29 March 2010

A Response to Stavins

[FURTHER UPDATE 3/30: Professor Stavins has just now emailed me to explain that he does not delete comments, and perhaps my comments went into the spam bin. I am happy to hear this and appreciate the opportunity to engage in an open exchange of views.]

Harvard economist Robert Stavins, a long-time advocate for cap-and-trade policies as a means to reduce carbon dioxide emissions, has written a blog post explaining why he thinks it is that cap-and-trade has died. His post reflects many of the flawed assumptions and erroneous history that led to cap-and-trade becoming a favored policy in the first place. Here are a few reactions:

First, Stavins hedges his bets a bit by explaining that cap-and-trade may not really be dead:
this approach to reducing carbon dioxide (CO2) emissions is by no means “dead.” . . . The competitor proposal from Senators Cantwell and Collinsthe CLEAR Act — has been labeled by those Senators as a “cap-and-dividend” approach, but it is nothing more nor less than a cap-and-trade system with a particular allocation mechanism (100% auction) and a particular use of revenues (75% directly rebated to households) — and, it should be mentioned, some unfortunate and unnecessary restrictions on allowance trading. And we should not forget that cap-and-trade continues to emerge as the preferred policy instrument to address climate change emissions throughout the industrialized world — in Europe, Australia, New Zealand, and Japan.
He is right that there are vestiges of cap-and-trade still kicking around Congress. The prospects for passage in legislation still looks fairly dismal.

On that last point, Europe has indeed focused on cap-and-trade, but was remarkably not even at the table when the final Copenhagen Accord was put together -- not really a signal of Europe's leadership position. On Japan and Australia, the suggestion that cap-and-trade is emerging as a preferred policy instrument is to ignore the political realities in each of the countries. Momentum on cap-and-trade is moving in the other direction in both instances, just like in the US.

Stavins argues that the political hostility to action on climate change was the main reason for the failure of cap-and-trade:
In general, any climate policy approach — if it was meaningful in its objectives and had any chance of being enacted — would have become the prime target of political skepticism and scorn. This has been the fate of cap-and-trade over the past nine months.
This argument is wrong in at least two dimensions. First, since the 2008 elections the US has large Democratic majorities in both the House and Senate (including a Senate "supermajority" for much of 2009) and a Democratic President. This fact alone renders Stavins argument flawed. The problem was not a lack of political support, but failed policy design despite the strong political support.

In terms of public opinion, Stavins is wrong as well. For more than a decade public support for action on climate change has been strong, despite various ups and downs on views of climate science. Again, the problem was failed policy design in the face of strong public support, which supports action but does not hold climate change to be a top priority -- it never has, and arguably, never will.

Stavins interpretation of polls is in error when he writes:
For one thing, U.S. public support on this issue has decreased significantly, as has been validated by a number of reliable polls, including from the Gallup Organization. Indeed, in January of this year, a Pew Research Center poll found that “dealing with global warming” was ranked 21st among 21 possible priorities for the President and Congress. This drop in public support is itself at least partly due to the state of the national economy, as public enthusiasm about environmental action has — for many decades — been found to be inversely correlated with various measures of national economic well-being.
Global warming has never been viewed as anything close to a top priority by the American public. The same poll that he cites by Pew had global warming 20th out of 20 possible priorities in both 2007 and 2008. There simply has been no significant drop in public support for action.

Michael Shellenberger and Ted Nordhaus have provided a more accurate reading of the polls:
Public opinion about global warming, it turns out, has been remarkably stable for the better part of two decades, despite the recent decline in expressed public confidence in climate science. Roughly two-thirds of Americans have consistently told pollsters that global warming is occurring. By about the same majority, most Americans agree that global warming is at least in part human-caused, with this majority roughly equally divided between those believing that warming is entirely caused by humans and those who believe it to be a combination of human and natural causes. And about the same two-thirds majority has consistently supported government action to reduce greenhouse gas emissions since 1989.
As I detail in The Climate Fix public opinion in support of action is plenty strong for action to occur.

Stavins falls into the trap of thinking that an apocalyptic moment is needed for climate policy to be enacted:
Unlike the environmental threats addressed successfully in past legislation, climate change is essentially unobservable. You and I observe the weather, not the climate. Until there is an obvious and sudden event — such as a loss of part of the Antarctic ice sheet leading to a disastrous sea-level rise — it’s unlikely that public opinion in the United States will provide the bottom-up demand for action that has inspired previous Congressional action on the environment over the past forty years.
Well, if action in climate policy requires Antarctica falling into the sea, then I think that we can forget about action. Stavins dismal view is probably just the result of sour grapes from a cap-and-trade advocate, seeing his preferred policy fail in the political process. It is hard to admit a flawed policy design when you can blame the ignorant public instead.

Stavins also gets his history wrong when he writes:
Nearly all of our major environmental laws have been passed in the wake of highly-publicized environmental events or “disasters,” ranging from Love Canal to the Cuyahoga River.

But the day after Cleveland’s Cuyahoga River caught on fire in 1969, no article in The Cleveland Plain Dealer commented that “the cause was uncertain, because rivers periodically catch on fire from natural causes.” On the contrary, it was immediately apparent that the cause was waste dumped into the river by adjacent industries. A direct consequence of the “disaster” was, of course, the Clean Water Act of 1972.

In their book Break Through, Shellenberger and Nordhaus take a close look at the Cuyahoga River myth and find that reality does not match with legend:
On June 22, 1969, oil and debris on the surface of the Cuyahoga River in Cleveland, Ohio, burst into flames and burned for twenty-five minutes. The burning river quickly became national news. Time magazine published an article headlined “The Price of Optimism,” complete with a spectacular photo of the river aflame. Randy Newman wrote a song about the famous fire. And decades later, environmental leaders remembered the fire as an emblematic cause of the burgeoning environmental movement. “I will never forget a photograph of flames, fire, shooting right out of the water in downtown Cleveland,” President Clinton’s EPA administrator Carol Browner said years later. “It was the summer of 1969 and the Cuyahoga River was burning.”

But the famous photograph that appeared in Time was not of the Cuyahoga River fire of 1969. It was of a far more serious fire in 1952 that burned for three days and caused $1.5 million in damage. In fact, the Cuyahoga had caught fire on at least a dozen occasions since 1868. Most of those earlier fires were much more devastating than the 1969 blaze: A fire on the Cuyahoga in 1912 killed five people. A fire in 1936 burned for five days. The 1969 fire, by contrast, lasted just under thirty minutes, caused only $50,000 in damage, and injured no one. The reason Time had to use the photograph of the 1952 fire is that the 1969 fire was out before anyone could snap a picture of it.

For at least a hundred years before 1969, industrial river fires were a normal part of American life.
Action took place on environmental polices of the 1970s not because of some new and unprecedented disasters -- the equivalent of Antarctica falling into the sea -- but because policies had been designed to match the political views of the day. The public, as Mike Hulme has said, have minds of their own. They should be respected.

The lesson that we should take from the failure of cap-and-trade is that public opinion must be a factor in thinking about policy design, not as something simply to be shaped by messaging or advocacy in the direction that experts prefer, but as a real factor that both limits and enables political possibilities. The reality is that there is strong public support for action on climate change -- but not for just any action. Understanding what the public will and will not support and designing those constraints into climate policies is a prerequisite to effective action on climate change. Until this lesson is appreciated, climate policy will continue to founder on unrealistic expectations about changing public opinion in light of massive climate disasters. This is nothing more than a recipe for over-hyping climate science in public debate.