Examination of Witnesses (Questions 40-52)
LORD LAWSON
OF BLABY
AND PROFESSOR
DAVID HENDERSON
16 MAY 2007
Q40 Mr Chaytor: But if your argument
is there is no need to cut back on carbon dioxide emissions because
human beings are sufficiently adaptable to cope with a temperature
rise of up to four degrees, then there is no argument whatsoever
for a carbon tax.
Lord Lawson of Blaby: No, there
is no argument for a carbon tax except for the fact that you have
got to have taxation and, bluntly, chancellors of the exchequer
have to finance public expenditure and up to a certain point,
if a carbon tax is more acceptable to the public than some other
forms of taxation, then it is perfectly reasonable for there to
be a carbon tax, but in my judgment there is no necessity to put
on a carbon tax.
Q41 Mr Chaytor: So your solution
then or your response to the IPPC reports and to Stern is to do
nothing because of your confidence in human beings' ability to
adapt?
Lord Lawson of Blaby: I think
I would go further than that, but not a lot further. I think the
situation should be watched very, very carefully and insofar as
there is a role for government in helping people to deal with
the adverse effects of a rise in temperature, like, say, the building
of sea defences, then it is sensible it do that. It does not take
an awful long time to do it compared with the 100 year or the
200 year horizons of these reports. It is also worth pointing
out, talking about these reports, that there are great benefits
from warming. Indeed, the IPPC reports themselves say that with
a temperature rise of up to three degrees centigrade globally
agriculture will be improved, there will be no disadvantage, it
will be an advantage, and in fact the picture is much more disparate
than that because there are some advantages and some disadvantages,
and if you adopt the approach that I am advocating you pocket
all the advantages and then you mitigate the disadvantages. That
seems to me a more sensible way to approach the issue. Another
way of approaching it is that all these problems of possible droughts
in some parts of world, so you need better water resource management,
possible increases in malaria (although that is contested by malaria
experts), and so on, are problems now. They are not problems that
have not appeared, they are problems which afflict the poor in
the world now, and therefore if you go and try to deal with these
you will be helping with a problem which is a very acute, serious
problem, irrespective of whether there is any further warming
or not. Incidentally over this century as a whole, the 21st century
so far, there has been virtually no further global warming. It
does not feel like that here because we are very conscious that
there has been some slight further warming in the northern hemisphere
and a continuation of the trend of the last quarter of the 20th
century, but in the southern hemisphere there has been a slight
cooling over the first few years of this century, which none of
the models have predicted and none of the models can explain.
Nobody knows why that is so, but it means that the average of
the northern and southern hemisphere is for this century so far
little change, so it is a hugely uncertain area.
Q42 Mr Chaytor: But if we accept
that human beings can adapt to certain consequences of climate
change like sea defences, are you confident that nation states
can adapt to the increase in the large-scale migration of people
as a result of desertification or conflicts over water supply?
Lord Lawson of Blaby: I do not
accept there will be conflicts because of changes in the climate.
There is a real danger of conflicts, I am not complacent about
the world, I think there are huge dangers of conflicts in various
parts of the world, in the Middle East and in many other parts
of the world, but I think the idea that climate change will be
the main source of conflict in the world or indeed the sorts of
conflict where there is going to be this very gentle warming,
I do not accept that at all. I think, incidentally, that there
is ample experience to show that there is a crying need for improved
water resource management as of now, irrespective of what may
happen in the future, and that is perfectly practicable.
Q43 David Howarth: I am not too sure
your solution of sea defences for small islands works because
of the effect on water supply in small islands. The Dutch example
depends on the Rhine being behind them rather than all around
them. Just supposing that sea level rises threaten the very existence
of a small island nation, would that be an acceptable cost?
Lord Lawson of Blaby: I think
that if you are suggesting that if there is some small island
where sea levels are rising (and there is no sign of this in the
present time, sea levels have been infinitesimally rising for
the past 100 years but there is no sign of acceleration) and if
there were to be a risk to some small island nation and you had
to say are we going to re-settle that population or are we going
to try and enable them to stay living on this small island at
the cost of a huge burden for the rest of the world, including
the whole of the developing countries of the world, I think it
would be nuts, it would be crazy. You cannot justify that decision
at all, but, anyhow, I think you have to start from where we are.
There is no way—and the Chinese have made this absolutely
clear—in which they are going to agree to cutting back on
their huge, rapid industrialisation programme with one new coal-fired
power station being built every five days and the other things
they have in mind. According to the International Energy Agency
(and other developing countries like India are following a rather
similar path) this year China is likely to overtake the United
States as the biggest single emitter of carbon dioxide, even though,
incidentally, its economy is only one-sixth the size of that of
the United States but because it is very energy intensive and
it specialises in energy-intensive manufacturing industries. That
is the IEA's forecast. The IEA's further forecast is that in 50
years' time the Chinese will be emitting as much as the whole
of the rest of the world put together, and they are not prepared,
very understandably, to hold back on this rapid programme. After
all, China until about 500 or 600 years ago, was the greatest
economic power in the world. They went wrong economically and
they made a number of foolish mistakes and they fell back and
they say, "Now is our chance to catch up again and do what
we are capable of doing. We are not responsible for all the concentrations
of carbon dioxide there are in the atmosphere. If you are concerned
about them, you, the West, deal with them. If you want now to
do something about it, fine, you do it, but we are not going to
be part of it," so the whole thing does not add up.
Q44 David Howarth: It sounds very
familiar, but can I just come back to the point at the start which
is not about who is going to do what in terms of prediction of
political science but as a matter of ethics and a matter of justice.
How big an island and what size of population of island would
you be prepared to relocate in order to save costs on other people?
Lord Lawson of Blaby: I think
I have made my position very clear. That is not a sensible question.
Q45 David Howarth: May I say that
is not an answer, sensible or not! Just one final point on a different
matter, right at the start you were talking about discount rates
and I was not clear whether the point you were making was about
the pure time preference point or it was about the future generations
being richer point and the two interacted. Could I just ask you
specifically about the pure time discount point which is the point
about whether we should value people in the future as to be of
roughly equal value to ourselves, regardless of whether they are
rich or poor, just as people. Do you agree or disagree with Stern's
view of pure time discount? I should add, before you step in,
that at least one of the economists you mention, Partha Dasgupta,
agrees fully with Stern's view on the pure time discount even
though he might disagree about the wealth point.
Lord Lawson of Blaby: Conventional
welfare economics is a very shady and dubious aspect of economics,
it is highly subjective, as is everybody who is engaged in it,
but conventionally, following on from Ramsey many years ago, it
divides the discount rate into two things, the delta and the eta.
One is a pure time discount and the other is a composite, which
I think is a very unsatisfactory composite because it is meant
to measure two things at the same time, what is called risk aversion,
which you understand, and inequality aversion—different
people having different incomes et cetera—and these are
two quite separate things, and I think that is a major flaw in
it. There is an interesting piece on this in the current issue
of World Economics by Beckerman and Hepburn on this whole
area which, if I may respectfully commend it to you, it is well
worth reading. So we can form views on pure time preference, we
can form views on what our risk aversion is, and we can form views
on what our inequality aversion is and, you know, it is all very
well if you add everything together you get an overall rate of
discount which is applied, but I do not think it is for Stern
I must say, to tell the whole of the world what they should feel
about these things. Different societies and indeed different cultures
at different forms of development may have different views on
how risk averse they wish to be and how inequality averse they
wish to be. As to how we should think about future generations,
I do not think it is a central issue, it is only a small part
of the overall problem, but if you look at how we do actually
behave as people, I think probably we do give instinctively greater
weight to the welfare of our children than we do to the welfare
of generations yet unborn. I am not saying we should do that but
I think that is how human beings are and I think in the same way
we tend to give greater weight (maybe we should not) to looking
after the citizens of our own country than we do, say, to looking
after the citizens of China. That is what people are like. You
can preach as much as you like about how people should be but
I do not think it is going to change human nature much and I do
not think it is terribly realistic to say the approach which Sir
Nicholas Stern takes is correct. As you said, Dasgupta agrees
with the delta but disagrees with the eta and other economists
disagree with the delta but may be prepared to agree with the
eta component. There is certainly no agreed economic position
on this and the majority of economists I have read who have pronounced
on this are extremely dubious about the Stern analysis. They may
agree that climate change is a problem but they disagree with
his analysis.
Q46 Chairman: Professor Henderson,
would you like to add anything to Lord Lawson's comments?
Professor Henderson: Not specifically
on this, Lord Chairman.
Q47 Ms Barlow: Lord Lawson, you have
spoken at some length about rising sea levels but in terms of
a rise of four degrees, the only other mention you have made is
of better water management. Studies have estimated that up to
20 per cent of all species could be eradicated in terms of the
effects of climate change. You have said this is a moral issue.
What about the effect on biodiversity and from an economic issue
have you factored into your analysis the economic effects of incredible
changes in agriculture and horticulture as a result of this rise?
Lord Lawson of Blaby: As I said,
talking about agriculture, even the IPPC—which I think gives
a grossly false impression of reality because in explicit terms
they do not allow for any changes or improvements in adaptive
capacity, which I believe is a completely absurd assumption, there
always have been changes as a result, as I say, of a combination
of greater wealth and development of technology, even on that
basis they say that up to three degrees centigrade agriculture
will benefit net from the change of temperature and it probably
would at even higher than that. As for the biodiversity point
and species, what they actually say is that a lot of the species
already in danger may be in greater danger. These are species
already in danger. I am not sufficiently knowledgeable about how
great the danger is. It is interesting that one of the things
that people are concerned about is polar bears and polar bears
have been around for millennia during which the change in the
world's temperature has been quite considerable and they have
survived, so I think that there is a huge amount of alarmism in
this. Everybody is aware of alarmism. Alarmism has always existed
and you have to aim off for it. You remember Malthus 200 years
ago saying that there was going to be war, pestilence and famine,
very much like the IPPC/Stern Review, because there was no way
in which food production could grow as fast as the population
was rising. There was the famous limits to growth thing. We were
all going to be in a terrible mess. The Club of Rome in the 1960s—I
remember that very well—saying that the world was going
to run out of raw materials and it would no longer be able to
grow. There would be no more economic growth, it was going to
come to a halt within 10 or 15 years. We are now told it is the
consequences of economic growth going on and on and on which is
going to cause all the problems because of carbon dioxide emissions.
Then again in about 1970 scientists said that there was going
to be a new Ice Age because at that period there had been some
cooling in the world, and even James Lovelock, who is now one
of the extreme alarmists about global warming, was predicting
then that at any moment we were going to plunge into a new Ice
Age. And of course the media love those scare stories, they love
these alarms, and they are given huge amounts of publicity. The
is true with medical scares, we read them all the time, there
is a huge amount, that is the nature of the world in which we
live. If you are a sophisticated legislator, which I am sure you
are, you have to discount this.
Q48 Lord Whitty: You seem to be saying
that at three per cent the world becomes a better place and at
four per cent we can live with it with a bit of adaptation and
sea defences, but actually from a business as usual case we are
looking at about 1,000 ppm by the end of the century and the implied
temperature rise for that is very substantial and we have not
had that level of carbon concentration for roughly 50 million
years when the world was much hotter and a very different sort
of place. Is there a point in your scale where the trade-off changes?
If we can survive at four per cent, can we survive at six per
cent or Helsinki becoming as warm as Singapore and Singapore presumably
going up another 22 degrees? Either you accept the causal relationship
between carbon concentration and temperature and if you do not
accept that then that is one point, but if you do, then is there
a point on the temperature scale at which in economic terms the
investment in adaptation ceases to be the best way to deal with
it and you have to invest in mitigation? If so, what is that point
approximately?
Lord Lawson of Blaby: I think
that the point really is this: that of course carbon concentrations
in the atmosphere have been rising substantially and are set to
rise substantially but those are not the only determinant by a
long chalk of the temperature of the globe. First of all, carbon
dioxide is not the most important greenhouse gas by a long way.
The most important greenhouse gas is water vapour, whether in
the form of clouds or water droplets in the atmosphere. That is
the biggest single greenhouse gas. Carbon dioxide is only a small
part of the total greenhouse gas picture, so it is extremely complex
and extremely difficult, and nobody, not even the IPPC, thinks
that anyhow that is the sole cause of the modest rise in temperature
that we have had. They accept that there are natural forces at
work too but they think probably it was the greater part, over
50 per cent, but it is all inevitably uncertain. Other people
think it is less but very few scientists think it is zero per
cent. However, it is very difficult to decide how much of this
modest warming that we have had is due to that. So it is not simply
a question of carbon dioxide concentrations in the atmosphere.
It is a question of what effect they are having, which we should
obviously be monitoring and watching very carefully. I have to
say I do not have the confidence that you have, Lord Whitty, to
be able to know what the world is going to be like in 100 years'
time or 200 years' time.
Q49 Lord Whitty: But you have said
that effectively—never mind the cause for a moment of global
warming—even it was totally natural causes that four per
cent is liveable with by investing in adaptation rather than attempting
any serious mitigation, but there must be a point on the temperature
scale at which the opposite becomes true, at which the cost of
adaptation is so huge, directly and indirectly, that mitigation
becomes—
Lord Lawson of Blaby: There are
all sorts of things that are going to happen some time. One day
the sun is going to burn itself out and that is going to be the
end of it.
Q50 Lord Whitty: Probably not in
the next 100 years though.
Lord Lawson of Blaby: No, but
I find it difficult to say with confidence what is going to happen
over the next 100 years. We do not know what is going to happen
in the development of technology, whether it is technology in
renewables or the development of technology in adaptation. How
man is likely to adapt given greater wealth, given better technology,
we cannot say. We do not know what is going to happen to sea levels.
There are all sorts of projections but, as I say, so far there
is no sign of any great rise in sea levels. However, we have got
to watch all these things and we should take the sensible steps
at the time to deal with them. I am not dogmatic about this but
I do think that rushing into what is in the Climate Change Bill
would produce great damage to this country, if it were taken seriously.
I suspect it is just posturing, incidentally, it is very fashionable,
very trendy, and I suspect it will never actually happen, but
I am afraid that it might. There is an outside chance that it
might and if it did it would be very damaging.
Q51 Chairman: You can see that the
clock has beaten you and there is a division. Because we are inquorate,
would you write to the Committee with your final statement. If
we could receive it in writing we can include it in evidence.
Professor Henderson: I have already
made an offer to the Clerk to put in a note on one or two other
questions that may come up.
Q52 Chairman: Thank you very much
indeed. Sorry but, as I say the clock beat us, not for the first
time. Thank you both very much indeed.
Lord Lawson of Blaby: Thank you.
The Committee suspended from 3.02 pm to 3.12
pm for a division in the House of Commons
|
