"Meeting the Challenges of Population, Environment and Resources - The Costs of Inaction" Senior Scientists’ Panel of the Third Annual World Bank Conference on Environmentally Sustainable Development Washington, D.C., October 4 and 9, 1995.

The problem we are facing today—how effectively finance environmentally sustainable development—is a new one, to the extent that there are no precedents to guide our advice. We must thus seek inspiration in the known facts which I will summarize, and in the existing examples from past experience in Brazil, as a representative developing country. As food for further thought I will close with an example of global climate change affecting human life.(1)

Bankers and policymakers are accustomed to analyzing different alternatives for investments with a view to determining the course of action that represents the best application of scarce resources. This is my understanding of the word effective in the title of this conference. One particular aspect of the choice of the best course of action is the fundamental decision of when to take action. We also have been asked to consider the cost of inaction, or the relative value of taking action later rather than now.

I propose that we recognize that it is absolutely essential that consideration of these difficult and new problems be based on reason, or on the best available scientific knowledge. The Third World Academy of Sciences, which I have the honor to chair, has identified the loss of ground of rational thought to other paradigms as one of the outstanding and worrying characteristics of the end of this millennium.

The major global environmental problems we face, as identified and addressed by the United Nations in the Earth Summit in Rio de Janeiro in 1992, are global warming and biodiversity. Inextricably linked with these environ-mental problems are the basic infrastructure problems of the generation and use of energy and the supply of fresh water, which are closely linked to agriculture. In the industrial sector the question of synthetic molecules that affect the chemical composition of our atmosphere has received wide attention in the efforts to replace chlorofluorocarbons (CFCs) with other substances that do not deplete the ozone layer.

The result of inaction in dealing with one of the global environmental problems—that of the global warming caused by human-induced emissions of greenhouse gases, especially carbon dioxide—is relatively easy to predict in physical terms. The problem of estimating the cost of such inaction is more difficult, but I would like to introduce some methodological considerations on how to approach the problem.

The most recent predictions by the Intergovernmental Panel on Climate Change (IPCC), the international body of scientists who make periodical evaluations of the state of knowledge regarding climate change, are that the global mean temperature will increase at a rate of 0.1-0.35º C per decade in the next century. This sustained rate of increase is probably greater than any seen over the past 10,000 years. Such a prediction is based on the panel's scenario of emissions, which postulated significant increases in global emissions throughout the next century.

The costs of inaction can be broken down into several categories. There is the cost associated with the damages inflicted by the change of climate, and in his paper Robert T. Watson has expanded on current knowledge of the effects of climate change in all aspects. There is also the cost associated with adapting to climate change, if this is the course of action selected, as it must be in some instances. On the other hand there is a cost associated with mitigating the problem, or taking measures to reduce emissions. Fundamentally, the choice is whether such costs should be incurred now when the alternative is facing the future cost of inaction.

The fact that the cost of action now is incurred much earlier than the potential costs of inaction poses problems that have been referred to in the literature as intergenerational equity, a concept that stretches the concept of a discount rate beyond the limits intended for its applicability and probably beyond recognition. I will not dwell on these aspects, except to mention that the problem of inter-country equity must be dealt with within the framework of the Convention of Climate Change, which contains all the important principles of a common but differentiated responsibility and several considerations for the special conditions of countries or groups of countries.

As we work toward implementation of the Berlin Mandate(2) to negotiate a protocol for the limitation of emissions of Annex I parties and for the continuation of implementation of present com-mitments of non-Annex I parties, we must establish a global regime in which each country's share of the burden of mitigating climate change should be, in a first approximation, proportional to its share of responsibility for climate change. This share of responsibility could be measured, for instance, by its contribution to the increase in the global mean temperature, and could evolve from this first approximation by invoking all other considerations contained in the convention in quantitative, negotiated terms.

The problem of global warming is fundamentally a problem of how to deal with the energy sector. The historical evolution of global consumption of energy shows a steady growth of 2 percent a year since the middle of the last century. The growth in the United States has been about 3 percent a year.(3) It is thus evident that any serious measure to achieve environmental sustainability from the point of view of global warming necessarily involves dealing with the future of the generation and use of energy.

The time evolution of efficiency in energy use allows some interesting conclusions. An impressive gain has been obtained in the efficiency of energy use for lighting. A less impressive but sustained growth has occurred in the efficiency of the conversion into mechanical energy.(4) It thus stands to reason that actions toward environmental sustainability must include efforts to explore all opportunities for further improvement of efficiency in both the generation and use of energy. Science and rationality have been and will continue to be even more essential factors in achieving energy efficiency. Any energy program must be intimately linked to the enhancement of the efficiency in energy use.

Energy is basic for development. It is a natural and fair aspiration of people in developing countries to achieve a standard of living comparable to that in industrial countries. Considerations of environmental sustainability, capital requirements, and the limitation of natural resources lead to the conclusion that the generalization of energy use in the world implies necessarily the achievement of new high-efficiency levels of technology. The development, in cooperation with industrial countries when appropriate, and introduction of such new technological levels in developing countries is thus a high priority. This concept includes the so-called technological leapfrogging, best described as jumping over steps taken in the past by industrial countries. The realization of the potential global benefits from this course of action justifies the cooperation of industrial countries and constitutes the con-structive interpretation of the quest for technology transfer by developing countries.

The question of the timing of such measures—and the question of the cost of inaction—must take into account factors that are intrinsically contradictory. The case for urgent mitigation follows from the fact that the effect of carbon dioxide emissions is felt as a change in the global mean temperature after a long delay. For example, the effect of avoiding the emission of 1 gigaton of carbon in 1995 on the predicted increase in the global mean temperature would not be felt for several decades.(5)

Investments and returns in the energy sector also have a typical timescale of several decades. To make matters even more complicated, the sector is very capital-intensive and is subject to technological changes that occur in a timescale shorter than the typical period for the payback of investments. It thus can be argued that it is best to delay action because in the future there will be more capital, better knowledge, and better technology, making this delay a more efficient use of capital resources.

In addition to the cost of inaction one should consider the cost of taking the wrong action. I would like to illustrate the theme with a few examples from the Brazilian energy sector.

In the 1970s the government of Brazil took a major initiative by implementing a national program to promote, through subsidies and technical development, the use of hydrated alcohol from sugar cane as an automotive fuel. The basic reason for increasing fuel supply security, then threatened by the first oil shock, was soon complemented by the realization of the additional environmental benefits of reducing urban pollution. This reason was later fortified by the realization that the program is a major demonstration of the use of biomass fuel as a means of avoiding carbon emissions.

The carbon emissions as a result of the combustion process are offset by the uptake of carbon during the growing season of the sugar plant in a sustainable manner; thus the 5 million Brazilian cars fueled with pure ethanol instead of gasoline do not contribute to global warming. A recent estimate is that, since its inception in 1974, the program has prevented carbon emissions totaling more than 9 megatons a year, a number that should he compared to the Brazilian emissions from fossil fuels of 60 megatons a year.

Another example from Brazil, of an instance when the decision in the energy sector proved not to be the best one, was that of the construction of the Balbina hydroelectric dam. For reasons related to the reduction of the cost of transmitting electricity, the Balbina dam was built near the remotely located city of Manaus, capital of Amazonas in northern Brazil. It turned out, however, that the area flooded by the reservoir was well out of proportion to both the installed power and the energy supplied by the plant: 216,000 hectares for an installed power of 250 megawatts and an energy supply of 1,100 gigawatt-hours per year. The resulting ratio of 5 megawatt-hours per year per hectare is one or two orders of magnitude worse than other hydroelectric dams in Brazil.

Opportunities in the area of energy conservation have an important role in a country like Brazil, even though they are limited in their overall contribution to the objective of environmentally sustainable development from the viewpoint of mitigating greenhouse gas emissions and thus alleviating global warming. The initial basic reason for an energy conservation program was to save scarce foreign currency by avoiding oil imports.

The Conserve program, carried out during the 1980s, allowed for a total replacement of oil derivatives in the Brazilian pulp and paper industry and for the near-total elimination of oil consumption in both the steel and cement industries. More recently, considerations of delaying investments in the construction of power plants and refineries, in the context of scarce investment capital, caused Brazil to enhance this energy conservation program, with the assistance of the World Bank. Total investment in energy conservation is expected to be on the order of $16 billion through 2015, for a total energy saving of 130 terawatt hours, equivalent to the output of two Itaipu dams, each with 12,000 megawatts of installed capacity.

Finally comes the issue of the relationship between energy and agriculture. The agricultural sector constitutes a necessary and prominent feature of development in developing countries and is of course closely linked with the energy sector. All developing countries have climates that are either tropical or arid or semiarid, with a high interannual climate variability. This correlation is certainly not a coincidence, but a discussion of which is the cause and which is the effect, even though interesting, is outside the scope of this chapter.

The fact that this correlation exists, however, implies that the peculiarities of such climatic conditions must be taken into account in making development decisions, in terms of their implications not only for the energy sector but also for the unique agricultural sector. The agricultural sector in turn conditions the energy demand through its requirements for fertilizers and fresh water for irrigation and other uses.

One interesting example in Brazil of the gains to be obtained by taking appropriate action in a timely fashion is provided by the introduction of monthly climate forecasts in the semiarid region of northeastern Brazil, in the state of Ceará since 1990. This region has a well-defined rainy season and a very high interannual variability of rainfall and its agriculture is highly dependent on the onset and strength of the rainy season (table 1).

These data demonstrate the striking difference in grain production as a result of appropriate and timely action.(6) El Niño episodes are associated with drought in Ceará and with a decrease in grain production. Severe drought conditions occurred in both 1983 and 1993, but grain production was higher in 1993, when El Niño’s southern oscillation was predicted by the forecast.

The same difference is seen between 1986 and 1994, both years with heavy precipitation; adequate agricultural management in 1994 based on climate and weather forecasts allowed for much higher grain production than in 1986. Negative effects of moderate droughts, such as those that occurred in 1987 and 1991, can also be reduced through timely and correct action. In 1991 and 1993 the prediction of El Niño and the associated drought was the basis for advice to farmers, and as a result grain production did not show the major losses incurred in 1983 and 1987 when no action was taken.

Table 1. Rainfall and grain production in the state of Ceará, Brazil, selected years

Grain production
(in tons)

Source: Meteorological Institute of Ceará/Brazilian Institute of Geographical Statistics.

Action was not taken following the prediction of the 1986-87 El Niño and associated drought, and grain production was quite small—100,000 tons as compared with the long-term average of 650,000 tons. In 1991 and 1993 the prediction of El Niño and associated drought was the basis for advice to farmers. As a result grain production did not show the major loss incurred in 1987, when no action was taken.

We have seen that knowledge is absolutely essential to decision making in the search for efficient investments to achieve environmentally sustainable development. Probably the most striking consequence of inaction results from inefficient education systems. This applies particularly to the current limited scope of science education. The difference among industrial and developing countries may be seen clearly through some well-known indicators, such as illiteracy level, number of engineers, postgraduate courses, and number of scientists per inhabitant. The consequences of investments in education are felt in the long term, typically one generation. So are the consequences of inaction—its results are seen after twenty years, when a poor basis of human resources results in new inaction or faulty decision making.

In closing, I want to mention a factor that must be taken into account in deciding on the cost of delaying action in dealing with the problems of environmentally sustainable development. The ultimate objective of development is to enhance the well-being of humanity in sustainable equilibrium with the environment. Thus the direct effect of human-induced global climate change deserves a central place in our concerns. It turns out that general physicochemical laws can in principle be applied to the transition of mammalian species from the living state to the dead state.

Under certain assumptions about the validity of thermodynamic equilibrium between these states, it can be hypothesized that there is a linear correlation between the logarithm of the frequency of deaths and the ambient temperature. The slope of the line might be associated, through Arrhenius's Law, with the activation energy for the passage.(7) In a few instances in which the appropriate statistical data were available, this hypothesis seems plausible, and it should describe analytically the mortality associated with the last exceptionally warm summer here in the United States.(8)

The death rate in Marseilles during the heatwave of July-August 1983 was correlated with the temperature.(9) The same mortality data on a log scale, shown as a function of the inverse absolute temperature, corroborates the hypothesis.(10) A similar dependence is found with the data from the Greater London heatwave of 1976. The implications of this hypothesis, were it to be verified, are far-reaching, because they imply that the frequency of deaths tends to be associated with temperature in exponential.

The observed effect results not so much from the attainment of high temperature extremes, but rather from the lack of their diurnal variation, as was distinctly observed in Marseilles and nearby Carpentras. Further, the possibility of adaptation of the affected populations to newly induced temperature extremes should not be excluded.

Notes

Highlights

"Any serious measure to achieve environmental sustainability from the point of view of global warming necessarily involves dealing with the future of the generation and use of energy"
          -José I. Vargas

"The realization of the potential global benefits from this course of action justifies the cooperation of industrial countries and constitutes the constructive interpretation of the quest for technology transfer by developing countries"
          -José I. Vargas

"One interesting example in Brazil of the gains to be obtained by taking appropriate action in a timely fashion is provided by the introduction of monthly climate forecasts in the semiarid region of northeastern Brazil"
          -José I. Vargas

"Knowledge is absolutely essential to decisionmaking in the search for efficient investments to achieve environmentally sustainable development"
          -José I. Vargas