Study: Kyoto Protocol Flawed and Dangerous

Published June 1, 1999

The Kyoto global warming accord is so deeply flawed, say analysts at the Reason Public Policy Institute (RPPI), that it is likely to do “far more harm than good.”

“After reviewing the meager promise of the Kyoto Protocol to reduce greenhouse gas concentrations, stacking it up alongside the protocol’s impacts upon people’s health as it is tied to the economy, and examining the opportunity costs of premature or inappropriate resource allocation,” the analysts conclude that the accord is unlikely to provide a net improvement in the environmental safety of present or future generations.

The RPPI report, titled “Climate Change Policy Options and Impacts: Perspectives on Risk Reduction, Emissions Trading, and Carbon Taxes,” was written by Kenneth Green, director of RPPI’s environmental program; Richard McCann and Steve Moss, partners at M.Cubed, a California-based regulatory and environmental policy and economics consulting firm; and Roy Cordato, Lundy Professor of Business Philosophy at Campbell University in North Carolina.

In the first of the report’s three chapters, Green contends that one of the protocol’s key shortcomings is its “anticipatory strategy.” But too little is known about the causes and effects of global warming for such a strategy to be likely to succeed. Instead, Green urges resilience as the preferred strategy, allowing people to react appropriately as they are confronted with specific, known problems.

“Resilient strategies,” Green writes, “are largely decentralized and non-regulatory, maximizing society’s ability to cope with risks through research, and through the naturally risk-reducing function of a dynamic, market-based, knowledge-building social structure.”

Rather than wasting resources on “head-them-off-at-the-pass” global warming proposals that offer uncertain benefits, public policy, Green contends, should aim at addressing more immediate and well-understood risks. Various studies have shown that the Kyoto Protocol, if implemented in its present form, could cause thousands of deaths because money was spent on combating global warming instead of such areas as health care or improved auto safety.

In their contribution to the RPPI report, McCann and Moss consider the likely success of emissions trading schemes to control greenhouse gas emissions. McCann and Moss warn that uncertainty–about the influence of individual greenhouse gases, about long-term forecasts generally, and about the likely consequences of climate change–makes emissions trading in this instance more like casino gambling than a true market-based solution.

McCann and Moss offer five principles to guide policy makers addressing climate change:

  • Don’t focus on temperature change alone; rather, consider the effects of change. Climate change can produce benign or even beneficial effects, and these must be weighed against the possible negative effects.
  • Don’t focus on the annual flow of greenhouse gases; rather, consider the total stock of greenhouse gases in the atmosphere. Efforts to reduce the flow of new greenhouse gas emissions will have an imperceptible effect on the total amount in the atmosphere.
  • Place more emphasis on research, design, and development to address the possibility of a potential catastrophic climate change outcome. Should such an event take place, the world would have to act quickly to minimize damage–and we are not currently prepared to do so.
  • Postpone market-based solutions like emissions trading. Markets require a specific set of conditions to operate smoothly and efficiently. “The lack of adequate market institutions, the transaction costs inherent in these types of trades, and the risks that participants will inevitably perceive will create large barriers to creation of a successful market.”

In the RPPI report’s final chapter, Cordato contends that carbon taxes should not be considered a suitable alternative to emissions trading. Carbon taxes cannot be justified, he contends, either as a matter of economic theory or as a mechanism for creating social benefits.

“If the goal is strictly to reduce the amount of greenhouse gases in the atmosphere,” writes Cordato, “a carbon tax that is set high enough will do the job.” But the aim should not be merely to reduce greenhouse gases, notes Cordato, but ultimately to improve overall social welfare.

The uncertainty that envelops the climate change issue makes the ultimate goal impossible to achieve, Cordato contends. “Calculation of the ‘correct tax’–a tax that would actually lead to an increase in social welfare and not just reduce greenhouse gas concentrations–would require information that is not only difficult to obtain but in large part conceptually impossible to specify,” writes Cordato.

As it is not possible to calculate the costs and benefits of a carbon tax proposal, Cordato concludes, any such proposal is necessarily arbitrary. Worse, he warns, carbon taxes result in top-down planning of energy production and consumption, and that means significant constraints on the lifestyle choices of individual Americans.

“In arguing for the tax,” Cordato notes, “some have viewed a reduction in lifestyle choices as an ethically positive aspect of carbon taxes, in the same way that the freedom-restricting aspects of an alcohol tax might be viewed as a ‘moral good’ by prohibitionists. . . . Carbon taxes should not be viewed as economic or environmental policy, but as an attempt to legislate new lifestyles and changes in traditional American ethical principles that emphasized personal responsibility and the right to pursue one’s own happiness.