The Clinton administration, in signing the United Nation's Global Climate Treaty in Kyoto, Japan, has, pending Senate approval, committed the citizens of the U.S. to a massive reduction in the emission of carbon dioxide (CO2) and therefore the use of energy.
CO2 is emitted naturally, of course, by everything from erupting volcanoes to exhaling people and animals. Indeed, without it there could be no human or plant life. The alleged problem is that, due to the burning of carbon-based fuels such as coal and oil, "too much" CO2 is being emitted. According to some, this will cause excessive amounts of heat to be trapped in the earth's atmosphere and ultimately lead to the problem of global warming.
These predictions, accepted by the United Nations and the Clinton Administration, if not by the scientific community, have led to the signing of the Kyoto agreement. If the U.S. Senate were to ratify this treaty, massive new taxes on the use of coal and oil, "carbon taxes," would be required. Americans would be forced to reduce their use of these fuels by about 25 percent in the next 10 years. These new taxes, according to some estimates, could more than triple the producer price of coal and double the producer price of oil and gas. The World Resource Institute says in one of its studies, "the justification for a carbon tax is that the benefits are worth the costs."
In the case of carbon dioxide, the cost-benefit calculation may be turned on its head. According to many scientists, increased levels of CO2 are generating unintended benefits for society. Furthermore, these are tangible benefits that are occurring in the present, as opposed to the costs of global warming, which are highly speculative and are not expected to occur (if at all) until well into the next century. As was recently reported in Science, the journal of the American Association for the Advancement of Science, "many climate experts caution that it is not at all clear yet that human activities have begun to warm the planet-or how bad greenhouse warming will be."
On the other hand, CO2 generally provides great benefits for the earth and mankind. This we know with certainty. Elizabeth Cullota, in the May 1995 issue of Science, pointed out that "CO2 is more than a greenhouse gas - it's also an essential nutrient for vegetation, an aerial fertilizer providing the carbon that plants use to make sugars, carbohydrates, and the other compounds they need to live." She concludes that "in the agricultural realm, experimental evidence suggests that higher CO2 concentrations may be a boon, helping many crops grow faster and yield more." According to a Duke University study cited by Cullota, as much as 10 percent of the increased crop yields over the last one hundred years have come from higher levels of atmospheric CO2.
CO2 also increases the efficiency with which plants use water. As atmospheric CO2 increases, plants will make more productive use of any given level of rainfall. In a study published in the November 1997 issue of Science, it is pointed out that, "For the individual plant, water-use efficiency is almost directly proportional to the level of CO2...doubling the CO2 concentration is almost like doubling the rainfall as far as plant water availability is concerned..." This study goes on to conclude that "Given that the availability of water for agriculture is already becoming such a problem, this aspect...of atmospheric change is a welcome one."
These benefits are in addition to those that are likely to occur in the event that warming actually takes place. Increased temperatures, especially those that occur over night, will delay the first frost and increase the length of growing seasons, further expanding crop yields.
Increased CO2 caused by the burning of fossil fuels may already be generating social benefits such as greater availability of fruits and vegetables, lower food prices and reduced world hunger. It is important to note that many of these benefits seem to be much less speculative than the hypothesized costs associated with global warming. These costs will occur only if predictions of certain computer simulation models are accurate.
According to the same economic theory that led many to advocate a carbon tax if increased CO2 generates external harms, wouldn't a carbon subsidy be required if the external effects of using coal and oil were, on net, beneficial? The prudent answer is probably not. When the net effects of external harms and benefits are uncertain, the economic theory of "second best" argues that neither taxes nor subsidies are in order.
Of course, this does imply that cautious policy-makers should eliminate existing taxes on gasoline and electricity. Furthermore, restrictions on coal mining and oil drilling should also be eased. A cautious "second best" approach would seek to end all carbon taxes and subsidies. Since environmentalists have been quick to justify increased regulations based on CO2's supposed negative effects, one would hope that intellectual honesty would lead them to consider a neutral policy based on CO2's known positive effects.
Roy Cordato is Lundy Professor of Business Philosophy at Campbell University and an adjunct scholar with the John Locke Foundation.
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