High level climate intervention considerations

I’ve lately helped Giving What We Can extend their charity evaluation to climate change mitigation charities. This is a less abridged draft of a more polished post up on their blog.

Suppose you wanted to prevent climate change. What methods would get you the most emissions reduction for your money?

GWWC research has recently tried to answer this question, with a preliminary investigation of a number of climate change mitigation charities. Another time, I’ll discuss our investigation and its results in more detail. This time I’m going to tell you about some of the high level arguments and considerations we encountered for focusing on some kinds of mitigation methods over others.

The binding budget consideration

The world’s nations have been trying to negotiate agreements, limiting their future emissions in concert. The emissions targets chosen in such agreements are intended to sum up to meet a level deemed ‘safe’. Suppose some day such agreements are achieved. It seems then that any emissions you have reduced in advance will just be extra that someone will be allowed to emit after that agreement.

This argument implies political strategies are better than more direct means of reducing emissions. In particular, political strategies directed at causing such an agreement to come about.

This argument may sound plausible, but note that it relies on the following assumptions:

  1. the probability of such an agreement being formed is not substantially altered by prior emissions reductions

  2. the emissions targets set in such an agreement are not sensitive to the cost of achieving them

  3. such targets will be met, or we will fail to meet them by a similar margin regardless of how far we begin from them.

None of these is very plausible. Agreement seems more likely if it will be cheaper for the parties to uphold, or if it is more expensive to have no agreement. These are both altered by prior emissions reductions. There is no threshold of danger at which targets will automatically be set; more expensive targets are presumably less likely to be chosen. Two degrees is especially likely due to past discussions, however as it becomes harder to meet it becomes less likely to be retained as the goal. The further we begin from the targets we set, the less likely we are to attain them. Overall, it seems unclear whether reducing emissions by a tonne yourself will encourage more or less abatement through future large scale agreements. Either way, it is probably not a large effect. Consequently no adjustment is made for this consideration in our analysis.

Correcting feedback adjustments

Suppose you protect a hectare of rainforest from being felled. The people who would have bought the wood still want wood though, so the price of wood increases a little. This encourages others to fell their forests a little more, canceling some of your gains.

This is how prices work in general: when you buy something, the world makes a bit more of that thing, but not as much as you bought. If you buy a barrel of oil and bury it, you reduce the total oil to be burned, but by less than one barrel. Others respond to the higher price of oil after you buy some by drilling for more.

These considerations are real, and well known by economists. The big question is, how much do these feedbacks reduce the effect of your efforts?

This depends on what are known as the ‘price elasticity of supply’ and the ‘price elasticity of demand’. These measure how much more wood is harvested if the price of wood goes up by one percent, and how much more wood is wanted if the price goes down by one percent. Let’s call these ES and ED. If you ‘buy’ one unit of forest and keep it from being logged, the reduction in logged forest is ED/(ED + ES). Supply and demand elasticities are known for many items. If we can’t find these figures however, we may estimate ES and ED to be roughly equal, so estimate the real effect of reducing logging to be half of what it first seems.

Many other kinds of correcting feedbacks work in a similar way. If you reduce carbon emissions by a tonne, everyone else will be a tiny bit less concerned about climate change in expectation, and make a tiny bit less effort to prevent it. If you put an extra tonne of carbon dioxide in the atmosphere, plants and the oceans will absorb carbon dioxide a tiny bit faster, so the total added to the atmosphere will be less than a tonne.

The selfish tech concern

New technologies could greatly aid climate change mitigation. Unlike many other approaches however, private businesses have large economic incentives to pursue innovation projects. This is often seen as reason to avoid paying for technological progress: if you didn’t donate, businesses would do it anyway. Plus they have probably already taken the good opportunities.

The truth appears to be quite the opposite. Suppose we break projects up into two categories: those that have attracted some private investment, and those that have not. A random project from the first category is actually likely to be better than a project from the second category.

Self-interested companies will invest in clean energy research until the costs exceed the private benefits (the gains that return to them, instead of everyone else). This means at the point that they stop, you know that the costs and the private gains are about equal. If you buy more at this point, to get public gains, on the margin this is close to free for you because private gains almost cancel the costs.

For a random project without private investment, you just know that the private gains are somewhere below the costs. Probably they are far below, so it is substantially more expensive. This could be made up for if it had larger public benefits, but there seems little reason to expect this. In particular, if private and public gains are correlated, you would not expect this. In general, funding extra work on self-interested projects will be more effective than funding projects that only altruists ever cared for.

The worthless tonne concern

What if you can only reduce carbon emissions by a single puny tonne? Or if you have a project to reduce emissions, but it can’t get to the ‘heart of the problem’, merely make a small dent cheaply then run out of steam?

Many people feel that with since climate change is a very big problem, contributing a small amount to its solution is not worth much, compared to completely solving a proportionally smaller problem, such as one person’s illness. If you contribute a tiny bit, other people may not contribute the rest of what is needed to solve the problem. Or China might increase its emissions so much as to dwarf reduction efforts in your country. A common sense is that your efforts have then been wasted.

This would be true if the amount of carbon in the atmosphere didn’t make much difference except at a threshold. That is, if ‘solving climate change’ was worth a lot, while ‘almost solving climate change’ was worth little.

This is not the situation we are in. Firstly, as far as we know the costs from climate change don’t come at big thresholds like that – each extra bit of carbon dioxide in the atmosphere makes climate change a bit worse. ‘Safety’ targets such as two degrees do not signify steep changes in harm. They are lines chosen to represent costs ‘too large’ by some agreed standards, to focus mitigation efforts.

Secondly, even if there were steep thresholds, we don’t know where they are. Which makes reducing emissions on the margin as good in expectation as if there weren’t thresholds, though more chancy. Often your effort will do nothing, while sometimes it does everything. This is similar to running for a bus which leaves at an unknown time – at many times your running won’t help, but sometimes it will make all the difference. Overall, if you run a bit more you’re a bit more likely to catch the bus.

So a tonne of reduced emissions is worth about as much whether it is the only tonne you contribute, or one of millions.

Hidden help complications

Suppose a charity tries to shut down coal plants, and coal plants are indeed shut down. This is not strong evidence that the charity has achieved anything. Other charities may also have been trying to shut down coal plants, and coal plants close for many reasons. On the other hand, the charity may have made many other power plants more likely to close, which you don’t see because they in fact stayed open. How can you say how much good this charity has done?

There is not a simple answer. You will want to find a way to estimate what would have happened otherwise. You will need to decide whether to credit a charity with the difference in probability of outcomes they seem to have caused, or with what actually happened. The former avoids extra randomness and better counts the effort that you want, while the latter is much easier to measure, and harder to manipulate. Another question is whether to credit charities with the marginal or average value of contributing to a project alongside other charities, or something else. For instance, if the first charity working on something makes a large difference, but each added charity helps less, do you divide the gains between them, credit each with almost nothing, or credit each successive one with less?

The unruly future consideration

Suppose you reduce emissions by stopping some forest from being logged. Even if you do a good job of this, it might be hard to protect it from being logged in fifty years. You have bought the people in the future the option of continuing to lock up the carbon, but circumstances and economic incentives will be different, and it’s not clear whether they will take it. If the forest is logged in fifty years, you will have basically delayed some climate change for fifty years, ignoring e.g. short term emissions exacerbating feedbacks and producing more emissions.

Thus protecting the forest reduces most of the harm it appears to in the short term, but an increasingly small fraction of harms moving into the future, as the cumulative probability that it will be logged rises. How much this is worth overall depends on where the harms are concentrated. Increasing costs to the climate moving further from what we are used to suggest costs will be concentrated in the further future. But wealth, technology progress and adaptation push hard in the other direction. Also, people are more likely to continue your mitigation in cases where climate change turns out to be worse in the future. I am not sure the overall effect. This consideration could erode a large fraction of the value of a mitigation project.

***

These have been some of the issues considered in our quest to find the best organizations for turning dollars into reduced greenhouse emissions. If our analyses of them are adequate, next time we will bring you the finest climate change charities a brief investigation can find.

 

5 responses to “High level climate intervention considerations

  1. Katja, Thanks for this great list of insights on how to measure mitigation efforts. I’m looking forward to the results.

    Like

  2. “But wealth, technology progress and adaptation push hard in the other direction.”

    That they do. So alternatives to climate change mitigation may be funding those adaptation and (ecosystem-service-)substitution technologies.

    It’s hard to see, then, how climate mitigation could be the best investment today, unless it’s really cost-effective.

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    • Agreed, I would characterize some of these considerations as low-level, concerning how the specific strategy of emissions reduction would be most efficiently executed. The high level question is what mix of climate-related strategies we should pursue toward the goal of maximizing global welfare. I think David Friedman is worth reading on this (see e.g. http://daviddfriedman.blogspot.hk/2011/09/what-is-wrong-with-global-warming.html ).

      With that said, figuring out more efficient ways to achieve emissions reduction has some value as long as it is being attempted at all.

      Like

  3. Pingback: Research on climate organizations | Meteuphoric

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