Home arrow Economics arrow CLIMATE CHANGE ISSUES - THE PROBLEM OF UNWARRANTED TRUST - PROFESSOR DAVID HENDERSON
CLIMATE CHANGE ISSUES - THE PROBLEM OF UNWARRANTED TRUST - PROFESSOR DAVID HENDERSON
There are good reasons to query the claims to authority and representative status that are made by and on behalf of the [IPCC] Panel, and hence to question the unique status, one of virtual monopoly, that it now holds.  The trust so widely placed in it is unwarranted.

Climate Change Issues: The Problem of Unwarranted Trust

Professor David Henderson

(visiting professor, Westminster Business School, former Head of Department of Economics and Statistics, OECD)


On 2 November 2006 I took the chair at a talk given in London by Dr Dieter Helm in the Beesley Lectures series on problems of regulation. His subject was ‘Energy Policy and Climate Change’. The procedure for the Beesley Lectures provides for a personal 15-minute contribution by the chairman, to be made after the talk and before the discussion is thrown open. The text that follows formed the basis for the main part of my contribution, which focused on climate change rather than energy policy.  It includes some comments on the Stern Review on ‘The Economics of Climate Change’, which had appeared a few days before the lecture, but my main criticisms are directed against the way in which governments across the world are handling issues relating to climate change.

 
Introduction

The Stern Review is a formidable document. Its main text comprises over 550 pages, and covers a vast range of issues. It reflects the work of a team of over 20 officials under the direction of Sir Nicholas Stern, backed by a substantial number of consultants. The Review draws on an array of already published studies and papers, as well on a substantial number of specially commissioned outside contributions.

I cannot offer you now even a preliminary considered assessment of the Review as a whole, nor would this be appropriate for today’s agenda. Let me however mention that a group of us, comprising both scientists and economists, hope to publish before long an assessment which will be as extensive as we can make it. What we have in mind is two linked review articles, one focusing on scientific and the other on economic aspects. Though authorship would be largely or wholly separate, the two articles are being prepared in conjunction: they will be cross-referenced and mutually supporting. These twin contributions are scheduled to appear in a coming issue of the journal World Economics, which has already carried, in its summer issue, some exchanges between Sir Nicholas and the nine economists who are members of the group.  

This evening I want to make some personal comments on one particular aspect of the climate change debate.

Grounds for concern

I am not a climate scientist, and I am a relative newcomer to climate change issues. I am an economist, and I became involved with the subject, almost by accident, just four years ago. My initial main involvement was with some economic and statistical aspects of this vast array of topics, but over time my interests and concerns have broadened. Increasingly - and this was neither expected nor intended on my part - I have become critical of the way in which issues relating to climate change are being viewed and treated by governments across the world. In particular, I have become a critic of the role and conduct of the chosen instrument of governments in this area of policy, namely, the Intergovernmental Panel on Climate Change (IPCC).

The IPCC process, and the massive assessment reports which are its main single product, are widely seen, by governments and public opinion alike, as thorough, balanced and authoritative. There is a general belief that the Panel has created a world-wide scientific consensus, based on an informed and objective professional assessment, which provides a sound basis for policy. Since its inception in 1988, the IPCC process has established itself, in the eyes of the great majority of its member governments, as their sole authoritative and continuing source of information, evidence, analysis, interpretation and advice on the whole range of issues relating to climate change

In my view, there are good reasons to query the claims to authority and representative status that are made by and on behalf of the Panel, and hence to question the unique status, one of virtual monopoly, that it now holds.  The trust so widely placed in it is unwarranted.

To begin with, the principle of creating a single would-be authoritative fount of wisdom is itself open to doubt. Even if the IPCC process were indisputably and consistently rigorous, objective and professionally watertight, it is imprudent for governments to place exclusive reliance, in matters of extraordinary complexity where huge uncertainties prevail, on a single source of analysis and advice and a single process of inquiry. The very notion of setting consensus as an aim appears as questionable if not ill-judged.

In any case, the ideal conditions have not been realised. The IPCC process is far from being a model of rigour, inclusiveness and impartiality. In this connection, there are several related aspects that I would emphasise.

First, the Panel’s treatment of economic issues has been flawed. Writings that feature in its Third Assessment Report contain what many economists and economic statisticians would regard as basic errors, showing a lack of awareness of relevant published sources; and the same is true of more recent IPCC-related writings, as also of material published by the United Nations Environment Programme (UNEP) which is one of the Panel’s twin parent agencies. In this area, what I call the IPCC milieu is neither fully competent nor representative.

Second, the built-in process of peer review, which the IPCC and member governments view and refer to as a guarantee of quality and reliability, does not adequately serve this purpose, for two reasons.
•    Reason No. 1 is that providing for peer review is no safeguard against dubious assumptions, arguments and conclusions if the peers are largely drawn from the same restricted professional milieu.
•    Reason No. 2 is that the peer review process as such, here as elsewhere, may be insufficiently rigorous. Its main purpose is to elicit expert advice on whether a paper is worth publishing in a particular journal. Because it does not normally go beyond this, peer review does not typically guarantee that data and methods are open to scrutiny or that results are reproducible.

Third, in response to criticisms that have been made of published and peer-reviewed work that the IPCC has drawn on, and queries that have been raised, the authors concerned have failed to make full and voluntary disclosure of data, sources and procedures. A leading instance is that of the celebrated ‘hockey-stick’ diagram, which was prominently displayed and drawn on in the Panel’s Third Assessment Report and afterwards. Probably no single piece of alleged evidence relating to climate change has been so widely cited and influential. The authors concerned failed to make due disclosure, and neither the publishing journals nor the IPCC required them to do so. As a result, fundamental errors and evidence of deficient statistical properties did not emerge until very recently.  

Fourth, the response of the Panel’s directing circle and milieu to informed criticism has typically been inadequate or dismissive.  Within the scientific community, these dismissive attitudes have sometimes gone together with a disturbing intolerance of dissenting views and ideas.   

Fifth, I believe that both the Panel’s directing circle and the IPCC milieu more generally are characterised by an endemic bias towards alarmist assessments and conclusions. Partly because of this bias, the treatment of climate change issues by environmental and scientific journalists and commentators across the world is overwhelmingly one-sided and sensationalist: non-alarmist studies and results are typically played down or disregarded, while the lack of knowledge and the huge uncertainties which still loom large in climate science are passed over. This chronic lack of objectivity on the part of so many commentators is in itself a matter for concern; but even more worrying, to my mind, is the fact that leading figures and organisations connected with the IPCC process, including government departments and international agencies, do little or nothing to ensure that a more balanced picture is presented. Some of them have become accomplices of alarmism.    

Alarmist attitudes and presumptions in relation to world issues, together with a fondness for radical so-called ‘solutions’, have in fact a long history: they go back well before climate change issues came into prominence, and hence predate the creation of the IPCC. They have been characteristic of the Panel’s sponsoring departments and agencies, and in particular of the UNEP and the ministries which it reports to. From the outset, the IPCC’s affiliations with what I have termed global salvationism have affected its capacity and readiness to treat the issues in a balanced way.

To sum up: the IPCC process, which is widely taken to be thorough, objective, representative and authoritative, is in fact deeply flawed: despite its scale, pretensions and reputation, it is not professionally up to the mark.

Peers of the realm, the Stern Review, and other elements

I had hoped that these concerns of mine, which are widely shared by others, would at least be noted in the Stern Review; and when the Review process got under way a year ago four of us made a formal submission to Sir Nicholas Stern, in response to the general invitation that he had issued, in which we raised the issue.  (My co-authors were Sir Ian Byatt, Sir Alan Peacock and Colin Robinson.)  In our submission, we said that

‘There is a dual opportunity here. First, the [Stern] Review can serve a valuable purpose by contributing to public enlightenment and a better informed debate. Second, and more controversially, it could put to the test the widely accepted view that established official procedures and policies in this area, both within the UK and internationally, are soundly based and well judged.’

Now you may think that it was naïve if not unreasonable of us to suggest that an official inquiry like the Stern Review should go out of its way to comment on ‘established official policies and procedures’, rather than taking these as given; and indeed, we might not have raised the issue had it not been for a then recent contribution to the debate which we saw as carrying weight. The contribution in question was the report, itself entitled ‘The economics of climate change’, from the House of Lords Select Committee on Economic Affairs.  

The Select Committee report is a wide-ranging document, but for me its most striking feature, and an especially welcome one, was the concerns that it expressed about the IPCC. Given the credibility which the IPCC has acquired, it is truly remarkable that a group of eminent, experienced and responsible persons, drawn from a national legislative body and spanning the political spectrum, with the help of an internationally recognised expert adviser (the late David Pearce), and after taking and weighing evidence, should have published a considered and unanimous report in which the work and role of the Panel are put in question.

After a long interval, Her Majesty’s Government, through the agency of DEFRA, published a dismissive official response to the Select Committee report, in which the the IPCC and its proceedings were duly commended without reserve. In commenting on this document, I said that it illustrated precisely those features of the IPCC process and milieu which prompted the Select Committee’s concerns.

How (you may ask) has the Stern Review treated the questions thus raised by the Select Committee, and by others too? As you know, the Review is long and wide-ranging, and it is also amply documented. From a rapid survey, it appears to list around 1100 papers and studies as references.  This extensive list does not include the report from the Select Committee. To put it mildly, this is a strange omission.  

In taking no account of the possibility that the IPCC process may be open to serious question, the Stern Review has followed the common established practice of many commentators from various subject disciplines. In economics, some topical examples which have emerged this week are the column by Martin Wolf in yesterday’s Financial Times, the warm pre-publication endorsements of the Stern Review from eminent economists that are printed together with the main text, and – I have to add – the impressive presentation which we have heard this evening from Dieter Helm. In these and many other cases, the authors take the established official process of inquiry and assessment as given, trustworthy and professionally watertight: hence they accept its ‘consensus’ results. In their analysis, and in the conclusions they draw for policy, there is no trace, hint, vestige or glimmer of awareness that that process could be deeply flawed, in ways that put the results in question.

Policy

From the position that I have now come to hold, I draw one very simple initial conclusion for policy.  It is this:

In relation to climate change, an urgent present need is to build up a sounder basis than now exists for reviewing and assessing the issues. A process should be established, for informing and advising governments and public opinion alike, which is more objective, more representative, more rigorous and more balanced than that which the IPCC and its sponsoring departments and agencies have built up and shown themselves unwilling to change.

David Henderson
Westminster Business School
2 November 200
 
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