Enter the Economists Part II

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Enter the Economists: Part I—Part II—Part III
Summary and Discussion at Bishop Hill
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Continuing our look at the Price of Life Controversy, we find how the global sustainability movement influences the IPCC and especially through the re-constituted Working Group III.

But first, here is a brief chronology to guide the reader:
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1987 Our Common Future published by the United Nations
1988 The Changing Atmosphere Conference in Toronto (also: Hansen’s Congressional Testimony; Margaret Thatcher gets involved; the IPCC formed)
1990 The IPCC First Assessment Report published
1992 Rio Earth Summit in June introduces the UN FCCC which defers to the IPCC for its scientific assessment. At its 8th meeting (11-13 Nov) the IPCC re-directs its Working Group III to the ‘Economic and Social Dimensions of Climate Change’ for the 2nd Assessment.
1993 The inaugural plenary of the re-constituted WG III (4-7 May) proposes a work plan orientated to the sustainable development goals of the Earth Summit. This is approved by the 9th IPCC meeting (29-30 June) and the selection of lead authors begin.
1994 Four WG III workshops (Jan-July) in Japan, Brazil, Italy and Kenya involving a broader community of experts. A first draft of the Report is circulated for expert review. A revised draft is prepared and circulated for governmental and NGO review and then a final draft is produced before the year is out.
1995 The Price of Life Controversy: with the final draft of the chapters in hand, a lead author’ meeting (Paris 22-24 Mar) prepares a draft of the Policymaker’s Summary for the intergovernmental Plenary and its line-by-line approval process. At the same time, and days before delegates depart for the first Conference of Parties to the FCCC (April, Berlin), India sends a letter [Kamal Nath, 24mar95] to other poor country delegates raising concerns about the damage assessment in Chapter 6. The campaign during CoP1 includes strong words in the India’s delegations official address [Kamal Nath, 6Apr95]. Three months later, the WG III Plenary in Geneva (25-28 July) fails to agree on the Summary nor ‘accept’ the underlying Report. The Plenary reconvenes in Montreal (11-13 Oct) where the Report is accepted and the Summary approved. However, this is only after the Chapter 6 authors have their dissent from a number of points recorded in the minutes. The Controversy continues in the science press with both sides now calling for the removal of the Chapter from the Report before its final submission to the 11th meeting of the IPCC (11-15 Dec). The controversy dies when this meeting accepts the Report and Summary with a minimum of fuss. The Chapter 6 authors never accept the Summary, claiming that its Part 7 contains distortions and interpolations of their findings.
(For the larger context see this Timeline.)

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Channeling Sustainability Enthusiasm

1972: UN Stockholm Conference: Indira Gandhi, Prime Minister of India, links environmental protection with development goals.

The global environment movement bursts onto the world stage in 1972 with the United Nations Conference on the Human Environment. It is here that the seeds of sustainable development enthusiasm are planted and the UN Environment Programme is born. 

But the great manifesto of sustainable development does not arrive until 1987 with the UN Report, Our Common Future.

The vision encapsulated in the ‘Brundtland Report’ is to bring together the apparent conflict between economic development and environmental protection as the twin goals in a new global project.  Across the world the successive public hearings of the Brundtland Commission attempt to give voice to those previously voiceless in the inter-governmental discourse. Aid workers and environmental activists are actively sought, as are the views of the poor and illiterate living close to nature. Indeed, such folk as Amazonian rubber tappers take to the microphone, and sound bites of their contributions remain preserved in the Report.  But ‘equity’ has two dimensions in sustainable development—not only across the globe but also forward through time: Our Common Future also invokes the voiceless voice of future generations so as to ensure that today’s prosperity does not spoil the natural and economic inheritance of those yet to be born.

1987: The Brundtland Report, the sustainable development manifesto

Riding a wave of enthusiasm generated by the Report, Gro Brundtland headlines a charismatic and prophetic billing for perhaps the most evangelical Climate Conference of all time. The International Conference on the Changing Atmosphere issues from Toronto into that baking North American summer of 1988 a concluding statement that famously begins:

Humanity is conducting an unintended, uncontrolled, globally pervasive experiment whose ultimate consequences could be second only to a global nuclear war.

The Conference Statement [pdf] is primarily concerned with the ‘implications for global security’ of atmospheric damage, and, most alarmingly, the damage caused by greenhouse gases. But the ensuing ‘Call for Action’ is much broader and includes a call for the reversal of the current net transfer of resources from developing countries.

Much to the consternation of the American political right, Climate Change Alarmism has always been much more than about fixing the climate. Even before Rio, the movement for action on global warming has already emerged the great hope and channel for all the aspirations of the global ‘sustainability’ movement—including the aspiration for global economic justice.

1988: Changing Atmosphere Conference in Toronto: In her keynote address, Prime Minister Brundtland of Norway channels sustainable development into alarmist climatology (here with Prime Minister Mulroney of Canada, and Environment Minister McMillan).

Following the summer of Toronto and Hansen’s congressional testimonial, the UN Environment Program helps establish the IPCC. And indeed, the following year, with the end of the nuclear arms race upon the collapse of the Soviet Union, global warming emerges second to none in the list of global security concerns. Given this background, it should be no surprise that at the next big and long anticipated sustainability convention, the 1992 ‘Earth Summit’ in Rio, the single concrete outcome would be the climate treaty framework.

After Rio, it is not only that the FCCC explicitly names the IPCC as its scientific authority on how to prevent dangerous anthropogenic interference with Earth’s climate system. The IPCC reciprocates in a conscious, explicit and powerful re-alignment of its mission towards the sustainability aspirations of Brundtland, Toronto and Rio. And this is where the reformation of Working Group III comes in.

Originally, the IPCC assessment work was divided into the ‘physical science’ (WG I), ‘impacts’ (WG II) and ‘mitigation’ (WGIII). Now, with the 2nd Assessment, ‘mitigation’ would be squeezed into the work plan of Working Group II so as to free up Working Group III to cover the cross-cutting social and economic dimensions of the problem. More specifically, the 3rd Working Group is now charged to ‘place the socio-economic perspectives of climate change in the context of sustainable development’ and to ‘recognize in its work the adopted Rio Declaration, Agenda 21’ as well as the FCCC.(1) This Working Group is thus burdened with the monumental expectations of the global sustainability movement. Not only is the Working Group being asked to show the way towards solving the climate problem by economic means, but also how to do so in a way that delivers economic justice across the globe now and forever. The burden of this expectation would be for the broader divisions of interest in the sustainability agenda to be exposed clashing along its wide and soft political interface.

Already at the early climate talks a number of delegations from the larger ‘developing’ countries had hinted that it is only with the incorporation of ‘development’ goals that they are prepared to cooperate—and this synchronizes precisely with the mission of the Meyer’s Global Commons Institute. So, while Greenpeace would work with the alliance of  tiny (drowning) small island states to conjure a sympathy vote on climate justice, the GCI came into alignment with some very powerful players on the big stage, including India and China, so as to make it even harder for Al Gore and Tim Wirth to persuade the US Congress that international economic regulation under the guise of a climate treaty would not compromise their national interest.

Quantifying Sustainability Enthusiasm

1989: The Pearce Report (UK) outlines implementation of sustainable development through economic planning

Already in 1989 a group of UK economists lead by David Pearce had followed up the grandiose proclamations of the Brundtland Commission. This Blueprint for a Green Economy (as mentioned above) was first solicited by the UK Dept of Environment to give a broad outline for implementation through economic mechanisms. It introduces all the hallmark of sustainable economics, including monetary valuation of non-market values, and inter-generational ‘time-preference discounting’—which gives a monetary value to the needs of future generations. In 1991, Blueprint 2 goes global with an emphasis on the problem of warming.

Also in 1991, across the Atlantic, William Cline publishes another report that is dedicated entirely to The Economics of Global Warming. This contains a fully chapter on costing the damages for the USA. Unlike the contemporaneous work of Nordhaus, it goes beyond the market to cover non-market damages and it even addresses the problem of the value of life.

Cline discusses various ways of valuing the anticipated deaths due to warming and these range from 0.5 to 6 million dollars. His preference, which is at the lower end, is exceptional in that it is calculated not by willingness-to-pay but by average lifetime earnings. In the end Cline finds that the total damages to the US economy for a doubling of CO₂ is around 1% GDP. Cline does not shy from policy recommendations. Despite what many see as a modest overall result, it is especially due to the very long-term inter-generational impacts of warming (and so a very low discount rate) that he calls for drastic immediate action.

1991: The Cline Report as with Pearce’s Blueprint 2, narrows the focus to global warming

Cline’s damages chapter must have looked ready-made to form the basis of the IPCC’s global damages assessment, and Cline was originally designated to co-ordinate the writing of Chapter 6. Indeed, he drafted the Chapter in its model, but when David Pearce raises concerns that this is not what is required, Cline backs out of the process. This leaves command of the drafting in the hands of Pearce, whose position on the level and urgency of a climate response places him somewhere between the two Americans, Cline and Nordhaus, who are now watching on the sidelines.

The other select authors of Chapter 6 are curious. India had nominated Rajendra Pachauri, who might seem an unlikely selection considering he has no publications in the field. But his selection fits with the IPCC policy of affirmative action towards nominees from poorer countries. Many chapter authors (and Working Group vice-chairs and co-chairs) with minimal scientific credentials arrive as tokens for poor-nation inclusion. Token he may have been in 1993, but within a decade Pachauri would be victorious over another Chapter 6 author, Pier Vellinga (Netherlands), when in 2002 they were both nominated to succeed to the leadership of the IPCC after Rob Watson’s departure under pressure from the George W Bush Administration.

1995: For the 2nd Assessment an entire working group is dedicated to sustainable development economics

To help with the writing of the Chapter, Pearce appoints a junior assistant. This is Sam Fankhauser whose PhD is right on topic and would feature prominently in the Report. Pachauri and Vellinga do the same, appointing Achanta and Tol respectively. When Vellinga promotes Tol to ‘Lead Author’ status in gratitude for doing most of his leg work, the others followed suit. This is how the likes of Richard Tol, a 25 year old PhD student, and Sam Fankhauser, not much older, find themselves lead authors of an IPCC chapter. They would soon pay dearly for the career boost this promotion undoubtedly affords: not only were their differential valuations of life at the centre of the controversy, but they would be the only authors of Chapter 6 to face the angry chorus at the two final Working Group Plenaries.

Once elected to the task, the authors face a real problem of content. There is no IPCC First Assessment to draw on, and apart from the very different assessments of US damages by Nordhaus and Cline, there is precious little published research to be found. With no time to spare, Pearce, Fankhauser and Tol fill the void by working furiously to ensure a timely appearance of their own studies in the peer review journals.

Confrontation at the Science-Policy Interface

On top of all this comes the problem of Meyer and the Global Commons Institute—who are ready and waiting to stir the pot at the inaugural Plenary in May 1993. But it is an OECD conference on the topic in Paris that summer where a public confrontation between Meyer and Pearce sets the tone for future relations [see: proceedings of ‘The Economics of Climate Change’]. Details are sketchy but Meyer describes the clash as ‘pretty brutal.’ Subsequently Pearce avoids situations where he might be confronted by his critics, including the series of Working Group workshops during 1994.

Relations are hostile almost from the beginning, but this and Pearce’s refusal to change the final draft of the Chapter in response to GCI criticism should not be read as the GCI having no influence on its content.  Indeed, this influence is evident throughout, although mostly in explanations and justifications of the Cost/Benefit Analysis (CBA) and its valuation of life. But when the controversy goes public in April 1995, the final draft had long been completed and Pearce is entirely fed up with the process. That summer he leaves it to Tol and Fankhouser to negotiate through the Plenary in Geneva, while issuing orders via the fax machine. After the Geneva Plenary collapses in a stalemate only to re-convene in Montreal, it is Richard Tol who is left alone to sustain the defence through to the final truce—where the authors’ objections to the Summary are tabled in the minutes. But, by the time Working Group III finally closes for business in October 1995, the controversy had already fledged a life of its own.

Terms of the Montreal truce: Extract from the minutes (‘Report’) of the reconvened WGIII Plenary October 1995

New Scientist reports on the stalemate in Geneva (19 Aug95)

The truce at Montreal is not the end of the controversy but only the end of the battles within the Working Group. All three Working Group reports are destined for final acceptance at the 11th IPCC meeting in Rome in early December. The fight now continues in the press until it peaks in the Nature issues of 23 and 30 November. By this time both sides are demanding the same outcome—to withdraw the entire Chapter from the Report.

Already, before Montreal, Pearce had suggested this. ‘We won’t be revising it,’ he is quoted as saying, ‘and we have no intention of apologising for our work.’ For him it ‘is a matter of scientific correctness versus political correctness.’ After Montreal, the political correct Meyer agrees at least on the grounds of ‘procedural correctness.’ The chapter must be rejected.

After the truce in Montreal the controversy escalates with demands on both sides to remove Chapter 6 from the Report (9Nov95)

From the Chair in Montreal (and in a letter appearing in Nature (12Oct95) while the Plenary was in session) Jim Bruce had tried to avert just such an outcome by clearing the air and so clearing the way for agreement on a Summary that is sufficiently aligned with Chapter 6. Indeed, the Montreal Plenary did go some way to achieving this. But after Montreal both sides agree that the Summary remains out-of-step with the Chapter. If modifying the Chapter at this stage contravenes IPCC rules—and it is widely interpreted that it would, with or without the authors’ consent—then so too would publishing it as it stood.

After Montreal other groups started to voice their views publicly. In the middle supporting Bruce and defending the retention of the Chapter we find the mainstream Green organisations. A Nature news report quotes the umbrella ‘Climate Action Network’ pleading that this ‘single issue’ not obstruct the greater goal. While both extremes see inclusion of the Chapter compromising the reputation of the IPCC, Bill Hare of Greenpeace thinks the same of its omission. Removal of the Chapter ‘would destroy the IPCC’s integrity as an impartial body and open the way for vested interests to interfere.’

After Montreal, Sir Crispin Tickell, Sir Martin Rees and Hans Dürr go in to bat for the GCI against Pearce (30Nov95)

Meanwhile, Meyer had gained an important ally on the British scene in Sir Crispin Tickell. Hailed as one of the patriarchs of greenhouse alarmism, he famously persuaded Prime Minister Margret Thatcher to take up the cause in the late 1980s. Already in the Independent article quoted above (published before the Geneva Plenary), Tickell is quoted saying that the value of life calculations are ‘ludicrous.’ He said so in a letter to the IPCC before getting involved in a fiery correspondence directly with Pearce—which was not calmed by Pearce warning the knight that he plays the pawn in ‘a sustained campaign of misinformation and abuse.’

The final news report on the controversy appears in Nature (30Nov95) just days before the IPCC acceptance meeting in Rome. It quotes attacks from Tickell answered by Pearce, and it plants Hare moderating in the middle. But the reason for this report is mostly to provide Nature readers with background to an extraordinary letter printed a few pages over in the same issue.

An astonishing and timely achievement by Meyer, he pulls 38 scientists—including Sir Martin Rees and Hans-Peter Dürr—and more, all undersigning a letter calling on the IPCC to withdraw the value of life calculations from its 2nd Assessment. They should be removed from the Report before ‘unsafe and discriminatory’ data becomes enshrined in print ‘for at least the next five years’ as its official advice to the UN treaty talks.

Meyer’s trump card: a letter to Nature signed by 38 scientists including Sir Martin Rees (30Nov95)

At this time the personal harassment of Pearce escalates, suggesting that he had good reason to avoid confrontation (although I have no evidence linking this harassment with GCI). Not only does he receive lots of hate mail delivered to work and home, but in late November his Centre for Social and Economic Research of the Global Environment at UCL is picketed by demonstrators—and even briefly occupied. At one point colleagues fear for his physical safety, but he escapes recognition under ‘his silly Russian hat’. (source: Tol, Haites,TES)

Despite the heightened tension and protestations in November, the acceptance in Rome passes with little fuss. According to the Australian Delegation Report, when presenting the Summary and the Report to the Session, Jim Bruce’s co-chair Hoesung Lee notes:

…that IPCC procedures had been adhered to at the plenary, particularly when disagreements had arisen. On some issues it had been impossible to achieve full agreement amongst the experts and this was clearly identified in the text of the report. [p10, para40]

The main task of the Rome meeting is to give line-by-line approval of the drafted ‘Synthesis’ of the three Working Group summaries. And here the controversy does continue. The Australian Delegation Report notes that:

The social costs issue again (as in Working Group III Plenaries in Geneva and Montreal) generated considerable discussion resulting in addition of strong caveats about the reliability of estimates of non-market damages. [p13-14, para 56]

Thus qualified by additional caveats, the bottom line on damages of ‘a few percent of world GDP’ carries through into the final synthesis assessment [see: Synthesis Report 7.3, p15 pdf ].

And that is the end of it. While some of the actors, especially Pearce, were evidently smarting for some years to come, the controversy is all but forgotten by the time the 2nd Assessment is published in June 1996 when that other chapter controversy—over Working Group I, Chapter 8—is only just beginning.

…continues with Enter the Economists Part III: An Amateur Appraisal

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Notes

1. These quotes are from the Preface to Working Group III 2nd Assessment (available here). See also the minutes (‘Report’) of IPCCC VIII (Speech by Bolin is Appendix D) and of IPCC IX. The latter contains the new work plan of Working Group III as Appendix D. On page 5 this states: ‘Each chapter will also place the socio-economic perspectives of climate change in the context of sustainable development. The working group should analyze the issues as broadly as possible recognizing the Rio Declaration on Environment and Development, Agenda 21 and in particular the Framework Convention on Climate Change, as adopted.’

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