climate Conference and recommendations of the Organizing Committee for the
(5) The work of the Intergovernmental Panel on Climate Change, which
has included the compilation of the possible elements of a framework
convention on climate change,
RECALLING:
change,
(1) Decision 15/36 of the Governing Council of UNEP on global climate
(2) Resolution 1 (EC-XLI) of the Executive Council of WMO "Global
Climate Change",
RECOGNIZING the actions taken by the Secretary-General, in
co-operation with the Executive Director of UNEP, to respond to the request in
Resolution 4 (EC-XLI) to begin preparations for negotiations on a framework
convention on climate change;
CONSIDERING that the adoption by the UN General Assembly of
Resolution 44/207 "Protection of global climate for present and future
generations of mankind" demonstrated a universal recognition by governments of
an urgent need for concerted international efforts to address the climate
change issue, in particular by negotiating, after completion of the IPCC First
Assessment Report, a framework convention on climate change and adopting the
convention, if possible at the UN Conference on Environment and Development
in 1992;
CONVINCED that further steps are needed to implement the decisions of
the UN General Assembly and those of the governing bodies of WMO and UNEP on
the negotiations of a framework convention on climate change:
ITEM 4.1, EC-FLII/PINK 47, APPENDIX B, p. 2
AUTHORIZES the Secretary-General to convene jointly with the
Executive Director UNEP, an open-ended ad hoc working group of
government representatives, urging that where feasible, Members
nominate experts in climate change who have been involved in the
work of the IPCC;
REQUESTS that the ad hoc working group meet in Geneva in
September 1990 to prepare for negotiations on a framework
convention on climate change based, inter alia, on the findings
of the IPCC First Assessment Report;
NOTES with pleasure the invitation of the Government of the
United States of America to host a first negotiating session on
the framework convention on climate change;
REQUESTS the Secretary-General:
(1) To convene jointly with the Executive Director of UNEP
the first open-ended negotiating session on the framework
convention on climate change not later than February 1991 taking
into account the invitation by the Government of the United
States of America;
(2) To report, jointly with the Executive Director of UNEP,
to the 45th session of the UN General Assembly on the progress in
the preparations for negotiations of framework convention on
climate change;
(3) To report to the Eleventh Congress and to the Executive
Council on the progress of the actions under this resolution.
Resolution
Res. 4.2/1 (EC-XLII) - SECOND WORLD CLIMATE CONFERENCE
THE EXECUTIVE COUNCIL,
RECALLING:
(1) Resolutions 43/53 and 44/207 of the UN General Assembly on the
"Protection of global climate for present and future generations of mankind",
(2) Resolution of 44/228 of the UN General Assembly "United Nations
Conference on Environment and Development",
(3) Resolution 4 (EC-XLI) of the Executive Council of WMO "Global Climate
Change",
NOTING (Draft) Resolution 4.1/1 (EC-XLIII) Framework Convention on Climate
Change,
AUTHORIZES the Secretary-General to convene jointly with the Executive
Director of UNEP, and in close consultation with the Executive Heads of
ICSU/UNESCO and its IOC, following the fourth session of the IPCC, a
preparatory meeting open to all interested governments, such a meeting to
include experts who have been involved in the IPCC process to prepare a draft
of the ministerial declaration for the Second World Climate Conference,
taking into account:
(1) Prior consultations with governments;
(2) The work of the IPCC including its first assessment report;
(3) The results of any prior preparatory meetings for the negotiation of a
framework convention on climate change;
(4) The work of the Preparatory Committee for the 1992 Conference on
Environment and Development;
(5) The need for continuation and enhancement of the necessary scientific
research, monitoring and environmental and socio-economic studies of climate
and climate change together with the maintenance and enhancement of the
observational networks that supply the requisite data for these studies, as
the foundation upon which response strategies and policy options will be
based;
(6) The need to support the international exchange of information on
climate and climate change;
(7) The need to support intergovernmental agencies working on climate and
national climate institutions in particular those in developing countries;
FURTHER AUTHORIZES the Secretary-General jointly with the Executive Director
of UNEP to request the Secretary-General of the United Nations to plan to take
into account the outputs of the Second World Climate Conference in the
discussion of the climate issue during the forty-fifth session of the United
Nations General Assembly;
(ECDOCSE 1413)
ITEM 4.2, EX-XLII/PINK 14, APPENDIX B, p. 2
REQUESTS the Secretary-General in consultation with the
Executive Heads of UNEP, UNESCO and its IOC and ICSU to prepare a
report to the Eleventh World Meteorological Congress including an
account of the potential implications for WMO, and to ensure a
wide distribution of the recommendations, Declaration and
Proceedings of the Conference, timely implementation of the
recommendations as appropriate through follow-up regional
conferences and workshops and other forms of technology transfer,
and that relevant SWCC outputs are brought to the attention of
the planners of the 1992 UN Conference on Environment and
Development.
ITEM 2.6, EC-XLII/PINK 45, APPENDIX B
Resolution
Res. 2.6/1 (EC-XLII) - INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE
THE EXECUTIVE COUNCIL.
NOTING Resolutions 4 (EC-XL) and 4 (EC-XLI).
Panel on Climate Change (IPCC).
NOTING with satisfaction the progress made by the Intergovernmental
work of IPCC by many governments at the third plenary of the Panel
FURTHER NOTING the expressions of need for the continuation of the
(Washington D.C., 5-7 February 1990),
during which the IPCC First Assessment Report will be considered;
RECOGNIZING also the forthcoming Second World Climate Conference
the United Nations Environment Programme (UNEP) to arrange for the
REQUESTS the Secretary-General jointly with the Executive Director of
continuation of IPCC as a joint WMO and UNEP body to, inter alia:
(a) Undertake scientific and technical work in support of the
negotiations of a framework convention on climate change;
(b) Periodically update the assessments of the available scientific
socio-economic impacts;
information on climate change and the resulting environmental and
(c) Undertake further environmental and socio-economic analyses of
the various policy options posed as response strategies:
(d) Evaluate the special problems of the developing countries in
their efforts to address the issue of climate change and assess
possible options to deal with these problems;
(e) Take all appropriate steps to ensure the effective participation
of developing countries and the broad dissemination of its work;
(£) Report regularly to the Council on the progress of its work, and
through the Secretary-General of WMO and the Executive Director
of UNEP to the United Nations General Assembly;
FURTHER REQUESTS the Secretary-General in consultation with
the Executive Director of UNEP to review the report of the IPCC and the the results of
Second World Climate Conference in the light of their possible
implications for WMO and UNEP and to report on the review to Eleventh Congress.
14631
1
Executive Summary
Science
We are certain of the following:
- there Is a natural greenhouse effect which already keeps the
earth warmer than it would otherwise be,
- emissions resulting from numan activities are substantially in-
creasing the atmospheric concentrations of the greenhouse gases:
carbon dioxide, methane, chlorofluorocarbons (CFCs) and nitrous oxide.
These increases enhance the greenhouse effect, resulting on average in
an additional warming of the Earth's surface. The main greenhouse gas,
water vapour, will increase in response to global warming and further
enhance it.
- the total increase of greenhouse gas concentrations attributable
to human activities is at present equivalent to an Increase of carbon di-
oxide since pre-industrial times (about 200 years ago) by about 50%
We calculate with confidence that:
- atmospheric concentrations of the long-lived gases (carbon di-
emissions oxide, nitrous oxide and the CFCs) adjust only slowly to changes of
the long-lived gasas would require reductions in emissions from
human activities of over 60% to stabilize their concentrations at to.
day's levels; methane would require a 15-20% reduction.
The human-caused emissions of carbon dioxide are small as com-
pared to the natural carbon dioxide exchange between the atmosphere on
one hand and the terrestrial system and the oceans on the other. The
latter were, however, in close balance before anthropogenic emissions
began and the steady human-induced emissions into the atmosphere re-
present a significant disturbance of the natural carbon cycle.
Based on current model results. we predict:
- a rate of increase of global mean temperature during the next
century of about 0.3 degrees C per decade (with an uncertainly range of
0.2-0.5 degrees C per decade) assuming the IPCC Scenario A (Business
as Usual) emissions of greenhouse gases (i.e. few or no steps are taken
to limit emissions of greenhouse gases) ; this is a more rapid increase
than seen over the past 10 000 years. This will result in a likely
increase in the global mean temperature of about 1 oC above the present
value by 2025 (about 2 oC above that in the pre-Industrial period), and 3
c above todays value before the end of the next century (about 4 oC
above pre-industrial). The rise will no: be steady,
11.261.90 18:15 P.03
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1950-07-11
NETEORUL
46 8 157165 03
2
that land surfaces warm more rapidly than the oceans, and higher
northern latitudes warm more than the global mean.
the oceans act as a heat sink and thus delay the full effect of
greenhouse warming. The related (actual) temperature change is at any
given time estimated to bo botween 50 and 80 % of the committed
change, i.e. the change when the climate system has reached equilibrium.
There are many uncertainties in our predictions particularly with
regard to the timing, magnitude and regional patterns of climate change,
especially changes of precipitation. This is due to our incomplete un-
derstanding of sources and sinks of greenhouse gases and the responses
of clouds, oceans and polar ice sheets to a change of the radiative for.
cing caused by increasing greenhouse gas concentrations.
Over many thousands of years there have been significant changes
in the atmospheric greenhouse gac conoontrations and global climate,
such as those that occurred during the Ice Ages. The mechanisms
causing these are not yet well understood.
Our judgement is that:
- global mean surface temperature has increased by 0.3 to 0.6 oC
over tha last 100 years, with the five global-average warmest years
being In the 1980s. The increase has not been smooth in time, nor uni-
form over the globe.
- the size of the warming over the last century is broadly consis-
tent with the predictions by climate models, but is also of the same
magnitude as natural climate variability. Thus the observed increase
could be largely due to this variability; alternatively this variability
and other human factors could have upset a still larger human-induced
greenhouse warming. The unequivocal detection of the enhanced
greenhouse effect from observations is not likely for a decade or more.
Impacts
Because of the lack of accurate estimates of the expected regional
changes of climate, precise predictions of the regional impacts of cli-
mate change cannot yet be made. Some general conclusions can,
however, be drawn.
If no preventive measures to limit the further increase of man-in-
duced emissions of greenhouse gases (Scenario A, Business as Usual), an
average rate of global mean sea level rise of about 6 cm per decade is
projected over the next century, with an uncertainty range of 3-10 cm
per decade.
131153
1990-07-11 16:35 METEOROL STOCKHOLMIUNIV
46 8 157185 0.1
3
Already a rise of sea level by 30-50 cm would affect the habitabi-
lity of low-lying coastal regions significantly and a one meter rise
(possible towards the end of next century as estimated in the Scenario
A) would impact 360 000 km of coastline, render some island countries
uninhabitable, displace tens of millions of people, threaten low-lying
urban areas, flood productive land and contaminate fresh water supplies.
Although studies have not yet conclusively determined whether on
average global agricultural potential would increase or decrease,
changes of climate would have important effects regionally. Decline in
production might be expected in regions of high present-day vulnarabili-
ty, where the ability to adjust is low.
Some current forests will mature and decline in a climate, to
which they are increasingly poorly adapted, while a potential for
forests to grow might eventually develop elsewhere.
Similarly other natural terrestrial ecosystems would be markedly
influenced because the rates of climate change are likely to be faster
than the ability of some species to adjust.
Enhanced carbon dioxide concentrations in the atmosphere might
enhance growth of certain plants.
Comparatively small changes of climate can cause large water re-
source problems. The availability of water and biomass might be signifi-
cantly affected, positively or negatively, and both are major energy
sources in many developing countries.
Response strategies
A
major dilemma of the issue of climate change due to increasing
emissions of greenhouse gases into the atmosphere is that actions may
be required well before many of the specific issues that are and will be
raised can be analyzed more thoruoghly by further-research.
The CFCs are already being eliminated to prevent their continued
destruction of the stratospheric ozone layer. This is also an effective
measure to slow down the rate of global warming. Every effort should be
made to find replacements that have little or no greenhouse warming
potential or ozone depletion potential rather than the HCFCs and HFCs
that are now being considered.
Assuming a projected increase of the world population to about 8
billion by 2030, the present global average emissions of carbon dioxide
of about 1.45 ton of carbon per capita would have to be reduced to about
4b 8 157185
1990-07-11
8 157185 05
4
0.35 ton of carbon per capita in order to stabilize carbon dioxido oon-
centrations in the atmosphere.
If the present rate of deforestation were reduced to about half of
the present rate, this could reduce the rate of increase of carbon dioxide
in the atmosphere by 5-15% compared with the present
Reforestation of 12 million hectars per year during the next 40 rate.
would similarly slow down the rate of increase of carbon dioxide in years the
atmosphere during this period by 5-15%.
Roles of Industrialized and Developing Countries
bility in dealing with the problem arising from climate change. The for-
Industrialized and developing countries have a common responsi-
mer should take the lead in two ways:
with future agreements to limit emissions,
to limit climate change by adapting their own economies in line
without standing in the way of the latter's development.
to cooperate with developing countries in international action,
countries requires the proper concern for environmental protection as
Sustainable development in industrialized as well as developing
the necessary basis for continued economic growth. Environmental
siderations must be systematically integrated into all plans for deve- con-
environmental objectives.
lopment. The right balance must be struck between economic growth and
The developing countries are rapidly increasing their emissions of
greenhouse gases in striving for improving their living standards.
Recognizing the poverty that prevails among the polulations of develo-
priority by them. Narrowing the gap between the industrialized and the
ping countries, it is natural that achieving economic growth is given
developing world should provide a basis for full partnership of all na-
to deal with the climate change issue.
tions in the world, which is essential for the development of a strategy
Options
The climate scenario studies of Working Group I and III outline
control policies on emissions that would slow global warming from pre-
sently perhaps 0.3 oC per decade to 0.1 oC per decade.
The potentially serious consequencies of climate change give suf-
ficient reasons to begin adopting response strategies that can be
justfied immediately even in the face of significant uncertainties.
These include
11.Jul.90 16:55 P.06
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1990-07-11 16:24 METEORCL STOCKHOLM UNIO
46 8 157185 05
5
elimination of CFC emissions and careful assessment of the
greenhouse gas potential of proposed substitutes,
improved energy end use efficiency,
Improved forest management,
use of cleaner, more efficient energy sources with lower emis-
sions of greenhouse gases,
review of agricultural practices.
There is no single quick-fix technological option for limiting
greenhouse gas emissions. A comprehensive strategy addressing all
aspects of the problem and reflecting environmental, economic and so-
cial costs and benefits is necessary.
Individual nations, or groups of nations, could initiate actions to
stabilize and later reduce emissions and thus take the lead in the pre-
vention of an accelerated increase of greenhouse gas concentrations in
the atmosphere in order to prepare fo truly international agreements. An
important aim would be to define targets for carbon dioxide and other
greenhouse gases.
In the long term perspective, work should begin on defining crite-
ria which would reflect the impacts of climate change and its costs on
one hand and social and economic cost and benefits and practicalities of
reductions in emissions on the other. This evaluation should take into
account what might be an acceptable level of climate change on the one
hand and an acceptable rate of economical and technological adjust-
ments on the other hand.
Consideration of measures for reducing the Impacts of global cli-
mate change should begin as soon as possible, particularly with regard
to disaster prepareness policies, coastal zone management and control
measures for desertification, many of these being jusitified in their
own right. Measures to limit or adapt to climate change should be as
cost-effective as possible, while taking into account important social
implications. Limitation and adaptation should be considered as an in-
tegrated package.
Environmental objectives can be achieved either through regula-
tions or through market based economic instruments. The latter, through
their encouragement of flexible selection of abatement measures, tend
to encourage Innovation and the development of improved technologios
and practices for reducing emissions and therefore frequently offer the
possibility of achieving environmental improvements at lower costs
than through regulatory mechanisms. IL is untikely, however, that eco-
nomic instruments will be applicable to all cirumstances.
46 8 157185
1990-07-11 16:24 METECROL STOCKHOLM UNIV
46 8 157185 06
6
Future Work and International Cooperation
The measures that may be necessary require a high degree of in-
ternational cooperation, with due respect for national sovereignty of
states. To assist in that process, international negotiations on a con-
vention on climate change should start as quickly as possible. -- Key
issues for negotiations will include the criteria, timing, legal form and
incidence of any obligations to control the net emissions of greenhouse
gases, how to address equitably the concequences for all, any
institutional mechanisms including research and monitoring that may be
required, and in particular, the requests of the developing countries for
additional financial resources and for the transfer of technology on a
preferential basis.
The IPCC recommends that research regarding the climate change
issue in general, and the international economic implications in particu-
lar, be Intensified.
*
Because climate change would affect, either directly or indirectly,
almost every sector of society broad global understanding of the issue
will facilitate the adoption and the implementation of such response
options as deemed necessary and appropriate. Further efforts to achieve
such global understanding are urgently needed.
*
The IPCC appeals to multilateral and bilateral funding organiza-
tions to assist developing nations in their efforts to take part in the
international cooperation with regard to the climate change issue and to
do so without awaiting the outcome of future negotiations on a climate
convetion. It further appeals on an urgent basis to governments for in-
creased contributions to the IPCC Trust Fund for future IPCC work.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
01. List
Re: Global Change Task Force Group (2 pp.)
n.d.
(b)(6)
Collection:
Record Group:
Bush Presidential Records
Office:
Economic Advisers, Council of
Series:
Schmalensee, Richard, Files
Subseries:
WHORM Cat.:
File Location:
Group on Global Climate Change #2 (IPCC - Intergovernmental Panel on Climate Change) and RSWG
(Response Strategy Working Group) [Letters, Memorandums, Reports, and Other Information][2]
Date Closed:
2/16/2018
OA/ID Number:
03679-013
FOIA/SYS Case #:
2017-0310-F
Appeal Case #:
Re-review Case #:
Appeal Disposition:
P-2/P-5 Review Case #:
Disposition Date:
AR Case #:
MR Case #:
AR Disposition:
MR Disposition:
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MR Disposition Date:
RESTRICTION CODES
Freedom of Information Act (FOIA) - [5 U.S.C. 552(b)]
Deed of Gift Restrictions
(b)(1) National security classified information
C(1) Closed by Executive Order 13526, governing access to national
(b)(2) Release would disclose internal personnel rules and practices of an
security information
agency
C(2) Closed by statute or by the agency which originated the information
(b)(3) Release would violate a Federal statute
C(3) Closed in accordance with restrictions contained in donor's deed of
(b)(4) Release would disclose trade secrets or confidential or financial
gift [formerly listed as only C]
information
PRM. Removed as a personal record misfile
(b)(6) Release would constitute a clearly unwarranted invasion
of personal privacy
(b)(7) Release would disclose information compiled for law enforcement
Presidential Records Act [44 U.S.C. 2204(a)]
purposes
(b)(8) Release would disclose information concerning the regulation of
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
financial institutions
P-5 Release would disclose confidential advice between the President and
(b)(9) Release would disclose geological or geophysical information
his advisors, or between such advisors [(a)(5) of the PRA]
concerning wells
41
Return
July 13, 1990
DOMESTIC POLICY COUNCIL
twin
Working Group on Global Change
Task Force on Economic Costs
Bruce Bartlett
Deputy Assistant Secretary for
From
Economic Policy
Main Treasury, Room 3445
Washington, D.C. 20220
Tel: 566-2768 FAX: 786-8452 sir: Chais
Fred Bernthal
Clim
Deputy Director
National Science Foundation
1800 G St., N.W., Room 520
yes
Chuy
Washington, D.C. 20550
Tel: 357-9427 FAX: 357-9725 see - Knith Ewuh of 7/16 only)
Curtis Bohlen
Assistant Secretary
Oceans & International Environmental &
Scientific Affairs Bureau
Department of State, Room 7831
Washington, D.C. 20520
yes
Tel: 647-1554 FAX: 647-0217
Robert W. Corell
Assistant Director for Geosciences
National Science Foundation
1800 G Street, N.W., Room 510
Washington, D.C. 20550
Tel: 357-9715 FAX: 357-9629
J. Clarence Davies
Assistant Administrator
Policy, Planning and Evaluation
Surpot along Cristiforo
Environmental Protection Agency
attending
401 M Street, S.W.
Room 1013 West Tower
Washington, D.C. 20460
Tel: 382-4332 FAX: 252-0275 & 252-0780
you
Assistant Bruce Gardner Secretary for Economics sec: Garle
Department of Agriculture
14th & Independence Ave., S.W., Room 227E
WAshington, D.C. 20250
Tel: 447-4164 FAX: 475-4915
Teresa Gorman
Associate Director for Environment,
Energy, and Natural Resources Policy
Office of Policy Development
Old EOB, Room 227
Washington, Tel: 456-6554 D.C. FAX: 20500 456-7739 an annu
Robert E. Grady
sec: Broban
Associate Director
Natural Resources Energy and Science
Office of Management and Budget
Old EOB, Room 260
Washington, D.C. 20500
Tel: 395-4844 FAX: 395-5730
C. Boyden Gray
Counsel to the President
Deff Holmstend
May
White House, West Wing, 2d Floor
if
Washington, D.C. 20500
will attere
Tel: 456-2632 FAX: 456-6279
Nancy Maynard
Assistant Director for Environmental Affairs
Office of Science and Technology Policy
New EOB, Room 5005 4281/2
Washington, D.C. 20506
Tel: 395-3637 FAX: 395-3719
6202
Barry McBee
Special Assistant to the Secretary
to the Cabinet
Office of Cabinet Affairs
Old EOB, Room 235
Tel: 456-6437 FAX: 456-2223
2000
Mark Plant
Deputy Under Secretary, Economic Affairs
see Junitte
Department of Commerce
yes
14th & Constitution Ave., N.W., Room 4850
Washington, D.C. 20230
Tel: 377-3523 FAX: 377-0432
John Schrote
Deputy Assistant Secretary
en: debour
Policy, Budget, and Administration
Department of the Interior, Room 6214
18th and C Streets, N.W.
Washington, D.C. 20240
Tel: 208-4123 FAX: 208-5048 4561
Linda Stuntz
Deputy Under Secretary for Policy,
Planning and Analysis
Department of Energy, Room 7B-098
1000 Independence Ave., S.W.
Washington, D.C. 20585
Tel: 586-5316 FAX: 586-5313
the
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
MEMBER OF THE COUNCIL
July 12, 1990
Chop
MEMORANDUM FOR TASK FORCE ON ECONOMICS OF THE
WORKING GROUP ON GLOBAL CHANGE
bee
FROM:
RICHARD SCHMALENSEE BK
SUBJECT:
Publishing our Report
MOB
H4
This is to let you know that, per the attached memo from Allan
Bromley, I will schedule a Task Force meeting in the near future
to consider publishing our report after the "considerable
scrubbing and updating" that is clearly necessary. The issues on
Brancy
the table seem to me to be the following:
Do we agree with Dr. Bromley that "it would indeed be very
useful to have [our] report published"? If no, our task is
finished. If yes, two further questions require our
attention.
What is the best format for publication? There is no
obvious report series in which our paper could appear as a
routine matter, but it does not strike me as desirable to
have its appearance be a significant, nonroutine event.
How shall we organize "scrubbing and updating"? My impulse
would be to have written comments sent to CEA by, say, mid-
August. We could then prepare a revised draft, with
bracketed language where necessary, for discussion in
September.
Enclosed for your information is my attempt at an updated list of
the members of our Task Force. Please let me know if it should
be altered in any way.
THE WHITE HOUSE
WASHINGTON
July 5, 1990
MEMORANDUM FOR RICHARD L. SCHMALENSEE
FROM:
D. ALLAN BROMLEY ma
SUBJECT:
GLOBAL CHANGE ECONOMIC REPORT
I am sorry that it has taken so long to get back to you concerning your memo of
June 15.
I believe that it would indeed be very useful to have your report published but I think
that it would be important to give it some considerable scrubbing and updating before
doing so. I suspect that there are regulations which would require that it be
indicated as something other than a working group report to the DPC because these,
I believe, are considered privileged documents which do not get published in the
normal course of events.
Your paper, I think, breaks entirely new ground and would contribute in a very
substantial way to more enlightened public discussions and for that reason I think it
important that it be released.
Obviously it would be important to have the concurrence of all the members of your
group and I would be more than happy to take a look at the final version before it
goes out.
July 12, 1990
DOMESTIC POLICY COUNCIL
Working Group on Global Change
Task Force on Economic Costs
Bruce Bartlett
Deputy Assistant Secretary for
Economic Policy
Main Treasury, Room 3445
Washington, D.C. 20220
Tel: 566-2768 FAX: 786-8452
Fred Bernthal
Deputy Director
National Science Foundation
1800 G St., N.W., Room 520
Washington, D.C. 20550
Tel: 357-9427 FAX: 357-9725
Curtis Bohlen
Assistant Secretary
Oceans & International Environmental &
Scientific Affairs Bureau
Department of State, Room 7831
Washington, D.C. 20520
Tel: 647-1554 FAX: 647-0217
Robert W. Corell
Assistant Director for Geosciences
National Science Foundation
1800 G Street, N.W., Room 510
Washington, D.C. 20550
Tel: 357-9715 FAX: 357-9629
J. Clarence Davies
Assistant Administrator
Policy, Planning and Evaluation
Environmental Protection Agency
401 M Street, S.W.
Room 1013 West Tower
Washington, D.C. 20460
Tel: 382-4332 FAX: 252-0275 & 252-0780
Bruce Gardner
Assistant Secretary for Economics
Department of Agriculture
14th & Independence Ave., S.W., Room 227E
WAshington, D.C. 20250
Tel: 447-4164 FAX: 475-4915
2
Teresa Gorman
Associate Director for Environment,
Energy, and Natural Resources Policy
Office of Policy Development
Old EOB, Room 227
Washington, D.C. 20500
Tel: 456-6554 FAX: 456-7739
Robert E. Grady
Associate Director
Natural Resources Energy and Science
Office of Management and Budget
Old EOB, Room 260
Washington, D.C. 20500
Tel: 395-4844 FAX: 395-5730
C. Boyden Gray
Counsel to the President
White House, West Wing, 2d Floor
Washington, D.C. 20500
Tel: 456-2632 FAX: 456-6279
Nancy Maynard
Assistant Director for Environmental Affairs
Office of Science and Technology Policy
Old EOB, Room 428-1/2
Washington, D.C. 20500
Tel: 395-6202 FAX: 395-3719
Barry McBee
Special Assistant to the Secretary
to the Cabinet
Office of Cabinet Affairs
Old EOB, Room 235
Tel: 456-6437 FAX: 456-2223
Mark Plant
Deputy Under Secretary, Economic Affairs
Department of Commerce
14th & Constitution Ave., N.W., Room 4850
Washington, D.C. 20230
Tel: 377-3523 FAX: 377-0432
John Schrote
Deputy Assistant Secretary
Policy, Management, and Budget
Department of the Interior, Room 6214
18th and C Streets, N.W.
Washington, D.C. 20240
Tel: 208-4123 FAX: 208-4561
3
Linda Stuntz
Deputy Under Secretary for Policy,
Planning and Analysis
Department of Energy, Room 7B-098
1000 Independence Ave., S.W.
Washington, D.C. 20585
Tel: 586-5316 FAX: 586-5313
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Bruce Bartlett, Dep Asst Sec for
Economic Policy
Main Treasury, Room 3445
Please deliver to:
FAX number of addressee: 786-8452
566-2768
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
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1
202 786 8452
7-12-90 2:19PM
3'20"
6
TOTAL 0:03'20"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Fred Bernthal, Deputy Director
National Sciance Foundation, Room 520
Please deliver to:
357-9725
FAX number of addressee:
357-9427
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
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1
202 357 9419
7-12-90 2:22PM
3'04"
6
TOTAL 0:03'04"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Curtis Bohlen, Asst Sec, Oceans &
Internatl Environ & Scientific
Dept of State, Room 7831
Please deliver to:
647-0217
FAX number of addressee:
647-1554
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
NO
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1
96470217
7-12-90 2:26PM
3'19"
6
TOTAL 0:03'19"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Robert Corell, Asst Dir for Geoscier
National Science Fdn, Room 510
Please deliver to:
352
375-9629
FAX number of addressee:
357-9715
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
Number of pages, including cover sheet:
6
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
NO
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1
9 357 9629
7-12-90 2:30PM
3'19"
6
TOTAL 0:03'19"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
J. Clarence Davies, Asst Administrato
Policy, Plan & Evaluation, EPA
Please deliver to:
Room 1013, West Tower
FAX number of addressee: 252-0275 or 252-0780
382-4332
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
Number of pages, including cover sheet:
6
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
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1
202 252 0275
7-12-90 2:34PM
3'15"
6
TOTAL 0:03'15"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Bruce Gardner, Asst Sec for Econ
USDA, Room 227E
Please deliver to:
FAX number of addressee: 475-4915
447-4164
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
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1
202 475 4915
7-12-90 2:54PM
2'51"
6
TOTAL 0:02'51"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
C. Boyden Gray, Counsel to the Pres
White House, West Wing
Please deliver to:
2d Floor
456-6279
FAX number of addressee:
Telephone number of addressee: 456-2632
From:
RICHARD SCHMALENSEE, MEMBER
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
6
Number of pages, including cover sheet:
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
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2024566279
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2'49"
6
TOTAL 0:02'49"
6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Nancy Maynard, Asst Dir for
Environmental Affairs, OSTP
NEOB, Room 5005
Please deliver to:
395-3719
FAX number of addressee:
395-3637
Telephone number of addressee:
RICHARD SCHMALENSEE, MEMBER
From:
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
Number of pages, including cover sheet:
6
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
# 6
*** SEND ***
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2023953462
7-12-90 2:42PM
2'48"
6
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6
XEROX TELECOPIER 7020
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
July 12, 90
Date:
Mark Plant, Dep Und Sec, Econ Affairs
Dept of Commerce, Room 4850
Please deliver to:
377-0432
FAX number of addressee:
Telephone number of addressee: 377-3523
From:
RICHARD SCHMALENSEE, MEMBER
202-395-6947
FAX number of sender:
Telephone number of sender: 202-395-5036
Number of pages, including cover sheet: 6
TRANSMISSION REPORT
THIS DOCUMENT (REDUCED SAMPLE ABOVE)
WAS SENT
** COUNT **
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6
XEROX TELECOPIER 7020
July 12, 1990
DOMESTIC POLICY COUNCIL
show
Working Group on Global Change
Task Force on Economic Costs
Bruce Bartlett
dut
Deputy Assistant Secretary for
Economic Policy
Main Treasury, Room 3445
Char
Washington, D.C. 20220
Tel: 566-2768 FAX: 786-8452
Fred Bernthal
Deputy Director
National Science Foundation
1800 G St., N.W., Room 520
Washington, D.C. 20550
Tel: 357-9427 FAX: 357-9725
Curtis Bohlen
Assistant Secretary
Oceans & International Environmental &
Scientific Affairs Bureau
Department of State, Room 7831
Washington, D.C. 20520
Tel: 647-1554 FAX: 647-0217
Robert W. Corell
Assistant Director for Geosciences
National Science Foundation
1800 G Street, N.W., Room 510
Washington, D.C. 20550
Tel: 357-9715 FAX: 357-9629
J. Clarence Davies
Assistant Administrator
Policy, Planning and Evaluation
Environmental Protection Agency
401 M Street, S.W.
Room 1013 West Tower
Washington, D.C. 20460
Tel: 382-4332 FAX: 252-0275 & 252-0780
Bruce Gardner
Assistant Secretary for Economics
Department of Agriculture
14th & Independence Ave., S.W., Room 227E
WAshington, D.C. 20250
Tel: 447-4164 FAX: 475-4915
2
Teresa Gorman
Associate Director for Environment,
Energy, and Natural Resources Policy
Office of Policy Development
Old EOB, Room 227
Washington, D.C. 20500
Tel: 456-6554 FAX: 456-7739
Robert E. Grady
Associate Director
Natural Resources Energy and Science
Office of Management and Budget
Old EOB, Room 260
Washington, D.C. 20500
Tel: 395-4844 FAX: 395-5730
C. Boyden Gray
Counsel to the President
White House, West Wing, 2d Floor
Washington, D.C. 20500
Tel: 456-2632 FAX: 456-6279
Nancy Maynard
Assistant Director for Environmental Affairs
Office of Science and Technology Policy
New EOB, Room 5005
Washington, D.C. 20506
Tel: 395-3637 FAX: 395-3719
Barry McBee
Special Assistant to the Secretary
to the Cabinet
Office of Cabinet Affairs
Old EOB, Room 235
Tel: 456-6437 FAX: 456-2223
Mark Plant
Deputy Under Secretary, Economic Affairs
Department of Commerce
14th & Constitution Ave., N.W., Room 4850
Washington, D.C. 20230
Tel: 377-3523 FAX: 377-0432
John Schrote
Deputy Assistant Secretary
Policy, Budget, and Administration
Department of the Interior, Room 6214
18th and C Streets, N.W.
Washington, D.C. 20240
Tel: 208-4123 FAX: 208-5048
3
Linda Stuntz
Deputy Under Secretary for Policy,
Planning and Analysis
Department of Energy, Room 7B-098
1000 Independence Ave., S.W.
Washington, D.C. 20585
Tel: 586-5316 FAX: 586-5313
OF THE INTERIOR 130
United States Department of the Interior
OFFICE OF THE SECRETARY
House
ME
WASHINGTON, D.C. 20240
file
With
Memorandum
To:
Addressees
From:
Indur Goklany, (DOI), Principal U.S. Delegate and
Clients
Rapporteur, RUMS/IPCC-WG3
Goklany 5/2/90
choge
Subject: Resource Use and Management Subgroup (RUMS-IPCC
WG3-RSWG) Report
The April 23rd-25th meeting of RUMS was very successful from our
point-of-view. We now have a report which will be circulated to
all nations (see Attachment).
The meeting was attended by U.S., Canada, Australia, U.K., Japan,
China, Brazil, Tanzania, Kenya, FAO and the Coal Industry Advisory
Board. The U.S. was represented by USDA, Corps of Engineers, NOAA
and DOI.
This report does not differ markedly from the initial drafts that
you may have seen. The most important changes that were made to
the April 3rd version are:
Clarification that analysis of economic efficiency (and of
costs and benefits) should also consider environmental
factors.
The language on subsidies is much softer in many places at the
insistence of the Japanese. It now asks for "analysis and
review" of subsidies where it initially had "analysis, review
and, if necessary, eliminate".
The conclusion section in the Food Security Section was
eliminated, but its last paragraph is now the last paragraph
in the Executive Summary.
Reforestation and afforestation are now explicitly included
as near-term options.
There is now a little bit more on fisheries including a
reminder of their role in recreation.
The term "welfare" has now been substituted by "wellbeing",
e.g., as in social and economic wellbeing.
There was a strong suggestion to have the RUMS report make
recommendations, as opposed to merely provide a "menu of options".
This had been anticipated, and the Co-chairman started the meeting
by reviewing the process by which we had gotten to the meeting and
the reasons for providing a menu rather than recommendations.
The paper clearly articulates the U.S. view that currently we
should be pursuing policies that are economically justifiable now,
and that criteria for determining justifiability include economic
efficiency, cost-effectiveness and consideration of opportunity
costs. (There was an unsuccessful effort to drop "economically"
prior to "justifiable").
It also make several positive allusions to economic-based
solutions, and notes the uncertainties in estimating not only
changes in the climate, but also in estimating their impacts on
resources and, further, on socioeconomic consequences.
The Executive Summary speaks for itself. Much of this is quite
predictable, however, it does make some points which may not be
clearly articulated in the other Subgroup reports, e.g.:
Temperature change is one of several, and perhaps not the most
important, climatic variable and that for many of these
variables, we do not even know the direction of change.
The effects of climate change could be trivial relative to
changes due to other causes, e.g., population growth and other
socioeconomic factors.
That climate change could also have beneficial aspects in a
number of circumstances.
That human beings have a long and relatively successful
history of coping with adverse climate change, and that we can
learn from past lessons as well as lessons learnt from current
resource use and management practices employed across the
existing wide variation in climate over the face of the globe.
That, while economic and technological growth may be seen to
be part of the problem, they also make it easier to cope with
any climate change.
Recognition of the potentially positive aspects of CO2, and
that limitation strategies should explicitly consider these.
That the ultimate objective is socio-economic wellbeing (which
includes consideration of environmental factors).
That increased productivity (for agriculture, forests, and
water) and economic growth, consistent with the principles of
sustainable growth and development, are environmentally
beneficial.
Decision-making on resource use and management should be
decentralized--with some consideration of the broader
society's concerns to deal with the "not-in-my-backyard"
syndrome.
Resources or resource sectors (e.g., agriculture and forestry)
that are managed intensively are more able to adapt
successfully than unmanaged ecosystems.
As noted, most of the other points are quite predictable, e.g.,
greater support for sustainable growth and development, increased
reforestation and afforestation, inventorying, monitoring,
assessments, research, technology transfer, and recognition of the
special problems of developing nations, etc.
The RUMS meeting also discussed possible future tasks. These are
specified in the attached letter from The Canadian Co-chairman
(Pentland) to the RSWG chairman.
If you have any comments on this document, please provide them to
me by COB May 16th (tel. 208-4951, fax 208-4867. Note the change).
Attachments. (Passanto Howard a)
COUNCIL OF ECONOMIC ADVISERS
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
June 14, 1990
MEMBER OF THE COUNCIL Cheys)
MEMORANDUM FOR TIMOTHY DEAL, ERIC MELBY
FROM:
RICHARD SCHMALENSEE
BL
SUBJECT:
German Proposal on the Environment
This is obviously a very troubling document. I hope it
bears so little relation to what has gone before (or that their
attempt to sieze the pen is such a departure from past practice)
that you can avoid having to work from it. If everything fails,
however, here are some specific responses.
Introduction: There is no scientific basis for the statement
that "Changes in the Earth's atmosphere will endanger life on
earth unless present trends are checked." (Incidentally, these
are the same words we heard from the German Environment Minister
at the White House Conference in April.) Neither the WGI report
of IPCC, which concludes that equilibrium temperature is likely
to rise by 1°C by 2030 and 3°C by the end of next century in the
"high emission" scenario, nor examination of agricultural
impacts, sea-level rise, health impacts and other relevant
factors by USEPA and WGII of IPCC provide any justification for
the German statement. Do our German friends have different
information?
There is no real support for the assertion that "it is of
paramount importance for suitable preventive steps to protect the
atmosphere to be taken without delay." I know of nothing that
suggests that a few years' delay in G-7 action would make a
quantitatively important difference to trace gas concentrations
60 years from now.
Paragraph #1: The Montreal Protocol focuses on curtailment of
ozone depleting gases, many of which are (by happy coincidence)
also powerful greenhouse gases. The language in paragraph #1
mentions "tightening targeted reductions for greenhouse gases" in
the context of the Montreal Protocol. We should resist efforts
to mis-characterize the purpose of the Montreal Protocol.
Although we can and should applaud continued progress in reducing
ozone-depleting gases and note that many of these gases are also
powerful greenhouse gases, we should not allow it to be suggested
that our support for the Montreal Protocol amounts to support for
a greenhouse gas protocol.
2
Paragraph #2: The third sentence is deceptive: the OECD nations
account for only about 40 percent of anthropogenic CO2 emissions
and that this share is projected to shrink.
The next sentence suggests commitment to adopt both a
framework convention and a CO₂ emissions protocol in the same
1992 time frame. There is no rational basis for such a
commitment given the current state of knowledge about the
magnitude and impact of climate change. A lack of knowledge
about the costs and benefits of particular response strategies is
a major impediment to consideration of a CO₂ protocol at this
time. If a protocol is ultimately deemed necessary, we believe
that there are important advantages to looking at sources and
sinks and at all greenhouse gases comprehensively.
The subsequent reference to "radical provisions" can only be
intended as a bargaining chip; we cannot possibly agree to
anything like this, and they must know it.
Paragraph #3: There is no scientific support for the assertion
that "it is of pre-eminent importance for the protection of the
climate" that forests be protected. There are lots of good
reasons for protecting forests, but tropical deforestation
accounts for only about 12 percent of anthropogenic CO₂
emissions, the climatic effects of which are (in our view)
uncertain.
I hope we decide soon whether or not to agree in advance to
a forestry protocol, but as far as I know that decision has not
yet been made, and there is disagreement within the
Administration. (This issue also arises in connection with
paragraph #4, which assumes a protocol.)
Paragraph #7: Proposed declaration on debt forgiveness (first
tick) is much too sweeping, although I gather we are willing to
discuss debt-for-nature swaps.
Paragraph #8: We strongly applaud increased attention to
environmental concerns in the Eastern European nations as they
shift from centrally-planned to market-oriented economies.
However, the suggestion for a mechanism to ensure the use of
"best available technology" (whatever that might mean in
practice) for all economic reconstruction projects is far too
restrictive; no such requirement exists in our own nations.
Eastern European countries should be asked to achieve desirable
environmental improvement using market oriented rather than
command-and-control technology requirements.