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Thoughts on global warming

In addressing climate change, China has a unique opportunity to assert its rising global leadership role, as well as moral authority, writes George A. Akerlof.

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Let me start with a few statements to indicate where I am coming from.

First, the theory and evidence that I have seen all seems to strongly suggest that human-related emissions of carbon into the atmosphere is causing, and will in the future cause, significant global warming.

Second, this global warming is on such a scale that it will wreak havoc on both poor and rich countries.  It could even make large sections of the earth uninhabitable.

Third, the costs of abatement are large.

Therefore the decision to curtail emissions is a very serious one and it is clear that these decisions will also cause hardship in poor and in rich countries.

Fourth, despite these high costs, the time has passed that policy makers should still be acting on the null hypothesis that global warming will not occur.

Choice of null

Here I come to the first use of economics.  It turns out that this point is central to current US policy. As I see it, current US policy is that the Federal Government should do continued research to ascertain the extent of global warming and its future path and the  policy tree is to take future action only if the findings of this research are sufficiently conclusive.

In the event of the findings being sufficiently conclusive,  we should take serious corrective action to curtail our own emissions and also to participate in international treaties regarding abatement of emissions.

An alternative null hypothesis—that global warming is already occurring—could be the basis of our policy. Were that to be the case, this alternative hypothesis would cause our policy to be very different : in this case we should be taking active steps now to curb emissions and to participate in international treaties to curb it.

Which of these two null hypotheses guides our policy should be determined by the relative costs and benefits and the relative probabilities of the two hypotheses.

The losses from failing to address global warming if it does occur are truly enormous. Even more serious, the effects are also irreversible. In contrast, the losses from addressing global warming, if it does not occur or if it is not very serious, are not enormous and the losses from addressing the problem  are only very large. In addition, it seems that the likelihood of global warming with serious impacts on large segments of the planet seems now to be very high.

If we add up the relative economic costs and benefits and weight them by their respective probabilities, that seems to show that we should definitely be acting on the presumption that global warming is going to occur.

The unavoidable conclusion is that the current US administration and the US Congress have made the wrong call.

We should be acting to curb it and we should be engaging in international co-operation to do so. And even those who have very serious doubts about whether global warming is occurring should still believe that we should be taking precautions against it. 

Economic remedy

The second topic that I want to address is how we should fight global warming.

Economic theory gives a simple natural way to fight global warming, which is to have escalating taxes on carbon emissions. There is a simple reason why this is the ideal remedy : carbon emissions into the atmosphere constitute a nuisance to everybody on the planet.

People should be taxed to pay a penalty equal to the value of the nuisance that they cause. In this way people who value their emissions more than the nuisance they cause will make those emissions and they will  pay the tax. People whose emissions are not valued as much as the nuisance they cause will curb them and will not  pay the tax. Thus with such a tax, emissions will be curbed insofar as the nuisance they create exceeds their benefits.

The economics here is as simple and straightforward as economics ever gets. It would be hard to find any economist who would disagree.

It may also be worthwhile noting that this may be one place where economists’ judgments may be different from that of other professionals.   We economists tend to  be fairly optimistic about the effects of prices or taxes on people’s behavior. So the size of the tax necessary to reduce these emissions may be large, but perhaps not extremely large.

The reason for that is that we think that over fairly long periods of time that people are fairly responsive to changes in prices. In addition, there will be substitution of nuclear and other non-carbon forms of electricity generation.

Steve Chu’s talk gave some indication as to how large these taxes would have to be to get important shifts even with current technology to carbon-free generation of electricity.

With a carbon-tax people will switch to smaller and more fuel-efficient methods of transport. With sufficient time for innovation and a tax that is sufficiently high there will be other innovations as well. There are also possible innovations in carbon sequestration.

A further recommendation from standard economics is that there should be large-scale government support for research into new technology that will reduce carbon emissions.

However, this research must be supported by incentives to develop such technology further and put it in place.

But it is important to note that the new technology will not and  cannot be successful unless the appropriate incentives for its use are put into place : you may create the most beautiful inventions, but  unless it pays people to use them, they won’t.

So we need a carbon tax or something like it to provide such incentives.

Finally, because much of the use of energy involves networks of people who are doing the same thing, initial technologies may need some extra push from governmental subsidy and governmental regulations.

Thus the economics of what should be done is fairly simple --  sufficiently simple, in fact,  that it can be easily taught as an application of standard economic principles in a first-year undergraduate course. But it turns out that getting people to follow these economic principles is very difficult indeed.

I have seen this at first hand at Congressional testimony given by my wife, who was the Chair of the Council of Economic Advisers from 1997 to 1999. It was her job to represent the economic case of the Clinton Administration as to why the Congress should support the Kyoto Treaty.

The Congress-people were not willing to vote for this because they felt that the costs of supporting Kyoto were too high relative to the benefits. In a nutshell they were afraid that their constituents would rebel against the increases in the prices that would accompany reductions in carbon emissions called for in the Kyoto Accords.

The moral basis of policy

In retrospect I think that the argument for the carbon tax has been pitched in the wrong way and at the wrong level.

The Clinton Administration framed its argument in terms of costs and benefits, but instead, the issue of global warming needs to be phrased in moral terms. Phrasing it in moral terms  should also be the stance for international agreements.

The morality of it is fairly easy : if somebody does not do anything about global warming, the climate of the earth is likely to change drastically, with severe harm to future generations. Carbon emissions are the cause of this global warming. Therefore it is immoral for any country, any industrial entity, or any person to contribute more than her fair share to this nuisance.

It is like a case of stealing. By adding more carbon to the atmosphere than our fair share, we are taking more than what rightfully belongs to us. We should not feel entitled to that any more than we would feel entitled to enter uninvited into our neighbors’ house and partake of the dinner sitting on the table for their family.

Whether or not we should do that is not a question of costs and benefits and even less should it be a question of our costs and ourbenefits.

It is a question of basic right and wrong.



Opportunity for China

I would like to make a suggestion to the Chinese delegation  regarding the stance that they should take toward global warming. I do not think that you should look to the United States to take the lead before you take your own stance on global warming. China is the rising economic star. China is also  the rising star on the stage of world leadership.

World leadership should be given not to countries because they are rich and powerful. It should be given to countries that have a moral commitment to do what is humanitarian and right.

Global warming is one such area. It is an area where the US especially has abdicated what is right for what is expedient. This is an opportunity, perhaps at not even very great cost, for China to assert its moral authority.

It is a good place to begin the assertion of world leadership that China will increasingly take as this century progresses.

George A. Akerlof is the Koshland Professor of Economics at the University of California, Berkeley and winner in 2001 of the Nobel Prize for Economics. This article is taken from a paper Professor Akerlof delivered to the China/US Climate Change Forum in Berkeley in May 2006.


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Default avatar
匿名 | Anonymous



US vs China

There is misunderstanding about China's position on climate change. According to equity and "common but differentiated responsibility", China argues that developed countries, including the United States should take action to address climate change for what they did to the environment. However, it does not mean that China will commit to emission reduction targets if US does. The largest barrier for the Chinese government is not the US but the concern of potential impacts on economic growth

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匿名 | Anonymous


温室效应最早是由法国科学家傅利叶于1824年发现的,1896年瑞典科学家阿赫那斯更进一步对大气层温室效应作了定量研究。温室效应是大气吸收红外辐射同时使地表和大气下层温度升高的现象。温室效应的存在是毫无争议的。自然排放的温室气体可以给地球升温33 °C(59 °F),否则地球将不适合人类居住。关于温室效应的讨论集中在人类活动增加了大气中温室气体含量时使温室效应变化的程度。地球上最主要的温室气体存在形式是水蒸汽，36–70% 的温室效应（不包括云层）都是由它造成的；二氧化碳占9–26%；甲烷占4-9%;臭氧占3–7%。其它自然排放的温室气体对温室效应贡献很小；其中之一的二氧化氮在大气中的浓度由于诸如农业在内的人类活动而有所增加。大气二氧化碳和甲烷的浓度相比1750年工业革命前水平分别增加了31%和149%。目前的水平在从冰核中搜集的过去650，000年的可靠数据中是最高点。相对间接的地质证据表明最近一次此程度的大气二氧化碳浓度发生在两亿年前。在过去20年间二氧化碳浓度增量的确3/4都是由化石燃料的燃烧造成的。其余部分大都缘于土地使用的变更，特别是森林的采伐。目前大气中二氧化碳浓度大约为百万分之三百八十三。由于化石燃料的持续使用和土地使用的变更，预期未来二氧化碳浓度将继续上升。上升幅度将基于不确定的经济、社会、科技及自然发展，但最终会由于化石燃料耗尽而受到限制。政府间气候变化研究小组(IPCC)关于“排放情景”的特别报告展望了未来CO2排放的众多可能，其变化范围于2100年为从百万分之五百四十一到九百七十。化石燃料的储备可使CO2排放达到此水平，若广泛使用煤、油砂或甲烷水合物，排放还将于2100年继续。



Existence of the greenhouse effect as such is not disputed. Naturally occurring greenhouse gases have a mean warming effect of about 33 °C (59 °F), without which Earth would be uninhabitable.[17][18] The debate centers on how the strength of the greenhouse effect is changed when human activity increases the atmospheric concentrations of some greenhouse gases.


The present atmospheric concentration of CO2 is about 383 parts per million (ppm) by volume.[23] Future CO2 levels are expected to rise due to ongoing burning of fossil fuels and land-use change. The rate of rise will depend on uncertain economic, sociological, technological, and natural developments, but may be ultimately limited by the availability of fossil fuels. The IPCC Special Report on Emissions Scenarios gives a wide range of future CO2 scenarios, ranging from 541 to 970 ppm by the year 2100.[24] Fossil fuel reserves are sufficient to reach this level and continue emissions past 2100, if coal, tar sands or methane clathrates are extensively used.[25]

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匿名 | Anonymous



the inconvenient truth

This film gives me more thoughts on global warming. There is no magic pills to cure this persistent ailment unless everyone takes certain responsibity to confront it.
Of course, we also wish that a knight, such as the President of the US would come in front of the world declaring a war against global warming.
However, things are not as easy as we think. To slove this problem , we need to change from the bottom of our heearts, from the change of life-styles, reducing the emission of CO2.
What can we do now?
Since I am still a student, all can I do at this stage is to conserve water and electricity, to wear more clothes rather than using the air-conditioner, not to use hot water bag to keep warm, to classify the rubish and to send the retrievable parts to recycling companies, not to buy unnecessary things, seldom to or even not to use plastic bags and paper, to send email , not the real cards, to friends during the festervals, to avoid driving, but to take buses or to walk instead.
As students, we can also join in the propoganda against global warming, telling people around to watch this film, informing them of the horrible consequences.
We may also publicize some vedio clips ,or flash online to let more people take action.
If we want to see Beijing, Shanghai, Hangzhou being swallowed by the ocean, we'd better take action now.
We can make our own contribution by participating some public benefit activities during the spring festerval break.
We can also plant and take care of a tree since each tree can consume more than one ton Co2 during its life time.

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匿名 | Anonymous



awakening the morals

I firmly agree with you. Reducing Co2 emission is the obligation of all responsible countries. Any country developing its economy at the expense of ecological balance or the ecology of other countries, especially those taking no action so far should reconsider its morals in international community.

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匿名 | Anonymous



What's the point of conscience?

Whats all this "Whether poor country or wealthy we could all suffer enormous damage" There is an old chinese saying - the poor aren't afraid of wearing shoes, the greenhouse effect is more terrifying, it could return humanity back to a primitive society, really poor countries are not far from primitive society so there's nothing to be afraid of. Since its hard to return to frugal ways once one has become accustomed to luxury, up until now, only the rich countries were troubled, now however the rich countries want to draw the poor countries on to their pirate ship.

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匿名 | Anonymous



Short-term Benefits Vs Long-term Benefits

People who have some knowledge of economics realize that resources are scarce, but the sensible people will have a hypothesis with a fundamental precondition that the resources are made best of and generate the maximum profit. How to make use of resources lays the foundation of profit-making, therefore, the sensible will take up resources through depredation. However, not only will they have to pay for the cost of depredation during the process, but the cost for destroying resources as well, that is , environmental cost . In this case, who should be responsible for the environmental cost? The earth? The global warming phenomenon tells us that it is definitely the sensible who should take charge of the bill. The issue that we are confronting now--- what kind of choice will the sensible make?

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匿名 | Anonymous



I recommend a documentary film to everyone

"An Inconvenient Truth" addresses the issue of global warming.

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匿名 | Anonymous

I think this is necessary!

Because we just have onew earth . We should keep it



Default avatar
匿名 | Anonymous



Global warming is related to everyone

Global warming is related to everybody, directly or indirectly.

To tackle this issue, every person must be aware of environmental issues.

It is everybody's responsibility to fight global warming, not just one specific person or country.

Comment translated by Dongying Wang

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匿名 | Anonymous




Today, our teacher want us to do a project about this. I had no idea. My friend had told me about this web site, pretty good .
Comment translated by Yuexia Guo