Has Global Warming Increased Global Inequality?

According to a report by ‘Proceedings of the National Academy of Sciences of the USA’ or PNAS, Global Warming has very likely increased global economic inequality. The report states that the results of warming on annual economic growth has led to a 25% decrease in economic growth in poorer countries, and increases in many wealthier countries.

Dr. Richard Wellings, the Deputy Research Director of The London based Institute of Economic Affairs joins the programme.

Dr. Wellings is skeptical about the findings of the report. "I think that in reality, they have probably got it the other way around. In particular, the availability of cheap and reliable fossil fuels like coal and gas has been absolutely essential for the development of previously poor countries like India and China. The reduction of poverty in China has reduced inequality globally dramatically."

The report claims that a wide swathe of countries across the Middle East and into Asia have suffered major drops in GDP. Dr. Wellings, however, says that some of those African countries have done rather well in the past decade, and so have some tropical countries such as Indonesia, Thailand and Vietnam, which have experienced rapid economic growth. "Many of them have now reached middle income status which shows that a warm climate is not necessarily going to stop you developing very rapidly. Obviously, there are many many factors involved and the situation is made more complex because there are few statistics available as large parts of these economies are in the black market, so even on that level, we have to be skeptical of the data."

Dr. Wellings is also skeptical of climate change statistics, which, he says, are rather out of date, just as he criticizes the idea that there is an optimal temperature in which people work in. "I am skeptical about this too. If you travel to tropical countries in S.E. Asia, obviously you don't get the same seasons as you do in N.W. Europe, but people get used to those temperatures, and they work hard if you look at the construction sites and so on. Obviously, there is a necessity to heat buildings in northern climates, which is why both Russia and the US have such high-energy consumption figures in the winter. Generally, in tropical countries the growth rate of crops is fast as long as there is enough water."

Interestingly, Dr. Wellings sees that the ‘green agenda' being pushed by environmentalists is pushing developing countries away from fossil fuel towards hydro-electricity, and this he sees as being not necessarily a good thing. "We see countries, for example such as Ethiopia building big dams across the Blue Nile and that site causing problems downstream. The green agenda is pushing production towards forms of renewable energy, which are more expensive… Dr. Wellings sees the green agenda issue as being a serious consideration when discussing the possibility of the poorer countries catching up with the richer countries in the north. "I think that northern countries have been encouraged to adopt the green agenda, and this is massively pushing up energy prices. Traditionally, lower energy prices have always been one of the main drivers of increased productivity. Look back at the industrial revolution for an example, and after that in the 1960s and 1970s with cheap oil etc. So, because of these green policies, you are seeing much slower growth in the western world. If China and India do not adopt those policies, they are likely to catch up, because they are going to get a big productivity improvement from much cheaper energy and transportation costs."

Dr. Wellings does not accept that he is a climate change denier but stresses that he accepts that there are economic trade-offs, and, he says, there still is great uncertainty as to what is going to happen to the climate. He sees climate change as having been politicized. "It has effectively become an industry; it has been captured by people who think they can make profit out of it. Obviously, renewable energy industry is one of them. There are also a number of energy NGOs which have seen vast amounts of money been shifted into green projects and so on in the developing world…." There are, however, a number of ‘win-win' policy possibilities, which could address the potential threat from climate change: "one of them is starting to respect property rights of groups in the rain forests and not having corrupt people coming in and torching the rain forests, selling off the timber and basically stealing the land from the indigenous people. Also, the West has to stop these crazy subsidies of various forms of harmful agriculture. Often the worst ones are the green policies like the bio fuel policies, which the EU has introduced, and these have caused enormous damage in developing countries where the corrupt elites would destroy the rain forests to produce bio fuel for the EU market. This has now been adjusted to some extent but some of these policies are still hugely damaging to the environment."

Dr. Wellings sees migration to northern countries as being not the result of climate change forcing people to move north but rather as being a result of corruption and economic mismanagement amongst elites in developing countries.

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