Blue Planet in Green Shackles What Is Endangered Climate or Freedom (Vaclav Klaus)

BLUE PLANET in
GREEN SHACKLES
What Is Endangered: Climate or Freedom?
V aclav Klaus
Washington, D.C.
Originally published in 2007 under the title, Modrti, nikoli zelenti planeta- Co je ohroieno:
klima, nebo svoboda?, published by Dokoran, s.r.o., Czech Republic.
Competitive Enterprise Institute

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www.cei.org
© Vaclav Klaus 2007

©Competitive Enterprise Institute 2008
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- -·
"So, do you believe in warming now?"
Table of Contents
..
Foreword VII
Introduction XI
1. Definition of the Problem 1

2. Resources, Their Exhaustibility,
and the Irreplaceable Role of Prices 17
3. The Wealth Effect and the Effect
of Technological Progress 23
4. Discounting and Time Preference 33
5. Cost-Benefit Analysis or Absolutism
of the Precautionary Principle? 43
6. What Is Really Happening with Global Warming? 49
7. What to Do? 67
Appendixes 75
Bibliography 93
Foreword
Today, the global warming debate raging in the United States and Eu-
rope has become extremely contentious. On both sides of the Atlantic,
the debate has metastasized into cultural warfare against economic lib-
erty. For that reason, pro-freedom voices are needed to reframe the de-
bate to show how a free people can better address the challenges facing
Westem civilization.
To that end, we are proud to publish Blue Planet in Green Shackles
by Czech President V aclav Klaus, which we believe will provide an
important contribution to that struggle. His willingness to speak out
on the general challenge posed by alarmist global warming policies is
welcome and important.
I find it fitting that the Competitive Enterprise Institute would
be publishing this book today. For many years, CEI has led the fight
against climate alarmist policies. For us to be joined in this struggle by
one of the very few political leaders who has successfully worked to
VIII Blue Planet in Green Shackles
increase freedom in his country is both a boon and an honor. And I am

happy to say that this is not our first fruitful encounter.
A few years ago, I corresponded with President Klaus; we discussed
that a "new environmental man" may be emerging to lead us-freed
from self-interest-into a Brave (and Green) New World. In 1994, I
wrote him articulating CEI' s view that ecological central planning was
even more dangerous than economic central planning. His reply-" one
sentence is sufficient: I fully agree with you"-has graced my office
wall ever since!
Thus, the publication of President Klaus's book brings CEI's rela-
tionship with him full circle. Yet it also ties into another connection we
enjoy with his nation. I had not realized until recently that the great
economist Joseph Schumpeter was born in what is now the Czech Re-
public. Like so many European thinkers, Schumpeter was a bit pes-
simistic and made a compelling case for why capitalism would ulti-
mately fail. He noted that capitalism's success would create a large
and increasingly powerful intellectual class; that this class-driven by
envy of entrepreneurial wealth and a desire for power-would then
undermine the moral foundations of economic liberalism, fostering the
growth of a massive modern Mandarinate.
The result is that intellectuals would capture the moral high ground
and directly benefit by filling the many well-paid Mandarin positions
in government and in regulated businesses. The combination of psy-
chological and economic rewards would place statism in the intellectu-
als' class interest.
Schumpeter's outline does much to explain the weakening support
for liberty in Europe and the United States. Still, it remains too gloomy.
President Klaus and other classical liberals in Europe, CEI, and other
influential policy organizations have not succumbed to the collectivist
temptation. In effect, we have chosen to become "traitors" to our class
and to devote ourselves to re-legitimizing and promoting economic
liberty.
As a minority, we must seek out allies if we are to prevail. Our next
step, I believe, is to ally ourselves with those within the business sec-
tor-at least those within the entrepreneurial business sector-who ben-
efit from the expansion of the sphere within which voluntary arrange-
ments are possible. Business leaders are generally better at business
than politics, so they should seek a broader scope in which to exer-
foreword IX
cise their comparative advantages. They should work with us to ad-

vance privatization, deregulation, free trade, limits on the power of the
state-in general, economic liberalization. Yet even in this realm, our
struggle is as difficult as ever.
Sadly, it is our government-growing opponents who have shown
us the potential of outreach efforts like this. In the United States, they
have created a powerful alliance of left-liberal and environmental ac-
tivists and tort lawyers. And now they even have some major corporate
CEOs on board. Falling for the allure of rent-seeking profits combined
with favorable PR, business executives are getting behind proposals
to cap carbon dioxide emissions-in the hope of gaining from selling
emission credits-and "renewable" energy legislation-in the hope
that some subsidies come their way.
We face a target-rich environment. Given the temptations of politi-
cal power and material profit from political predation, that should not
be surprising. We have our work cut out for us.
Our challenge is to develop our own counter-alliance of entrepre-
neurial businesspeople and free market scholars and activists. Such an
alliance would provide us the resources we need to meet Schumpeter' s
challenge in order for economic liberty to prevail.
Schumpeter challenged us to bridge the gap between the world of
ideas and the world of politics. As someone who has one foot in each
camp, President Klaus has already done much to advance this goal.
This volume advances it further.
Fred L. Smith Jr.

President, Competitive Enterprise Institute
Introduction
We are living in strange times. One exceptionally warm winter was

enough for the environmentalists and their followers to draw far-reach-
ing conclusions on climate change and to call for the implementation
of radical measures that would "do something" about the climate, if
possible, right now. All this fuss occurred in spite of long-term trends
and the fact that the average global temperature in the 20th century in-
creased by a mere 1.1 °F.
One event follows another. AI Gore's Oscar-winning would-be docu-
mentary film was shown in movie theaters around the globe. The Stern
Review (Stem 2006), written by order of British prime minister Tony Blair,
was published with great fanfare. The--more political than scientific-
summary of the fourth report of the United Nations' Intergovemmental
Panel on Climate Change (IPCC 2007) appeared on the front pages of
newspapers, surprisingly, several months before the publication of the
report itself. The constraints of political correctness, tougher than ever,
are being enforced and only one permitted truth is-yet again-imposed
xii Blue Planet in Green Shackles
on us. Everything else is being denounced. The British Minister for en-
vironment recently said that just as the terrorists cannot present them-
selves in the media, the climate skeptics should not have the right to
publicly speak against global warming. Regrettably, it is not the first time
in human history we are witnessing such ideological pressure. The cul-
mination is the awarding of the 2007 Nobel Peace Prize to former Vice
President AI Gore.
I agree with Michael Crichton (2003, 1) that "the greatest challenge
facing mankind is the challenge of distinguishing reality from fantasy,
truth from propaganda. Perceiving the truth has always been a chal-
lenge to mankind, but in the information age (or as I think of it, the
disinformation age) it takes on a special urgency and importance." My
short book aspires to contribute to the debate.
Global warming has become a symbol and example of the clash be-
tween truth and propaganda. The one politically correct truth has already
been established, and opposing it is not easy. Yet a large number of peo-
ple, including top scientists, see the issue of climate change, its causes,
and its projected consequences quite differently. They are alarmed by
the arrogance of those who advocate the global warming hypothesis and
the complementary hypothesis that links the problem of global warming
with some particular human activities. They fear the proposed and al-
ready implemented measures will radically affect the lives of each one of
them-and rightly so. I, too, share their concems and anxieties.
The advocates and promoters of those hypotheses are mostly sci-
entists who profit from their research, both financially and in the form
of scientific recognition, and also politicians (and their fellow travelers
in academia and in the media) who see it as a political issue attractive
enough to build their careers on. I see the problem in the same way
as the well-known Dutch physicist Hendrik Tennekes, who protested
against these attitudes as early as in 1990, and who has recently recog-
nized the need to speak up again. He stated that one crucial difference
exists between 1990 and 2007: /.(Then I was worried, now I am angry"
(Tennekes 2007, 1). Angry at his academic colleagues, he adds. And an-
gry at some politicians, I add.
Tennekes (2007} cites Stephen H. Schneider's 1976 quotation from
Harvey Brooks (then Harvard dean of engineering): /.(Scientists can no
longer afford to be naive about the political effects of publicly stated
scientific opinions. If the effect of their scientific views is politically po-
Introduction XIII
tent, they have an obligation to declare their political and value as-
sumptions, and to try to be honest with themselves, their colleagues,
and their audience about the degree to which their assumptions have
affected their selection and interpretation of scientific evidence." This
idea is the key thesis underlying my discussion in this volume.
I see it similarly to Massachusetts Institute of Technology Professor
Richard S. Lindzen, who recently wrote:
Future generations will wonder in bemused amazement that
the early twenty-first century's developed world went into
hysterical panic over a globally averaged temperature in-
crease of a few tenths of a degree, and, on the basis of gross
exaggerations of highly uncertain computer projections com-
bined into implausible chains of inference, proceeded to con-
template a roll-back of the industrial age" (quoted in Horner
2007, back cover).
It is exactly these issues that I want to address in my book, which

came into existence during the first three months of 2007 as a byprod-
uct of my being full-time President of the Czech Republic. It is, for the
most part, not original research. Quotations are therefore rather fre-
quent. Also, the book aspires to nothing more than lay knowledge of
the natural sciences. Yet I do not see this as a handicap. The problem
of global warming is much more about the social sciences than about
the natural ones, more about economics than climatology, more about
a human being and his or her freedom than about an increase in the
global mean temperatures by tenths of degrees Fahrenheit.
Shortly before the completion of this book, in the middle of March
2007, I was asked to present my position (in the form of answers to five
questions) to the U.S. Congress for hearings withAl Gore, the former vice
president. My answers are attached as appendix A of this book. In Sep-
tember 2007, I made a speech at the United Nations Global Climate Con-
ference in New York City. That speech is also included, in appendix D.
I would like to thank many colleagues and friends for helping
shape and sharpen my opinions on this subject. My discussions with
Jifi Weigl and Dusan Triska were very helpful. The same is true of the
e-mails with Dr. Lubos Motl of Harvard University and with Professor
Fred Singer of the University of Virginia.
As a witness of the current worldwide debate, I want to say that I
am no longer concerned-but angry-which is the impetus for the fol-
lowing text.
Chapter 1
Definition of the Problem
What is at stake is human freedom • Environmentalism as a quasi-religious ideology •

It also shares many traits with Marxism • The author's debate with AI Gore and critique
of his works • The importance of economics to the debate
for quite some time, I have been speaking and writing about the
environment in a rather unsystematic way. I have long intended to
present to the general public my rather complex views on the cur-
rent-so unfairly and irrationally led-debate about the environment
and about global warming in particular. This debate is increasingly
becoming a fundamentally ideological and political dispute, but only
as a substitute for other issues. That problem is something I want to
emphasize.
The themes in the contemporary dispute (or perhaps clash) are
clearly about human freedom-not about the environment. Such
themes are more relevant to the developed and relatively rich coun-
tries than to the poorer and less-developed ones, where people usually
face more down-to-earth problems. But without a doubt, those poor
countries face greater danger of being harmed by the dispute (which
is, in fact, not theirs). Such countries have been taken hostage by envi-
ronmentalists, who propose halting human progress at immense costs.
2 Blue Planet in Green Shackles
The ultimate victims will be the

Every time someone dies as a world's poorest. Moreover, mea-
result of floods in Bangladesh, sures that have been proposed so
an airline executive should be far will have practically no sig-
dragged out of his office and nificant effect. As Bj0rn Lomborg
drowned. (2007) aptly said, the realization of
all of AI Gore's recommendations
George Monbiot (2006)
(at huge financial expense) will
British journalist
The Guardian lead to a ridiculous outcome-
namely, that thanks to a delay in
the hypothetical increase of the sea level, the people onshore in Bangla-
desh will drown not in 2100 but in 2105, if today' s catastrophic environ-
mentalist scenarios come true! That is why Lomborg is, like me, con-
vinced that we should do something completely different, something
that would bring real results.
Before going any further, I want to express my full agreement with
the opinions held by the classical liberals, a human subspecies that is
itself on the verge of extinction. Classical liberals are right in insist-
ing that the largest threat to freedom, democracy, the market economy,
and prosperity at the end of the 20th and at the beginning of the 21st
century is no longer socialism (and most certainly not its extreme ver-
sion, which we, the Czechs, became intimately familiar with in the
communist era). It is, instead, the ambitious, arrogant, unscrupulous
ideology of environmentalism. Environmentalism is a political move-
ment that originally began with the intent to protect the environment-
a humble and perhaps even legitimate goal-but which has gradually
transformed itself into an ideology that has almost nothing to do with
nature.
This ideological stream has recently become a dominant alternative
to those ideologies that are consistently and primarily oriented toward
freedom. Environmentalism is a movement that intends to change
the world radically regardless of the consequences (at the cost of hu-
man lives and severe restrictions on individual freedom). It intends to
change humankind, human behavior, the structure of society, the sys-
tem of values-simply everything.
To prevent misunderstandings, I should clarify that my aim is not
to interfere with the natural sciences or with scientific ecology. Envi-
ronmentalism has, in fact, nothing to do with the natural sciences. Even
worse, it unfortunately does not have anything in common with the
Definition of the Problem 3
social sciences either, even though it operates on their territory. In this

respect, environmentalism demonstrates the naivete of (some) natural
scientists who strictly apply scientific principles in their own discipline
but completely disregard those principles whenever they move into
another field of study.
Even though environmentalism boasts about its scientific basis, it
is, in fact, essentially a metaphysical ideology that refuses to see the
world, nature, and humankind as they really are. It has no regard for
spontaneous evolution and takes the current state of the world and na-
ture as an untouchable standard, any changes to which would be a fatal
jeopardy.
In a recent, widely publicized lecture in New York City, AI Gore
(2006b) explicitly said that "we are now facing a planetary emergency,"
and "we are moving closer to several 'tipping points' that could-
within as little as 10 years-make it impossible for us to avoid irretriev-
able damage to the planet's habitability for human civilization." These
statements are utterly absurd and may be described as scaremonger-
ing. Proclamations of this kind, among other things, completely neglect
the fact that, in the course of the history of our planet, the state and
shape of the continents and oceans, the structure of animal and plant
species, the evolution of the atmosphere, and so forth have all been
subject to the permanent processes of change, caused both by complex
endogenous natural mechanisms and by uncontrollable exogenous fac-
tors. Many of those mechanisms-such as the activity of the Sun-are
absolutely beyond our reach.
Without doubt, humans have, during the past millennia, become
one of the factors causing those changes. For the environmentalists-
and their thinking is more than symbolic-humans are, in fact, an exog-
enous factor. Thanks to human behavior, the character of the landscape
has substantially changed, animal and plant species have expanded,
and some partial climate changes have taken place. Nevertheless, ex-
cept in the case of some local effects, the importance of humans to the
changes that have occurred-or to changes happening now-remains
unclear.
If the contemporary environmentalists' criteria were applied, for
example, to various historical epochs of the evolution of humankind,
we would probably have to conclude that we have been both the wit-
nesses to and the culprits of a permanent ecological disaster. We have
changed the former habitats into cultivated areas, squeezed out the
existing flora and fauna, and replaced them with agricultural crops.
Those actions resulted in climate changes (because of either irrigation
or desertification caused by deforestation or pasturing of the vegeta-
tion). Common sense, however, tells us to avoid this conclusion. From
the present environmentalist viewpoint, the logging of virgin forests in
Central Europe was surely a huge ecological disaster. Yet those forests
were replaced by a new, different, landscape; one that is, frankly, more
than an acceptable substitute-and not just from an aesthetic point of
.
v1ew.
If we take the reasoning of the environmentalists seriously, we
find that theirs is an anti-human ideology. It sees the fundamental
cause of the world's problems in the very expansion of homo sapi-
ens. Humans have surpassed the original scope of nature through the
development of their intellect and their ability to reshape nature and
make use of it. Not coincidentally, many environmentalists refuse to
place human beings at the center of their attention and thinking. Al-
though the term "'anthropocentrism," which is used for the opposite
viewpoint, may not be fully appropriate and fitting, it constitutes an
inevitable part of my thinking. In fact, I believe that anthropocentrism
is not just my perspective but also that of humankind as a whole.
Ethnocentrism is something completely different, as is the so-called
Gaia hypothesis, based on the deification of the Earth (for some criti-
cal comments about this hypothesis written from a Christian point of
view, see Scharper 1994).
The environmentalists
Today, one of the most powerful reli- seem to neglect the fact that a
gions in the Western World is environ- major part of the Earth is the
mentalism .... There's an initial Eden, result of conscious human ac-
a paradise, a state of grace and unity tivity and that the disputes
with nature, there's a fall from grace the self-appointed protec-
into a state of pollution as a result of tors of nature so often initiate
eating from the tree of knowledge, and do not aim at protecting any
as a result of our actions there is a original landscape but rather
judgment day coming for us all. a historical product of human
activities. For example, there
Michael Crichton (2003) are no criteria to determine
Popular fiction author
whether the existence of ani-
mal species in a certain area
should be considered an obstacle to human activity, especially if those

species have spread in that area only as a result of human modifica-
tions to the local landscape in the past few centuries.
The environmentalists ignore even the fact that nature, much like
humanity itself, constantly searches for and generates suitable condi-
tions for itself. Although the conditions for some animal and plant spe-
cies may be deteriorating because of certain human activities, the con-
ditions may be growing more favorable for other species. Nature itself
is adapting to these changes very flexibly. It has always done so, even
before the first human being was born. That is why all the statistics
seeking to enumerate the species that have gone extinct during past de-
cades are so misleading. Yet those statistics tend to be used as a strong
argument for enforcing various protectionist bans, restrictions, and
limitations. Animal species emerge and die out for one reason only:
nature's permanent adaptation to changing conditions.
Nothing like a predefined optimal state of the world exists that we
should, for some reason, preserve and protect. The state of the world
is the result of spontaneous interactions of a great number of cosmic,
geological, climatic, and other factors, as well as of the effect of living
organisms, which always look for the best conditions for their repro-
duction. The equilibrium that exists in nature is a dynamic one.
The environmentalists' attitude toward nature is analogous to the
Marxist approach to economics. The aim in both cases is to replace
the free, spontaneous evolution of the world (and humankind) by the
would-be optimal, central, or-using today's fashionable adjective-
global planning of world development. Much as in the case of Com-
munism, this approach is utopian and would lead to results completely
different from the intended ones. Like other utopias, this one can never
materialize, and efforts to make it materialize can only be carried out
through restrictions of freedom, through the dictates of a small, elitist
minority over the overwhelming majority.
The bizarre essence of environmentalism becomes manifest when
we observe how the character of environmentalist attacks has changed
over time-for the environmentalists, the particular object of criticism
is not that important. What is important is to evoke the sense of peril,
to foresee a danger of undreamed-of magnitude, to show the acute-
ness of the threat. As this kind of atmosphere is created, a new obli-
gation emerges: to act quickly (possibly right now), without paying
attention to details or costs

Isn't the only hope for the planet that of the newly employed mea-
the industrialized civilizations col- sures. In this atmosphere, the
lapse? Isn't it our duty to bring that rule becomes to ignore en-
about? tirely the opportunity costs
(that is, the expenses and
Maurice Strong
profit wasted by rearranging
Chairman of the Council of the United Nations
for the University for Peace and architect of priorities); to omit the usual,
the Kyoto Protocol allegedly slow procedures of
(as quoted in Horner 2007) representative democracy; to
disregard the common, or-
dinary people (because explaining everything to them would be too
time consuming); and to decide directly, with the aid of those who
know how things work.
It is no coincidence that the quality of water in rivers and lakes and
the concerns about smog in industrial areas stand at the birth of envi-
ronmentalism. Later, the movement shifted emphasis to the topic of
natural resources. Consider the famous though absurd book, The Limits
to Growth, written by Meadows et al. (1972) and commissioned by the
Club of Rome. In truly Malthusian fashion, it anticipated "the popula-
tion bomb" and overpopulation and focused on DDT (dichloro-diphe-
nyl-trichloroethane) and other pesticides, as well as other chemical ele-
ments and compounds. It discovered "acid rain;" warned against the
extinction of species; and revealed the melting of glaciers, the increase
in the sea level, the danger of the so-called ozone hole, the greenhouse
effect, and finally global warming. Some of these hypothetical disasters
were very quickly forgotten because they were effectively resolved by
natural, spontaneous human behavior.
In the past 150 years (at least since Marx), the socialists have been
very effectively destroying human freedom under humane and com-
passionate slogans, such as caring for man, ensuring social equality,
and fostering social welfare. The environmentalists are doing the same
under equally noble-minded slogans, expressing concern about nature
more than about people {recall their radical motto "Earth First!"}. In
both cases, the slogans have been {and still are) just a smokescreen.
In both cases, the movements were {and are) completely about power,
about the hegemony of the "chosen ones" (as they see themselves) over
the rest of us, about the imposition of the only correct worldview (their
own}, about the remodeling of the world.
I agree with Marek Louzek (2004, 70}, who expresses a similar idea
when he says that environmentalism "strives for the reform of the so-
cial order and for the removal of social and environmental injustices
created by the operation of free markets."
The present-day minister of industry and trade of the Czech Repub-
lic, Martin :Rirnan, is a prominent Czech environmental skeptic of long
standing. His latest article concerning this issue, "The European Warm-
ing Hysteria," states unambiguously that the decision of the European
Council to increase the share of so-called renewable resources "does
not have anything to do with protection of the environment," and that
"'it has perhaps even less to do with so-called global warming" (Rfman
2007; Hospodafske noviny, 10). He considers the recent ambitions of
some European politicians to lead the battle against global warming
to be "a waste of energy." His statement is precisely to the point: "The
European Pioneers will be even more worthless than the ones with the
red scarves around their necks" (ibid.). 1
I also agree with what Ivan Brezina says, in his article "Ecologism
as a Green Religion" (2004). This author, who is a biologist by academic
training, correctly and rigorously distinguishes this green religion from
"scientific ecology." He (2004, 43) does not consider environmentalism
(or "ecologism," using his word} "a rational and scientific answer to a
genuine ecological crisis"-a crisis that, I would add, does not exist-
but rather a general rejection of "the current form of civilization." Radi-
cal environmentalism is based on the notion that the flaw is hiding "in
the very essence of modern society," (Brezina 2004, 53) and that is why
this society must be changed.
Brezina also responded unmistakably and quickly to Gore's claims
by pointing out Gore's own wasteful consumption of electricity. In the
article "The High Priest of the Warming Religion Is Naked" (Brezina
2007b}, he uncompromisingly unmasks Gore's hypocrisy.
Similarly, the Czech economist Karel Kfiz sees environmentalism
as "a new religion." He asks in a very clever way, "Who was respon-
sible for the vanishing of the glaciers from the Czech mountains? Was
it perhaps the Urnfield people?" (KfiZ 2005, 32-33}2
1 This quotation reflects the Communist youth organization-the Pioneers-and the obliga-
tory use of red scarves (translator's note).
2 The Urnfield people were the largest population grouping in late Bronze Age Europe and were
preeminent from c. 1200 B.C. until the emergence of the C~lts in c. 600 B.C. {translator's note).
I could quote more Czech and other authors who hold similar,
critical opinions regarding environmentalism-opinions that unfortu-
nately express what is now the minority view in the Czech Republic
and elsewhere. In the current atmosphere, these opinions are viewed
as politically incorrect, particularly in the United States, in Europe, and
very markedly in all intemational organizations that are not directly
accountable to anyone and are therefore "postdemocratic" (such as the
United Nations). This atmosphere significantly weakens the effect of
such critical views.
In his speech "Let Us Not Underestimate the Ecological Risks" (Bur-
sfk 2007), the chairman of the Czech Green Party, Martin Bursfk, admits
quite openly and straightforwardly that he has a political ambition and
wants to change the current reality. According to Bursfk (2007, 69), "It
is up to the political representation to create political, institutional, and
economic environment for life and to ensure the sustainable develop-
ment of mankind or, to be specific, of the Czech Republic." Let us con-
sider several points in this quotation:
• He speaks about the future. According to Bursfk, the entirely
undefined and indefinable "environment for life" has yet to
be created. That implies that such an environment, favorable
for life on Earth, and particularly in the Czech Republic, has
not yet been created. This reasoning is wrong. It seems to com-
pletely ignore, among other things, the nearly unbelievable im-
provement of the environment that has occurred in the Czech
Republic since the collapse of Communism (see figure 1.1). A
market that is environmentally friendly (but unfriendly to en-
vironmentalists), in cooperation with market prices and private
ownership, is responsible for this fundamental change. Bursik
either completely rejects these institutions or considers them
insufficient.
• He talks not about the partial--economists would say mar-
ginal-changes, but about nothing less than the salvation of
"mankind," something we have unfortunately heard many
times in the past.
• He relies on political action organized from above rather than
on the spontaneous, nonpolitical and informally organized ac-
tivity of millions of responsible and-in their own interest-
rationally behaving people. According to Bursik (2007, 70), the
Figure 1.1. Air Pollution in the Territory of the Czech Republic, 1990-2005
2,000
1,800
aerosols
1,600
- -sulfur dioxide
c:::=:::::::~nitrogen oxide
1,400
- - - carbon monoxide
en ... ... ... __
-
c
0
0
en
"CJ
1,200
1,000
- ... ...
... ...
c ... ...
CQ
en
::a ... ... ___
-0
..c 800
600
- ... _
---· ... ... , ________ _
400
200
0 -t----.-----.--.,.-------.----,--.,.-------,----,--.,..----.----,--.,..-----,---,.----.---'
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
years
Source: Czech Hydrometeorologicallnstitute 2006.
conviction of classical liberals that human '"'ideas and skills"

will "always find some kind of a solution" is "a careless thesis,"
which he does not consider good enough.
The counterpart of Bursfk on a global scale is AI Gore. As early as
February 1992, I encountered Gore in New York City. The occasion was
a television debate dedicated to this issue during the run-up to the con-
ference held in Rio de Janeiro where many of today's mistakes were
already predecided. Gore c]aims that '"'we must promote the protec-
tion of the environment to the optimal central organizing principle of
a modem country," around which everything should ~~revolve." That
statement is thoroughly absurd. I did not agree with almost anything
he was saying at that time. On the contrary, I do agree with Lomborg
and Rose (2007, 11}, who argue that Gore is creating '"'an environmen-
tally obsessed society," and that '"'he is on a mission" to '"'fundamentally
change our civilization due to the threat of global warming."
I do not want to review his extremely misleading '"'documentary"
film, because to call it a documentary is an insult to the art of documen-
tary filmmaking. After having seen the film, one of my advisers, Michal
Petrik (2006, 84}, wrote an article for the Czech magazine Euro called
"An Inconvenient Demagogy:"
It is an ideologically and environmentally oriented lecture

that probably includes all the errors it could possibly include.
Graphs without any scale, symbols, or units, an emotional
game that even Greenpeace activists would be ashamed of
(such as a cartoon of a polar bear that keeps swimming, try-
ing to find an ice floe to rest on; yet the one that he finds is
too thin to support him and it breaks apart, so the polar bear
has to keep on swimming, heading for an unavoidable death).
The movie completely omits justifying the methods that have
led to the resulting relationships, correlations, and predic-
tions, while extrapolating to maximum the negative fore-
casts and coming catastrophes. And then comes a politician
who is the only savior, averting the catastrophe and saving
all humankind.
Gore's moralism is also symptomatic of environmentalists. Petrik

(2006, 84) writes:
Even Gore's own son turned out to be useful for the movie
because it was after his injury that Gore discovered what is
important in the world. In the same way, we learn of the au-
thor's sister who-due to lifelong smoking-died of lung
cancer. The movie thus did not lack a sudden revelation and
conversion that we know from religious rituals.
Petrik's (2006, 84), conclusion is clear: "The main subject matter of

the movie is neither science nor ecology, but rather a politically moti-
vated abuse of the environmental issues and approaches."
Let us take a look at Gore's literary output. Years after his 1992
book, Earth in the Balance (which was the subject of our television de-
bate), he released another book, called An Inconvenient Truth: The Plan-
etary Emergency of Global Warming and What We Can Do about It (Gore
2006a). What is worst about this book is the way it imposes the view
that the author is the exclusive owner of the truth without any evi-
dence. He presents the case extremely self-confidently, and because he
sees the problem as a "moral" one, he does not hesitate to describe it
with a considerable degree of moral supremacy over all of us. The book
is full of cliches, such as "my passion for the Earth," "planetary emer-
gency," "terrible catastrophes," and "the extinction of living species."
(In the Czech version of this book, I retained these key words in English
because the readers might otherwise think that I had made them up.) I
consider Gore's statement that "the worst potential catastrophe in the
history of human civilization is approaching" to be nearly fantastic (see

Introduction to Gore's book). Gore feels as if he were entrusted with a
"generational mission," opposing the "cynicism" of the rest of us. It is
rather sad but eye-opening reading.
Another crucial author is Paul Ehrlich, one of the founders of envi-
ronmentalism, who is renowned for his book, The Population Bomb (Eh-
rlich 1968). In the early 1970s, he wrote another book, along with Rich-
ard Harriman, called How to Be a Survivor: A Plan to Save Spaceship Earth,
in which he proposed a new U.S. Constitution that would include the
following commands (Ehrlich and Harriman 1971, quoted in Goklany
2007, 6):
1. Population control must be introduced to both overdevel-
oped countries as well as underdeveloped countries;
2. The overdeveloped countries must be de-developed;
3. The underdeveloped countries must be semi-developed;
4. Procedures must be established to monitor and regulate

the world system in a continuous effort to maintain an op-
timum balance between the population, resources, and the
environment.
Ehrlich (1971) even recommended decreasing the U.S. population

from its then 205 million because he saw it as an unsustainable situa-
tion. Let me point out that the United States today has more than 300
million people, yet the country is much richer than it was 35 years ago.
It is perhaps not necessary to add that human freedom is the key, not
the environment.
The dispute with environmentalism has one more aspect that is
worth mentioning, even though it is not directly relevant to our debate. I
have protested for many years against the now fashionable rejections of
the right-left scheme of politics, because such rejection means advocacy
of various third ways and social-engineering approaches to the world.
According to those approaches, the right-left dispute is an anachronism
that should be relegated to the past.
Nevertheless, the dispute has certainly not been forgotten. The hor-
rors of the past century remind us of this fact. During the period of
fascism, a similar argument was used. In her book Ecology in the 20th
Century, Anna Bramwell (1989) criticizes the following statement origi-
nating from the 1930s: "Those who want to reform society in accor-
dance with nature are neither people on the left nor on the right, but
they are ecologically minded" (quoted in Staudenmaier 1995, 48). I
agree with Peter Staudenmaier, the author of the essay "Fascist Ideol-
ogy: The Green Wing of the Nazi Party and Its Historical Antecedents,"
that "the slogan advanced by many contemporary Greens, 'We are nei-
ther right nor left but up front,' is historically naive and politically fa-
tal" (Staudenmaier 1995, 26).
Nevertheless, I ask myself if I should not back off a little bit. Argu-
ably, I could, of course, defend the original right-left scheme by a sim-
ply referring to the fact that environmentalism is nothing but a modem
incarnation of traditional leftism, but I do not know whether this argu-
ment would be of any help. Some words have already been chosen and
trying to redefine them may be meaningless.
After all, our Czech dispute at the beginning of the 1990s-the dis-
pute between the champions of classical liberalism and the ideologues
of "civil society"-was not just a classical right-left dispute. Instead,
those nonliberals were driven by a strange mixture of moralizing at-
titudes (toward human behavior in the public as well as in the private
sphere) and rather outdated views of the market and other important
socioeconomic institutions and policies. It was not, however, leftism of
the classical sort. The current confrontation between the classical liber-
als and "Europeanism" is waged in the same manner (Klaus 2006).
Similar developments are taking place all over the world today. In
his recent essay, "Struggle for the Future: The Poison of Populism and
Democracy's Cure," analyzing the situation in Latin America, Roger
F. Noriega (2006, 1) points out that, even there we could hardly speak
about the classic "battle ... between ideologies of the left and right." He
argues that populism is about the survival of democracy itself in light
of the power wielded by various populist leaders through their unme-
diated access to the populace. (Even in the Czech Republic, the clash
between liberal and nonliberal ideologies was about freedom and the
very essence of democracy.)
Noriega refers to populism that is threatening democracy in the
same manner as Marian Tupy (2006) does in his analysis of the situ-
ation in Central and Eastern Europe, "The Rise of Populist Parties in
Central Europe." Tupy (2006, 7) argues that "the defining feature of ...
'populism' is the refusal to consider trade-offs"-in other words, the
refusal to consider alterna-

tives and the fact that there We've already had too much economic
is always a trade-off. This at- growth in the United States. Economic
titude could serve as a text- growth in rich countries like ours is
book characteristic of vari- the disease, not the cure.
ous "green" statements and
demands. Paul R. Ehrlich
Many authors refer to cer- Professor of Population Studies,
Stanford University
tain historical connections be- (as quoted in Horner 2007, 11)
tween environmentalism (al-
though under different names
at different times) and other dangerous or directly totalitarian ideolo-
gies, particularly Fascism (or Nazism). I have already quoted Stauden-
maier (1995, 1-23), who systematically examines the so-called green
wing of National Socialism in Germany, and while doing so, demon-
strates a significant "ideological overlap between nature conservation
and National Socialism." He draws readers' attention to "the volkisch
movement," brought into existence in the second half of the 19th cen-
tury, which "united ethnocentric populism with nature mysticism. At
the heart of the volkisch temptation was a pathological response to mo-
dernity" (Staudenmaier 1995, 3).
The supporters of this movement believed that, "[P]erhaps the
most pernicious feature of European bourgeois civilization was the
inflated importance which it attached to the idea of man in general ...
[Humankind was] an insignificant creature when viewed as part of
and measured against the vastness of the cosmos and the overwhelm-
ing forces of nature" (Staudenmaier 1995, 4-5). Staudenmaier (1995, 5)
accurately says that "the mixture of ethnocentric fanaticism, regressive
rejection of modernity, and genuine environmental concern proved to
be a very potent potion indeed." He also recalls Ludwig Klages's essay
"Man and Earth" from 1913, which "anticipated just about all of the
themes of the contemporary ecology movement. It decried the acceler-
ating extinction of species, disturbance of global ecosystemic balance,
deforestation, destruction of aboriginal peoples and of wild habitats,
urban sprawl, and the increasing alienation of people from nature"
(Staudenmaier 1995, 6-7). Klages's work was meant to denounce "not
only hyperrationalism or instrumental reason, but rational thought it-
self," and it "justifies the most brutal authoritarianism." I find it fit-
ting that "'in 1980, 'Man and Earth' was republished as an esteemed
and seminal treatise to accompany the birth of the German Greens"

(Staudenmaier 1995, 7}.
In the 1930s, when many authors and politicians were rejecting an-
thropocentric views in general, "an all-encompassing Reich Law for the
Protection of Mother Earth" was drafted "in order to stem the steady loss
of this irreplaceable basis of all life" (Staudenmaier 1995, 15). At the end
of his essay, Staudenmaier (1995, 9) concludes that "the National Social-
ist 'religion of nature' ... was a volatile admixture of primeval teutonic
nature mysticism, pseudo-scientific ecology, irrationalist anti-human-
ism, and a mythology of racial salvation through a return to the land."
Janet Biehl (1995, 1-43) critically shows the continuing effect of
this attitude on the present in her essay '"Ecology' and the Modern-
ization of Fascism in the German Ultra-Right." According to her, the
contemporary "new" right in Germany is searching for "an 'ecological'
alternative to modern society" (Biehl 1995, 3}, openly declaring that
"the ecological crisis is resolvable only through authoritarian means"
(Biehl1995, 22}, that the establishment of an "elitist 'salvation govern-
ment"' is necessary, and "a bit of 'ecodictatorship' is needed to handle
our problems today" (Biehl 1995, 22). My aim is not to search for his-
torical parallels at all costs. We should, however, take these things into
consideration.
For all the reasons mentioned, I consider environmentalism to be
the most significant illiberal populist ideology of the present era, and
it deserves the attention of classical liberals. We should not fight old
battles with enemies who are no longer able to incite the revolt of the
masses. Today' s environmentalists, on the other hand, are capable of
doing just that; they do represent a real threat.
In this book, I do not deal with such a broadly defined, general
ideological dispute, because it takes place elsewhere. I want to remind
the reader of a few elementary economic laws and theories that are, in
most cases, completely neglected by the supporters of the environmen-
tal ideology. Despite all my efforts, I cannot figure out whether those
who ignore these laws and theories do so deliberately and consciously
or whether they are unfamiliar with principles that have been com-
monly known for decades and even centuries.3 In addition, I want to
3 In November 1986, more than 20 years ago, a seminar attended by sociologists, biologists,
and economists from various institutions of CSAV (Czechoslovak Academy of Sciences) took
place in Kosova Hora. B. Moldan, J. Vavrousek, L. Petrusek, V. Mezficky, J. Musil, and M. lllner
present some of the more technical conclusions of the recent discussion

about global warming (see chapter 6).
An economist does not question whether certain environmental
changes will happen. The economic discipline cannot offer an answer
to that question. The questions he or she does ask is to what extent will
the various economic factors counteract such changes and, particularly,
how should these changes be evaluated and what importance should
be given to them? Answers to these questions are the contribution that
economists can make to the environmental discussion.
As Dusan Triska {2007, 6) emphasizes in his unpublished text, An
Economic Analysis of Non-Economic Problems: The Case of Global Warm-
ing, "the economy (an economic system) is not the only subject matter
of economics. Economists do systematically investigate other social
systems, too." Because "the economy isn't just an anonymous {im-
personal) flow of technologies, goods, and services, but also a social
system of mutually interacting, differently motivated subjects," to be
able to study it, economists created "a large methodological base" that
allows even seemingly uneconomic phenomena to become objects of
their research. Economics is not about measuring temperature, car-
bon dioxide, solar radiation, underwater oil reserves, and thousands
of other things of this kind, but rather it is about human behavior.
I will not deal with the general concept of the rationality of hu-
man behavior, even though it is relevant-here I recommend Ludwig
von Mises's {1996) Human Action-nor will I talk about the relation-
ship between scarcity and prices, the relevance of property rights for
any kind of human behavior (including behavior related to the envi-
ronment), the problem of externalities, the principle of marginality, or
the like, because those topics would deserve a much more extensive
book.
There are only a few topics I want to touch on in more detail-
issues crucial at this time. To begin with, economists have been very
closely studying the concept of time preference. They have had basic
objections to the fundamentalist application of the precautionary prin-
ciple. They have been dealing with the relationship between the level
were on one side, and V. Klaus, T. Jezek, D. Tffska, and L. Mlcoch were on the other. The proceed-
ings have been published several times, most recently by the Czech Environment Center in 2003.
I introduced many of the basic theses that appear in this book as early as in 1986, in my essay
"Economy and Economics in the Context of Ecological Problems-Twenty Basic Economist's The-
ses," and I see no reason to change or retract them now.
of income (and wealth) and human behavior. They also have some-
thing important to say about resources and their exhaustibility in rela-
tion to technological progress. In these respects, economists most differ
from ecologists or environmentalists. Another underlying difference
is that economists, unlike environmentalists, do not create political
movements.
Chapter 2
Resources, Their Exhaustibility,

and the Irreplaceable Role of
Prices
The debate is about resources • The Club of Rome and Julian Simon's critique of its view
of resource exhaustion • The errors of Malthusianism • Resources do not exist indepen-
dent of humans and price defines their role • life under communism underlined this truth
In the previous chapter, I mentioned the variability of the environ-

mentalist emphases and attacks over time (even though they are all al-
ways kept in reserve in case one or the other suddenly fails). But over-
all, natural resources have been at the center of the debate. Over and
over again, we are warned that we are running out of resources, that
they are exhausted-or will be in the near future-and that no substi-
tute exists, or will exist, for them.
Therefore, the environmentalists propose various forms of regula-
tion. Recently, the introduction of additional (ecological) taxes that will
increase the price of various resources and thus reduce their consump-
tion has become particularly fashionable. This proposal is being sup-
ported by the hypothesis that the progress of civilization was achieved
at the price of exhaustion of nonrenewable resources and the degrada-
tion of the environment. That is why regulatory and tax (price) inter-
ventions are considered appropriate and inevitable. I do not see it that
way.
In the early 1970s, Donella H. Meadows and colleagues (1972) pre-

sented the catastrophic positions of the Club of Rome in The Limits to
Growth. This work negatively influenced the whole discussion of this
issue. Reading that book today, we would have to laugh-or get angry.
I agree with Julian Simon (1996, 49) that "that book has been so thor-
oughly and universally criticized as neither valid nor scientific that it
is not worthwhile to devote time or space to refuting its every detail."
The Club of Rome itself finally declared publicly that the conclusions
of the book were not correct, but "that [the Club] purposely misled the
public in order to 'awaken' public concern" (Simon 1996, 49). The fact
that environmentalists would state that incorrectness does not matter is
more than symbolic. It should not be forgotten. This instance was nei-
ther the first time nor the last time that environmentalists would use
arbitrary (and deceptive) methods to advance their goals.
The question of exhaustibility of resources is to a certain extent
the simplest issue in the environmental discussion-one that is most
frequently discussed by the critics and that is unfortunately still not
understood by those on the side of the environmentalists. No one has
illustrated the essence of this topic better than Julian Simon in his out-
standing book, The Ultimate Resource (1981, rev. ed. 1996).
In more than 600 pages (including a long list of references to other
writings), Professor Simon persuasively demonstrates that a big differ-
ence exists between natural resources and "economic" resources. Natu-
ral resources exist in nature and, therefore, are absolutely independent
of humans. Their basic defining characteristic is that they are just "po-
tential" resources and thus have no direct connection with the existing
economy (for example, to the pharaohs of Egypt, oil was not a usable
resource). Potential resources may not be used, given existing prices
and technologies.
An "economic" resource, in contrast, is one that is used by man-
kind. Peter H. Aranson (1998) asks when the sea waves will become
an economic resource and answers that it will happen exactly at the
moment "when technologies are invented that will be able to utilize
them." His conclusion in a verbal presentation is unequivocal: "[T]he
deposits of resources are increasing together with our supply of knowl-
edge." It is not a static variable.
Simon's "potential resources" are transformed into economic ones
only through his "ultimate resource" (hence the title of his book), which
Resources, Their Exhaustibility, and the Irreplaceable Role of Prices 19
is none other than humankind, its inventions, and its efforts. Only the
"human resource" and its unique ability to transform potential re-
sources into real ones can, in the long term, become scarce, possibly
limiting the future of humankind. The human resource must have the
freedom to act freely. It also must have freedom from the environmen-
talists. In fact, the human resource needs nothing else but freedom.
The fact that nothing like the exhaustion of resources is occurring
was very well documented in another book by Julian Simon called The
State of Humanity (Simon 1995). There, he particularly points to the
static nature of the concept of resources as understood by the envi-
ronmentalists. In reality, a resource is always a function of price and
technology. Similarly to Simon himself, one of his most prominent dis-
ciples, Indur M. Goklany, wrote a rather extensive book, The Improv-
ing State of the World (Goklany 2007), which is loaded with data on the
subject. Goklany begins by pointing out that the decreasing prices of
resources prove that scarcity of resources does not increase nor are re-
sources exhausted. He shows that "despite the short-term fluctuations,
the long-term price trend of virtually every commodity that is used to-
day has been downward over the past two centuries not only in terms
of 'real,' inflation-adjusted dollars but also more importantly in terms
of the amount of effort an average individual has to expend to obtain or
to purchase a given mass of that commodity" (Goklany 2007, 99).
Exhaustion of resources clearly does not take place as a large-scale
phenomenon. In a very clever way, Goklany (2007, 98) paraphrases
Bj0rn Lomborg: "The stone age didn't end because we ran out of stones,
the iron age because we ran out of iron, or the bronze age because we
ran out of bronze"; it ended solely because Simon's "ultimate resource"
(that is, humans) came up with something new, something better.
The intentional catastro-
phism in the thinking of the Perhaps the end of oil will come about
environmentalists is symp- sometime in the future, but whenever
tomatic. Paul Ehrlich, re-
it comes, it will only be a footnote to
nowned for his books The
history, just as the end of blubber is
Population Bomb and How to
today.
Be a Survivor, wrote in 1970:
"If I were a gambler, I would lndur M. Goklany (2007, 100)
take even money that Eng- American climate policy analyst and
land will not exist in the year expert on sustainable development
2000'' (as quoted in Simon
1996, 35). This statement is ab-

One of the defining features of religion surd, but Ehrlich is not, even
nowadays, an insignificant
is that your beliefs are not troubled by
person. He is professor emer-
facts.
itus at Stanford University
Michael Crichton (2003) and has published dozens of
Popular fiction writer books. Professor Simon took
him at his word, and in 1980
they made a bet, although not
one regarding England. Instead, the question was whether natural re-
sources would become more or less scarce over the next 10 years (more
precisely, whether their prices would increase or decrease). They agreed
on five metals-chromium, copper, nickel, tin, and tungsten-and they
chose the period of one decade. Ehrlich predicted that the prices of the
metals would go up, whereas Simon anticipated their fall. Simon's vic-
tory was indisputable. Not only has the weighted total sum of prices of
these five metals decreased but so has the price of each one.
No argument can persuade Professor Ehrlich, however. In his early
book, The Population Bomb (1968, 3), he wrote that "in the 1970s the
world [would] undergo famines-hundreds of millions of people are
going to starve to death." At the beginning of the 21st century, he at-
tacked Lomborg and his Skeptical Environmentalist with equal fervor.
The catastrophic projections of the environmentalists are usually
nothing more than the denial or at least the undervaluation of Simon's
intermediate link between the potentiality of natural resources and the
reality of economically usable ones. Theirs is a completely static, if not
stationary, view. Some of the variables are basically kept fixed, while a
dramatic-usually exponential-evolution is assumed for others. The
"catastrophe" is then quite logical and inevitable, but clearly it was ar-
tificially created by a very strange combination of assumptions: pes-
simistic assumptions concerning one group of variables coupled with
assumptions about the rapid growth of others.
Those early 1970s environmentalist models of the Club of Rome
were based on this type of thinking (see my own polemic with the For-
resterian models written in the late 1970s and the well-known essay
by William Nordhaus from the same period. After all, Malthus's entire
theory, with its catastrophic scenarios, was deduced from the difference
between the arithmetic and geometric growth of two variables-agri-
cultural production and total population-some 200 years ago. That
Resources, Their Exhaustibility, and the Irreplaceable Role of Prices 21
human creativity could produce offsetting geometric supply growth

was not then realized, nor is it today. The logic has not changed.
Moreover, the environmentalists usually do not trust humankind
its freedom (except for their own). The basis of their illiberal, statist
thinking lies in the Malthusian disbelief in humankind (and in its tech-
nological progress) and, conversely, in the belief in themselves and in
their own abilities. It is the fatal arrogance of some people, so persua-
sively described by Friedrich A. Hayek (1945), and the fatal conceit as-
sociated with such thinking. I am not aware of any specific statement
that Hayek made about environmentalism, but the substance is the
same.
The fact that Malthusianism and environmentalism are intercon-
nected was also very nicely described by Mojmir Hampl (2004) in his
monograph Exhaustion of Resources: A Perfectly Salable Myth. His state-
ments-such as "the sources are being created by men," they therefore
do not exist in nature, and "the essence of their existence is the growth
of human knowledge, which has no natural limits" (Hampl2004, 58)-
should be the starting point for any serious discussion of this subject.
Similarly, I have to recall a crucial (though, for an economist, rather
commonplace) thesis that, thanks to the rise in prices resulting from the
increasing scarcity of resources, the "disappearing" resources are be-
ing "continuously and smoothly replaced by other resources or spared
through their more economical consumption" (Hampl 2004, 58).
For an economist, these considerations are absolutely fundamental.
We have already said that resources do not exist as such. No resources
exist independent of humans, and no "need" for resources would be
defined without price. Each resource has its own price unless the so-
cial system abandons prices, which is what Communism sought and
partially achieved. Thanks to a particular price, a certain supply of re-
sources emerges; the price is what motivates people to offer resources.
Similarly, thanks to the price, a certain demand emerges for one com-
modity or another. When the price is high, the demand is high and the
supply is low; when the price is low, it is the other way round. This
concept is fundamental, but I am afraid that the environmentalists, un-
fortunately, do not see it that clearly.
They do not know that prices reflect a real scarcity (not a fictitious
one) of diverse assets (goods and resources)--of those that are gen-
uinely scarce-better than anything else (and most important, bet-
ter than the speculations of the environmentalists). Without scarcity,

there can be no price. They are probably also not aware that as a re-
source becomes more and more scarce (as it becomes ~.~exhausted," to
use their terminology), the price increases to a point where the demand
drops until it basically equals zero. Hence, resources are-in economic
terms-paradoxically inexhaustible. Hence, price represents the key
parameter, and the very existence of a functioning price system is a
crucial prerequisite for the undistorted and healthy development of
humankind (and nature).
Those who have not lived under Communism, when prices were
suppressed, perhaps do not understand these things. That may be the
case with Professor Ehrlich and AI Gore. But Czech environmentalists
should know better. I urge them not to start talking about externalities
and to tell us that externalities do exist. We do know that they exist, and
economics-as a scientific discipline-deals with them intensively and
systematically. However, the world is not dominated by externalities.
They represent only a fraction of the space dominated by interpersonal
interactions. They are a supplemental, not a fundamental, phenom-
enon. The u fundament" lies in uintemalities" (however obscure that
word may sound).
For the most part, economists think-in a rather complex way-
within the framework of two key categories: prices (P) and quantities
(Q). According to them, these two factors fundamentally affect human
behavior. That is why they distinguish the P-effects (the consequences
of changing prices) and the Q-effects (the consequences of changing
income, product, and wealth, which are discussed in the next chap-
ter). When it comes to resources and their ~.~exhaustibility," as well as
the speed at which they are being exhausted, the P-effect is absolutely
crucial.
Chapter 3
The Wealth Effect and

the Effect of Technological
Progress
The importance of wealth in solving the problems we face can be appreciated by looking
back in time • Climate's effects on wealth will be minor • The nature of risk • Technologi-
cal changes will be more far-reaching than climate changes • Developing countries' best
defense against climate risks is their own development • Failure to factor in technologi-
cal progress and wealth leads to an overestimate of the effects of climate change • The
Environmental Kuznets Curve and the role of perception in environmental transition
If we look at the future and any problems that may possibly arise (in-
cluding environmental ones) through the eyes of an economist, we
have to mention the income, or wealth, effect, on the one hand, and the
effect of technological progress, on the other. We also have to consider
the incredible human ability to adapt to new, unexpected events and
circumstances.
It is perhaps needless to talk extensively about the fact that peo-
ple's income and wealth will radically increase and that-as a re-
sult-their behavior and the structure of their demand for material
and nonmaterial goods will change as well, not to speak about the im-
mense technological progress that will occur. 1 We all intuitively feel
this is the case, but not all of us draw the right conclusions from it.
1 Economists consider the development of income and the resulting growth of wealth to be
the crucial factors of the so-called consumption function, especially in the long term. See, for ex-
ample, Friedman's (1957) theory of permanent income.
In "Costs and Benefits of

Teddy Roosevelt, a major environmen- Greenhouse Gas Reduction,"
tal figure in 1900, did not know the Nobel Prize-winning econ-
meaning of the following words: omist Thomas C. Schelling
(1996) ponders how the
airport masseur world will look in 75 years.
. To get an idea of what the fu-
antenna microwaves
antibiotic neutron ture might bring, he thought
atomic bomb nuclear energy of looking back 75 years, to
computer penicillin 1920. Interestingly enough,
DVD radio he says that in 1920--when
paved roads were uncom-
ecosystem robot
mon in the United States-
gene video
mud was the biggest climate-
Internet v1rus
related problem. Pure mud.
laser tsunami
Schelling adds, "It might not
Adapted from Michael Crichton (2003) have occurred to us in 1920
that by 1995 most of the na-
tion's roads would have been
paved solid." This conclusion is not in any way trivial. I am convinced
that as a conceptual construct it can be applied to the whole environ-
mental problem.
What will the world be like in 100 years, assuming the expected
economic growth? We do not know, but surely we will be miles from
where we are today. Many "roads will be paved solid." It is thus a fatal
mistake to base our thinking about the situation 100 years from now on
the knowledge of today's technologies and wealth.
One conclusion resulting from the debate about the likely wealth
of future society-which is undoubtedly nearly unimaginable for us
today-seems rather obvious and easy: There are some essential things
that we should not try to solve on behalf of future generations. Obvi-
ously, we are not the first ones to face these decisions. Numerous gen-
erations of our ancestors were in the same situation before us, and we
should not condemn them on the basis of the knowledge that we have
today. Does anyone really think that our ancestors in Anatolia should
have protected all the local vegetation from being grazed by goats?
Should our ancestors have been thinking about us at that time? Could
they think about us at all? Were they able to even imagine our present
world?
The Wealth Effect and the Effect of Technological Progress 25
The well-known Stern Review on the Economics of Climate Change

(Stem 2006) prepared for former British Prime Minister Tony Blair,
is very pessimistic about the future. It assumes that during the next
two centuries per capita consumption in the world as a whole will in-
crease annually by 1.3 percent on average. This figure does not seem
that high to a layperson, but even with this seemingly very moderate
rate of growth, annual per capita consumption, which is about $7,600
today, would increase to $94,000 in 2200! The figure of 1.3 percent is not
my assumption but that of the environmentalists-who are anticipat-
ing catastrophes-or, to be precise, it is the assumption of one of their
significant representatives.
A relevant objection is, of course, whether this growth will be halted
for ecological reasons-by climatic factors, for example. Through the
application of very complex methods, various economists have tried to
estimate the possible effect of climate changes (associated with green-
house gases) on the growth of world gross domestic product (GDP). A
well-known and often-quoted economic studies of this sort was Alan
S. Manne's (1996) "Costs and Benefits of Altemative C02 Reduction,"
which proved that nothing really different will happen if we ignore
climate change. If we assign-according to Manne's calculation-the
number 100 to GDP in 1990, the world GDP will approach the value
of 1,000 in 2100. Different assumptions-.particularly about discount-
ing (see chapter 4)-will change the estimates by only 1 percent or so!
Manne argues that the difference is perhaps as large as if we decided to
draw the curve of the GDP growth in the graph with a pencil of hard-
ness of 2H instead of 4H. Changes caused by the climate will be only
that small!
A small fraction of 1 percent of the world GDP is not, of course, a
negligible sum of money, but the impact is smaller than the possible
effect of dozens of other global economic factors. A more recent paper
by Robert Mendelsohn and Larry Williams (2004) confirms the previ-
ous calculations. Mendelsohn and Williams estimate the influence of
global warming on GDP in 2100 at 0.1 percent. Their estimates stem
from both the negative and the positive effects of global warming.
Mendelsohn (2006-2007, 44) puts the conclusion absolutely clearly:
"[T]he damages resulting from higher temperatures over the next 50
years will not be distinguishable from zero." Only later will it be pos-
sible to find a measurable effect.
In any case, in the future, society clearly will be far richer than it is
today. Moreover, many of the problems we know today will likely no
longer exist, and, conversely, many unknown and unsuspected things
will exist. In other words, technological progress will make a radical
difference. My older son provided me with a very apt analogy for this
debate. If we conclude on the basis of a reasonable but completely
static calculation of probability-that a risk exists that approximately
once every 30 years a short circuit in our television set causes a fire in
our apartment, how should it influence our current behavior with re-
spect to the future? Should we throw away the udangerous" television
set or simply ignore the risk? One possible solution would be to recog-
nize our risk aversion and to calculate the probable risk assessment (on
the basis of the previously mentioned calculation of probability). We
also have to realize that it is nearly impossible to assume that a televi-
sion set as we know it today will exist in 30 years' time. And that is why
the probability calculations made today have nearly no relevance for
the future. They are relevant only for the present.
The question of technical progress is crucial. Schelling (2002a, 2),
writing on the greenhouse effect, comes up with the following abso-
lutely elementary reasoning: u Ask a seventy-five-year-old farm couple
living on the same farm where they were bom: would the change in
the climate be among the most dramatic changes in either their farm-
ing or their lifestyle? The answer most likely would be no. Changes
from horses to tractors and from kerosene to electricity would be much
more important." Is it meaningful to assume that such changes will
happen also in the future? Or that the dynamics of technological prog-
ress will not be even more dramatic than they are today? The advocates
of another fashionable concept that I completely disagree with-uthe
knowledge economy"-would be the first ones to say loudly that tech-
nological progress will no doubt proceed at an even faster pace than it
has up to now, regardless of climate change.
Immense shifts also occur in the structure of national economies.
One hundred years ago, a much higher fraction of economic activities
were realized in the open air. Today, agriculture and forestry usually do
not make up more than 3 percent of the gross national product (GNP) in
developed nations. Other sectors do not tend to be significantly influ-
enced by climate change. Professor Schelling (2002a, 2) therefore says,
"Even if agricultural productivity declined by a third over the next half-
century, the per capita GNP

we might have achieved by Up to the 2°C level, the model simu-
2050 we would still achieve lations as presented suggest zero
in 2051." This argument itself or negative expected net costs from
should be sufficient to set- climate change .... This can fairly be
tle the question. Population described as the consensus position in
growth has a similar effect. the economics literature.
Schelling (2002a, 2) says that
"[l]f China holds population lan Byatt, Ian Castles, lndur M. Goklany, David
growth to near zero for the Henderson, Nigel lawson, Ross McKitrick,
next couple of generations, Julian Morris, Alan Peacock, Colin Robinson,
and Robert Skidelsky (2006, 203)
it may do as much for the
Earth's atmosphere as would
a heroic anticarbon program coupled with 2 percent annual population
growth." Here is another key argument. Let us therefore distinguish-
among other things-the influence of humans on climate change from
the effect of a growing population on climate change. These concepts
are two completely different things.
It would be possible to continue along these lines because the
number of factors that influence the reality around us is nearly infi-
nite. Schelling (2002a, 2) puts it very clearly: the developing countries
should not make sacrifices, because "their best defense against climate
change will be their own continued development."
Yet in the name of the endangered future, advocates of the envi-
ronmentalist approaches want to radically decrease today' s consump-
tion-not only their own, but also that of much poorer people-to help
much richer future generations that will be far more technologically
advanced. Do the environmentalists really think that a reduction of
consumption by 15 percent in 2007 has the same effect on human life
as a relatively equal reduction in 2200? Such expectations are utterly
absurd.
Mendelsohn (2006-2007) draws our attention to the issue of hu-
man adaptability and says that the environmentalists' projections do
not take it into account. In Mendelsohn's (2006-2007, 44} opinion, their
omission leads to an overestimation of "damages by more than an or-
der of magnitude." Adaptability is difficult to measure. No overall in-
dex of adaptability exists because it has yet to be invented. In the de-
bates about global warming, we talk about the greenhouse effect, about
greenhouse gases, and especially about carbon dioxide (C02 ). If we be-
Figure 3.1. C0 2 Emissions as a Function of Time
1.2
"'
-=
C)
.5
coo
:;. 1.0
coo
...cu
u
Q.
"'
c
C)
·c:;:; 0.8
·e"'
cu
0.6
0.4 +-r-............-r..,---r-r-r-.--T"--r-r-r-T-r-r-,--y--r-r--,-,.-r-T--r--'1--r-r--r-r--r-r--,.-,--.-,..-,--,~r-r-~r-r--....,.-.---.--.......-.....-r---t
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
years
Source: McKitrick et al. 2007, 11
lieved the hypothesis that economic growth (and particularly indus-

trial growth) leads to higher C02 emissions, we would be led to believe
that unrestrained industrial growth, which undoubtedly takes place in
the world, leads to the permanent growth of C02 emissions. Looking at
per capita C02 emissions as a function of time, however, we see that is
not the case (see figure 3.1).
In figure 3.1, we see that the per capita emissions of C02 increased
only until 1979 (when they reached the value of 1.23 tons) and that
they have been decreasing ever since. The last known value, from 2003,
is 1.14 tons. I consider this finding to be a good example of human
adaptability.
Let us add one more aspect of the "income effect" to this argu-
ment-namely, the idea of searching for a relationship between wealth
(and income) on the one hand and protection of the environment on the
other. Environmentalists begin with the absolutely wrong assumption
that economic growth or accumulation of wealth (and technological
progress) leads to deterioration of the environment. Economists have
something to say about this topic, too.
They are inspired by the so-called Kuznets curve, which was in-
vented as a result of pioneering empirical research of 1971 Economics
Figure 3.2. Relationship between Quality of Environment and Level of Income
-
c:
Q.)
E
c:
e
>
-
c:
Q.)
-
c:
0
.....
ro
0
·.::
Q.)
~
-=
income per capita
Nobel laureate Simon Kuznets. Kuznets proved that a relatively firm

relationship exists between the size of incomes and the inequality of
incomes. The upside-down U-shaped graph shows that when incomes
are low but increasing, inequality grows, too. After reaching a certain
critical point, however, income inequality starts decreasing. This re-
search has inspired the search for (and discovery of) other U-shaped
curves, even outside the realm of income inequality. Environmental U-
shaped curves are among them.
In 1991, Gene M. Grossman and Alan B. Krueger noticed that an up-
side-down U-shaped relationship exists between the quality of the en-
vironment and the level of income, that is, wealth. After analyzing data
from 42 countries, they calculated that the critical point occurs when the
annual GDP reaches something between $6,700 and $8,400 per capita.
The hypothetical curve is roughly as shown in figure 3.2.
Applying this to the real economy, a remarkable conclusion fol-
lows: Economic growth-an increase in wealth-is ultimately benefi-
cial to the environment.
Since the publication of Grossman and Krueger's (1991) paper, nu-
merous empirical estimates of the shape of this curve-based on newer
Figure 3.3. Environmental Transition
P time
and newer data-have emerged. These estimates are discussed, for ex-
ample, in Jeremy Brown's (2005) article, "Travelling the Environmental
Kuznets Curve." Environmentalists would have to prove the opposite,
which is-or seems-impossible. What is essential, however, is the fact
that that they usually do not pay much attention to details such as a
thorough data analysis. Economists, on the contrary, do.
Indur M. Goklany (2007) tries to generalize the hypothesis of the
environmental Kuznets curve when he speaks about "the environmen-
tal transition." His curve has a similar shape, but he chooses a more
general variable on the x-axis (see figure 3 .3).
Instead of per capita income, Goklany uses a time variable {a proxy
for both wealth and technological development). I would even add
Mendelsohn's adaptability as a variable, but it would not make any
difference. One difference between the two curves is evident: the influ-
ence of technological progress and human adaptability, which are oth-
erwise not directly measurable. Goklany (2007, 106), however, assumes
that "the Kuznets curve misses half the story" because it focuses only
on the influence of income (wealth).
He adds a P-moment to the graph (P stands for "perception"),
when people recognize the environmental problems, arguing that "be-
fore P one should not expect conscious actions to reduce the environ-
mental impact" (Goklany 2007, 107). Moreover, he adds another con-
dition: uthe existence of a relatively effective functioning mechanism
for translating the wishes of the public for a better quality of life into
the necessary state interventions" (Goklany 2007, 187). He therefore be-
lieves that the process of "the environmental transition" does not have
to proceed identically in all countries. We, the Czechs, know something
about that reality from the Communist era.
The variables can be redefined in various ways, but the shape of
the upside-down U-curve stays the same. And it is the shape of this
curve that is the main reason for our optimism. The conclusion is clear:
Rather than causing environmental problems, wealth and technologi-
cal progress solve them. Human adaptability offers hope.
Chapter 4
Discounting and
Time Preference
The importance of intergenerational comparisons • How economists tackle the issue

• How discount rates work • The subjective nature of value • Critiques of the Stern
Reviews discounting methods • The Stern Review undervalues costs for mitigating
global warming by a factor of three
Let us leave aside for a moment the question of what kind of environ-
mental (or exclusively climatic) changes may occur in the future, and
let us ask whether it is possible to evaluate these, or any other, poten-
tial changes. This question lies at the core of the social sciences and,
within that framework, the economic approach to this issue. It is almost
trivial to say that the longer the period we consider, the more difficult
and less reliable the evaluation becomes. The reason behind this com-
plexity and uncertainty is not "'the instability of our value system but
the evolving context of our evaluation," as Dusan Triska (2007, 3) per-
suasively argues. This distinction is extremely important-"' yes" to the
assumption of our value system's stability but "no" to the fixedness of
the context in which our evaluation occurs. These two assumptions are
the only possible starting points for any rational intertemporal analy-
sis. Without them, we would get nowhere.
Tnska (2007, 101} relies on the key assumption that underlies all
scientific economics: "'The hypothesis about stability of human pref-
erences." Only this hypothesis enables "intertemporal comparisons of

preferences," or in plain language, "intergenerational comparisons"
(Triska 2007, 103). On the basis of this assumption, Triska demands that
everyone "whose current aim it is to protect future generations from
global warming clearly and openly declares his or her presumptions
regarding that intergenerational relationship" (ibid.). In other words,
he wants environmentalists to clarify how they see the future and what
weight and importance they attach to it. Not everyone declares these
assumptions so explicitly. Some-and this is the environmentalists' ap-
proach-assume that no matter how distant the future is, it is of equal
importance as the present.
How can one make these intergenerational comparisons? How can
one evaluate $1 million today against the same amount tomorrow?
How can one evaluate 1 oc today against the same in 100 years? How
can one evaluate the sea-level rise in 50 years? How can one evaluate
the oil reserves? And so on and so on. Do we have any tools at our dis-
posal that would be of any help? An economist would answer "yes."
An economist knows that $1 million today and $1 million in 100 years
are two completely different things. The economist, therefore, tries to
explain what that difference is. This very subtle question is discussed
in economics by using the term "discounting."
As a well-known proverb says, "A bird in the hand is worth two
in the bush." We need to compare a bird that is closer and one that is
farther away-not only in space, but also in time. For every rationally
behaving person (although perhaps not all environmentalists), a $5 bill
today is better, is more valuable, and may have a more significant ef-
fect than one in the distant and, in the case of environmental debates,
even unforeseeable future. The argument, of course, is not just about a
$5 bill. All future incomes and expenditures tend to be of lesser impor-
tance to each individual than the present ones. Only the importance for
human beings counts, because no other arbiter exists-and cannot ex-
ist. There is no arbiter or judge called "general wisdom" or "common
sense," no entity unanchored in time.
In principle, we face two conceptually different problems. One is
our own evaluation of various things in the time that we have at our
disposal. What is problematic is not that we would chaotically change
our opinions or attitudes (although such changes also occur, for better
or worse), but rather, as has already been mentioned, that the evalua-
Discounting and lime Preference 35
tion context changes in time. This change of context is absolutely fun-

damental. The two key contexts, wealth and the level of technological
progress, were discussed in chapter 3.
The second problem arises when the consequences of our action or
inaction (or any other consequences) affect other people rather than us.
Economics has created different tools for diverse situations, but it has
no immediate tool for interpersonal and intergenerational comparisons
of utility and preferences, nor does any other social science. Utility as
perceived by various subjects cannot be compared, and any aggrega-
tions can be made only through the appraisal that emerges on a fully
impersonal market. Yet again we are back to discounting and the ques-
tion of what interest or discount rates the market discovers.
In his famous and crucial article, "The Use of Knowledge in Soci-
ety," Friedrich Hayek (1945) convincingly demonstrates that compari-
sons of utility among individuals cannot be made and that relevant
information can be derived only from the value that emerges on the
market, during a real exchange of goods and services. As a side note, I
must add that the artificial construct of the sale of emissions permits,
with which the European Union is currently experimenting, only reaf-
firms Hayek's wamings. It brings back the well-known Lange-Lerner
model, used by socialists to defend the possibility of the functioning of
a nonmarket, communist (although they would say socialist) economy
in the 1930s. Hayek resolutely rejected the model. The price cannot be
in any way "scientifically"_calculated or estimated. That we should
never forget. 1
In both cases, economics has not advanced-and cannot advance-
beyond the concept of discounting, which is not an insignificant mat-
ter. Economists solve this nearly metaphysical dilemma by the very
important concept of discounting. At the level of society as a whole,
they speak about the "'social discount rate," which cannot deviate too
much from the (long-term) market discount rate. This concept is noth-
ing new. I wrote about it as early as 1986. In the 12th of my "'twenty
commandments of an economist," I mentioned that economic subjects
do compare the past, the present, and the future. Moreover, the non-
zero interest (and discount) rate shows that .lithe future looks minor
1 The difference between real and artificial markets in the context of the current debates about
climate change is well described by Roger Helmer (2007), for example.
when compared with the present" and that, as a result, "the future is
less important than the present" (Klaus 1986, 28)
How much more minor the future is depends on the rate of pref-
erence of today over tomorrow or the rate of preference of the present
over the future. Is this view irrational? Is it a deliberate shortsighted-
ness and therefore ignorance on our part? Or is it the only possible
rational perception of the world? Are distant objects "objectively" mi-
nor, or are they not? Or is it just our shortsightedness, or possibly even
bias, that does not see that these objects do actually have the same size?
Questions of this kind open up room for new, very interesting, and
very relevant considerations.
One may authoritatively argue that economists (though certainly
not only economists) assume that the inevitable starting point of any
rational human deliberation and behavior is the indisputable fact that a
dollar (or any other currency) will be ''minor" in the future when com-
pared with the present and that a contrary deliberation does not make
sense. Economists speak, therefore, about time discounting or about
"the explicit delimitation of the character and the intensity of the rela-
tionship between today's and future evaluations of any given thing"
(Triska 2007, 7). They speak about the discount rate, which is nothing
more than the price of time that recalculates or converts the value of a
present $5 bill (or any other money) to the value of a future $5 bill. This
concept may not be easy to understand.
What people mostly understand quite well is the reverse process,
known as .ucompound interest," because they encounter it personally
in their lives. To invest a sum of money P 0 (or even only to deposit it in
a bank) means to expect that at the interest rate i, the original P 0 is going
to increase in time t to Pt according to the following formula:
This expectation-perhaps even intuitively-is easily comprehen-

sible to almost everyone.
Discounting is basically the reverse process, although one has to
admit that the existence of a negative exponent makes it less clear for
many to understand:
Discounting and Time Preference 37
From this formula, it is obvious that because of discounting (d is

the discount rate}, today's value R 0 in timet "looks" more like Rc If the
discount rate is d > 0, which is the basic assumption of conventionally
understood human rationality, then Rt < R 0 • Future events are necessar-
ily minor compared with present ones. The greater d and t are, the more
the value of the present and the future differs.
The discount rate can be derived, for example, from the interest
rate for which people are willing to borrow money for their immediate
use when they might not have the financial resources at that particular
moment. If they borrow $1,000 and the interest is 6 percent, then by the
end of the first time period, they will have only $940 from the original
loan. It is a general praxeological principle to think in this way, not a
specific feature of economics or the economists' views. This principle
also says that if people considered the discount rate to be zero (or ap-
proaching zero), they would be able neither to invest nor to save ra-
tionally. They would not be able to make any decisions concerning the
future at all.
I agree with Triska (2007, 106) that "for a closet intellectual," these
arguments may be too "down to earth" (not noble enough), and "it
would be unacceptable for him to apply this 'accounting' methodology
to the noble theme of the rescue of mankind." Nevertheless, I would
kindly ask those closet intellectuals to try to think about this way of
reasoning and make sure that their own reasoning is based on an as-
sumption that is at least as clear and simple as the discounting by an
economist. Let me quote Triska's (2007, 105-6) whole argument: "If they
had accidentally overcome their aversion, then it would be enough to
replace a $5 bill with their serious environmental issue and to replace
the time horizon of one year with a few 'intergenerational' decades.
Then they would maybe realize a little better that we can evaluate some
things differently today than in 30 years, not to speak about the fact
that it does no longer have to be us who are in the position of the evalu-
ators but those corning after us."
The well-known Harvard economist Lawrence Summers (the for-
mer secretary of the treasury under President Bill Clinton and thus also
under Vice President AI Gore) expressed this concept concisely not so
long ago. He asked if we really believed that it made sense to estimate
the contributions of various human projects for 100 years in advance.
His answer was that it did make sense, but "it would seem helpful to
spell these assumptions out" (Summers 2007). He would therefore rec-

ommend readers try to answer the following question: "What percent
of GOP would readers be prepared to give up over the next decade in
order to add annually a) 0.01 percent, b) 0.05 percent c) 0.1 percent d)
0.25 percent of global GDP growth over the period 2020-2120?" (Sum-
mers 2007).
I think this question-with all its subtleties-is more than instruc-
tive and very persuasive. The question has no answer, although en-
vironmentalists come up with their answers daily and in a very self-
confident way.
As an aside, I must add that economists abandoned the prescien-
tific principle that the value of goods (or the value of anything scarce)
can be objectively measured approximately 150 years ago. They under-
stood that value has an exclusively subjective nature. A comparable
total revolution in reasoning, such as the one that affected the world of
economics during the period between classical political economics and
neoclassical economics (the last third of the 19th century), has not hap-
pened in any other social science, and I am afraid that many present-
day people who are otherwise well educated do not understand its far-
reaching consequences. The environmentalists definitely do not. They
see everything around them "objectively." (This topic, however, would
require a separate study.)
In a recent and very important text, the well-known economist and
co-author of what is perhaps the most prominent textbook on econom-
ics, William Nordhaus (2006), used the concept of discounting to criti-
cally analyze the already cited Stern Review on the Economics of Climate
Change (Stern 2006) and its new version of the catastrophic vision of
global warming. Nordhaus noticed that Stern-unlike other authors of
what are today classic environmentalist studies (of the Club of Rome
kind)-builds on the standard models (not the Forresterian ones) that
are very close to those Nordhaus, too, has been using for several de-
cades. However, Stern's "conclusions ... are so different from most eco-
nomic studies" that have been published (Nordhaus 2006, 4).
After a careful study of the Stem report, Nordhaus (2006, 6) con-
cludes that the reason the results lie so far outside the mainstream is
Stern's "extreme assumption about discounting." Nordhaus rightfully
emphasizes that it is in no way an insignificant technical detail, inter-
esting to no one but economists, but rather absolutely fundamental be-
cause discounting is the key to any comparisons of the future and the
present. Stern's report basically considers the "social discount rate" to
be close to zero. This assumption "magnifies enormously impacts in the
distant future and rationalizes deep cuts in emissions, and indeed in
all consumption, today" (Norhaus 2006, 6). With the "normal" discount
rates, Stem's catastrophic outcomes and the resulting recommenda-
tions disappear.
In the February 2007 newsletter of the Center for Economics and
Politics, the Czech economist Mojmir Hampl also criticizes the low dis-
count rate in Stem's model. According to Hampl (2007, 4), Stern wants
to "persuade us that future generations who will live tens or hundreds
of years after us will evaluate the costs of global warming and the costs
of its prevention in the same way as we do today, despite the fact that
they will be much richer and much more technically advanced than we
are and will perhaps be dealing with completely different issues than
we do." He adds, "As if we did not already have enough theoretical
and empirical evidence that the measurement of tomorrow (and espe-
cially of the more distant tomorrow) through today' s eyes always leads
to predictions that would make our descendants laugh."
Similarly, Professor S. Fred Singer argues (in personal correspon-
dence to the author in February 2007) that "the choice of the discount
rate is usually presented in ethical terms-i.e., the well-being of our
children and grandchildren-having thus a very strong emotional ap-
peal." It results in an unrealistically low discount rate that overrates the
future effects of changes made today.
The social discount rate is thus the key parameter that compares the
significance of the well-being of future generations to that of present
generations. When it equals zero, we are looking at future generations
in the same way we look at present ones, which is utterly absurd. The
environmentalists {and Stern) will probably try to defend themselves by
arguing that a nonzero social discount rate ignores the large expenses
{burdens) that will emerge in the future and therefore call for intergen-
erational neutrality. I have tried to argue that approach is wrong.
Without using any argumentation whatsoever and without ana-
lyzing any deeper consequences, Martin Bursik (2007, 70), too, speaks
about "the principle of intergenerational justice." What does he un-
derstand as the underpinning of this principle? He also seems to use
the assumption of a zero or nearly zero discount rate. The effect of
this assumption is funda-

The [Stern] Review argues that the mental. When Nordhaus
presence of uncertainty should reduce uses his own model with a
the discount rate used. However, higher discount rate to recal-
many would argue that, because our culate Stern's result, he ob-
knowledge of future events becomes tains completely different re-
more uncertain as the time horizon sults. I am convinced that the
is extended, discount rates should if readers of news stories about
anything increase rather than dimin- the Stern Review in the main-
ish with time. stream media are not aware
of such things.
lan Byatt, lan Castles, lndur M. Goklany, David The question of Stern's
Henderson, Nigel lawson, Ross McKitrick, discount rate is somewhat
Julian Morris, Alan Peacock, Colin Robinson,
intricate (much like many
and Robert Skidelsky (2006, 212)
other complex assumptions
of today's climate models).
Nordhaus (2006) "reads" Stern's discount rate as 0.1 percent. Men-
delsohn (2006-2007, 42) says: "The [Stern] report assumes that the dis-
count rate ... is 0.1 percent above the rate of growth of consumption.
Because consumption is assumed to grow at 1.3 percent [as discussed
in chapter 3], the discount rate is 1.4 percent." Mendelsohn considers
even this discount rate to be low, overrating the future. Marco Per-
coco and Peter Nijkamp {2007) list 13 different estimates of the social
discount rate for various countries, and they end up with the average
value of 4.6 percent. That finding is much higher than Stern's rate.
To clarify, Nicholas Stern published an interpretive supplement,
"After the Stern Review: Reflections and Responses" (2007, 3), in which
he explains the difference between the discount rate and the "pure time
discount rate," making clear that it is the second one that equals 0.1
percent. Mendelsohn is therefore more likely to be right than Nord-
haus, although whether the concept is clear and understandable for ev-
eryone is highly questionable.
Mendelsohn (2006-2007) correctly points out that Stem's discount
rate is very low anyway {various authors use values ranging from 3 per-
cent to 6 percent), and he also criticizes the fact that Stem does not use
any discount rate at all that would estimate the costs of the fight against
global warming: "The mitigation costs reported in the study need to be
multiplied by a factor of three to be consistent with how damages are
calculated" (Mendelsohn 2006-2007, 43).
A zero social discount rate (or one that is approaching zero) makes
the future look as important as the present. I dare say that everything
depends on whether or not we understand the absurdity of this state-
ment. If we do not, then a serious discussion makes no sense and leads
nowhere.
To summarize, we can say together with Triska (2007, 107) that,
"Perhaps the main contribution of economic theory to the global warm-
ing debate is the requirement to specify all assumptions on which the
analysis is based-i.e., to clearly separate these assumptions from the
results of the analysis itself." This is, after all, an elementary require-
ment for any scientific work.
Chapter 5
Cost-Benefit Analysis
or Absolutism of the
Precautionary Principle?
The problem with the precautionary principle • How environmentalists use the principle
to justify intervention without evidence • Their hypocrisy in doing so • Problems with
"renewable" energy • The inadequacy of the precautionary principle in a world of trade-
offs and the appropriateness of cost-benefit analysis
Another immensely problematic matter that must be mentioned ex-

plicitly in the context of the global warming issue is the so-called pre-
cautionary principle. The precautionary principle is either misunder-
stood by the environmentalists or understood only too well, but in any
case it is essentially misused to serve their own ambitions.
They use it in an aprioristic and absolutist manner, which leads
them to defend an unjustifiable maximization of risk aversion. I do
not want to ridicule this process in any way, because it is in itself very
human. It must, however, have its limits. Every rational human being
minimizes risks; there is nothing wrong in doing so. What is important,
however, is a reasonable minimization of risks. S. Fred Singer (2000)
aptly says, "'I'm not a great believer in buying insurance if the risks are
small and the premiums are high.... We're being asked to buy an in-
surance policy against a risk that is very small, if at all, and pay a very
heavy premium." The point is that, according to the Kyoto Protocol, we
should reduce the use of energy by one-third, which by 2050 will result
in the reduction of tempera-

It's reasonable to expect the supply ture of only 0.05°C.
of energy to continue becoming more Martin Bursik (2007, 70)
available and less scarce, forever. demonstrates the abuse of
this attitude, with uninten-
Julian Simon (1996, 181) tional humor, by saying that
Economist ''we indeed have no proof,
but we base our assumptions
on the precautionary prin-
ciple" (author's translation). This statement alone would suffice for
a separate analysis. Should we do something very radical and costly
even if we do not have sufficient evidence?
Economists are usually not even aware that this "principle" exists
as such. It is not mentioned in their standard textbooks. They approach
problems of any kind by looking at both sides of each coin. Hence, they
take into consideration not only the effects but also the costs of every-
thing, including aprioristic precaution. Thus, they oppose the reckless
enforcement of any regulatory intervention that promises a nonzero ef-
fect. They discuss benefits and costs of altematives and, above all, think
in terms of so-called opportunity costs (the effects of alternative activi-
ties that were "lost" because of the regulatory intervention). I always
used to tell my students that understanding the concept of opportu-
nity costs is one of the prerequisites-and there are not that many-for
earning a university diploma.
Economists also point out that these costs are generated not only by
action but also by inaction. Both the implementation of a measure and its
nonimplementation have consequences. Environmentalists, however, do
not see things that way. In his article "The Irrational Precautionary Prin-
ciple," Jim Peron (2004, 39) adds that these views aim even further and
that today "the precautionary principle is tantamount to a coup in legal
theory." I am afraid that this is the case in judicial practice as well-and
not only in judicial practice.
We are witnessing the absolutist interpretation of the precautionary
principle being used by environmentalists to justify any kind of regu-
latory intervention or ban. All they need to implement such regula-
tions-once the imminent catastrophe is sufficiently described-is sim-
ple moralizing, noble preaching about the future, and demonstrating
their "concern" about humankind a la AI Gore. "If something can cause
damage, let's stop it," they say. There is the word "can" and there is the
Cost-Benefit Analysis or Absolutism of the Precautionary Principle? 45
word "damage." We should very carefully distinguish between "dam-

age" and "secondary effect," because nothing happens or can happen
without some effects. Every human activity has its secondary effects
and thus also its costs. This approach is only one step away from ban-
ning almost anything.
We come across this way of thinking in real life almost daily. A pro-
totype of its application-and thus the most prominent environmental-
ist battlefield today- is the production of electric energy. Despite the
environmentalists' harsh rhetoric, they themselves use electricity every
day. The recent story of Gore's energy-demanding household is quite
fascinating. The environmentalists most certainly do not wish to return
to the notion of a Rousseauian noble savage and his allegedly idyllic
life-at least not in the reality of their own lives.
The one-sidedness and flatness of environmentalists' thinking about
energy is convincingly demonstrated by Michael Heberling (2006) in
his article, "It's Not Easy Being Green." Heberling analyzes the envi-
ronmentalists' views on individual types of energy resources. Accord-
ing to environmentalists, it is always, in fact, automatically much better
to use geothermal energy, which-unlike coal, gas, or oil-they con-
sider inexhaustible and, therefore, unlimited and abundant. This think-
ing is, of course, a fatal mistake. It is more than obvious that extracting
geothermal energy is often uneconomic, at least by means of today' s
technologies. And yet environmentalists want it now, regardless of the
costs and prices.
They similarly refuse to acknowledge that nature is being damaged
not only by coal-fired power plants but also by hydroelectric ones. The
city of Aswan on the Nile, the
Yellow River in China, and
the Brazilian Igua¢ Falls are To replace the Czech nuclear power
a testimony to the destruc- plant of Temelin with wind power
tive effects that hydroelectric plants would require the installation
power plants have on river of about 5000 wind power plants.
ecosystems. Contrary to the If they were to be built next to each
environmentalists, authentic other, they would form a line reaching
protectors of the environment from Temelin all the way to Brussels.
on local levels are well aware
of this fact. Vaclav Klaus,
Sun and wind power are own calculations, see appendix C
also considered "free" by the
environmentalists, because
In order to substitute the electricity they are "inexhaustible." Nev-
produced in our nuclear power plants, ertheless, power engineers, as
we would have to either build about well as economists and ordi-
20,000 windmills or occupy 1 million nary people, know that solar
hectares of land with otherwise use- energy and wind energy are-
less crops-the so-called biomass, for many reasons-extremely
that can be used as fuel. One million expensive. One of those rea-
hectares represents one-fourth of all sons is that the land necessary
our arable land, or one-seventh of the for power plants of this type
area of the entire Czech Republic. is far from inexhaustible. It is
scarce, and it most definitely
Martin Riman is not free.
Minister of Industry and Trade, Czech Republic Heberling (2006) demon-
strates that for wind power
plants to produce 5 percent of
all electric energy in the United States, as some environmentalists de-
mand, building 132,000 more wind turbines would be necessary. That
number is both incredible and unimaginable. Is land-one of the clas-
sic factors of production-available for this number of turbines? Is it
available at a reasonable price? Is it worth killing 12 million to 15 mil-
lion birds with the blades of the turbines every year? And what about
the landscape aesthetics (as we can see north of Vienna or south of Ber-
lin)? As appendix C demonstrates, replacing the Czech nuclear power
plant of Temelin with wind power plants would require the installa-
tion of about 5,000 wind power plants. If they were to be built next to
each other, they would form a line reaching from Temelin all the way
to Brussels.
Referring to the Stern Review, Robert Mendelsohn (2006-2007, 45),
professor of environmental studies at Yale University, mentions an im-
portant point: "It is one thing to imagine a windmill here and there
or solar panels on the top of a few buildings. However, to reach the
renewable goals of the [Stem] report, 5-10 million hectares of solar
panels would have to be installed, preferably in sunny locations near
the equator. A total of 2 million windmills would have to be installed
across 33 million hectares of land. The biofuel sector would need an ad-
ditional 500 million hectares of land." Mendelsohn also notes that the
environmental consequences of these projects are entirely omitted from
the Stern Review.
Cost-Benefit Analysis or Absolutism of the Precautionary Principle? 47
One could go on and on with arguments of this sort. For the mo-
ment, however, I am most concerned about demonstrating how a
wrongly conceived precautionary principle applied to the dangers aris-
ing from the use of coal or nuclear fuel-that is, without a consistent,
detailed, and thorough cost-benefit analysis-leads to solutions that
are utterly ineffective and will put a disproportionate burden on our
future. In real life, there is always a trade-off--even for caution. That
trade-off tends to be most expensive. To argue the contrary would be
irresponsible populism.
In an interview with ICIS Chemical Business Americas, Bjern Lorn-
borg (2007) gives several good examples of this "something for some-
thing" approach. Even with the regulation of pesticides, approximately
20 people die of cancer every year in the United States because of pes-
ticide residuals in groceries. Banning the pesticides would, therefore,
save 20 lives annually. The subsequent increase in the price of fruits and
vegetables (grown without pesticides) would lower their consumption
by at least 10 to 15 percent, with estimates showing a resulting increase
in the number of cancer-related deaths of 26,000 a year. The ratio of 20
to 26,000 is clear enough. Where is the precautionary principle now?
One can apply similar considerations to the effects of temperature
increases. Estimates say that, by 2050, the number of deaths in Great
Britain caused by extreme heat could increase by 2,000 a year. At the
same time, the estimated deaths caused by cold could decrease by
20,000. Again, we see a similar ratio. Data from the United States are no
less illuminating. Indur M. Goklany (2007, 167) shows that, from 1979
to 2002, 8,589 people died as a result of extreme heat, whereas 16,313
died as a result of extreme cold. It looks as though a slight increase in
temperature could only improve the situation, even though tempera-
ture change is a factor in only 0.056 percent of all deaths.
Therefore, I say "yes" to cost-benefit analysis and "no" to the apri-
orism of the precautionary principle.
Chapter 6
What Is Really Happening with

Global Warming?
Czech temperature data and how it can be interpreted • Questions that need to be asked
about global warming • The effects of political influence on science • The "hockey stick"
debate • Natural climate variability and the nature of the current warming • Glaciers
and sea level changing for a long time • Examples of skeptical declarations signed by
many scientists • The political nature of the Intergovernmental Panel on Climate
Change summary documents • The important findings of an independent review of the
summaries • Warming has benefits and occurs on other planets, too
It may be worthwhile to start this chapter with some illustrative data.

I contacted the Czech Hydrometeorological Institute, which had just
published a very convincing Climate Atlas of Czechia (Tolasz 2007), and
asked its researchers to provide me with one random time series of
temperature from a meteorological station with long-term temperature
data. They advised me not to pick Prague, because it is a large urban
area that is nontypical for the country, and suggested the meteorologi-
cal station of Opava instead.
The evolution of temperature in that station between 1921 and 2006
is depicted in figure 6.1.
At first sight, there is no visible trend over time. The average tem-
perature in Opava during the past 86 years was 8.3°C. If we use a sim-
ple regression analysis, we obtain a trend component of 0.0028°C per
year. For laypersons, this represents an average temperature increase
of 0.028°C per decade and 0.28°C per century. Clearly, the estimate of
this parameter is not statistically significant, and I would like to point
Figure 6.1. Average Annual Temperature in Opava, Czech Republic, 1921-2006

10.5
0
10.0 0
9.5
- 0
0 0
0
-.... 0
~ 0 00 0
0 00 0 0
0 0
0 0 0
-....
Cl)
0 00 0 0 0
::J 0 0 0 0 0
«< 0 0 0
Cl)
8.5 0
0 00 0
0 0
ct. 0 0 0 0 0 0 0 0
-E 0
Cl) 00 0 0 0
8.0 - 0
0 0 0
c; 0
::J 0
c: 0 0 0 00 0
c:
«<
7.5 0
0 00
Cl) 0 0 0 0
bO 0
0 0
~ 7.0 0
Cl) 0 0
>
«< 0
0
6.5 0
6.0 0
5.5
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
years
Source: Czech Hydrometeorologicallnstitute
out that my goal was certainly not to find a line or a curve that would
representatively express the 86 values of this time series. I am also very
well aware of the fact that when one is considering a relatively short
time series a great deal depends on the choice of its beginning and
end-dates that in this case were determined not by me but by the
Czech Hydrometeorological Institute. Obviously, a different choice of
beginning point could have led to different results.
It is possible to "play" with the beginning-as well as the end-of
this time series. Such changes are very telling. It is possible to get vari-
ous moving averages. The meteorologists used the standard 11-year
moving average because that calculation corresponds with the solar ac-
tivity period. I myself calculated many others, even the 30-year moving
average, with no fundamental changes in outcomes. The 30-year aver-
age demonstrates high temperature levels at the beginning, a decrease
of temperature afterward (until the 1970s), and a slight increase in the
later period. For laypersons, it is probably easier to look at the averages
of separate decades. With the overall average of 8.3°C, the average of
the decades 1921-1930 and 1931-1940 is 8.5°C, which is a level that was
reached again in 1991-2000. The only period warmer than the 20 years
from 1921 to 1940 is the part of the decade of 2001-2006. It is not my in-
What Is Really Happening with Global Warming? 51
tention to draw any general conclusions from these data or in any way
overestimate their importance; I present them only as a starting point
for the illustration of the problem.
The results of serious empirical analyses of climate changes, as well
as of global warming, the credibility of these analyses, and-to add a
new dimension-the credibility of their media presentations are some-
thing completely different from the social science or economic consid-
erations presented here. Although it may be hard to believe, these con-
siderations are more or less two different things.
Patrick J. Michaels, the former president of the American Associ-
ation of State Climatologists, challenges-in my view, very convinc-
ingly-the phenomenon of global warming in his book Meltdown: The
Predictable Distortion of Global Warming by Scientists, Politicians, and the
Media (2004). He raises three elementary questions that rationally struc-
ture the entire problem:
• Is there global warming?
• If so, have people caused it?
• If so, can we do something about it?
A fourth question could be added: Does an eventual moderate tem-
perature increase matter?
The prominent American scientist Professor S. Fred Singer (2006)
poses very similar questions in his commentary, "The 'Climate Change'
Debate":
• Is there evidence for or against a significant human contribu-
tion to the current global warming?
• Would a warmer climate be better or worse than the present
one?
• Can we really do something about climate?
These and many other authors reach conclusions that are diametri-
cally opposed to the ones that are fashionable and politically correct to-
day. Such authors also try to ascertain what lies behind the existing dif-
ferences. They do not believe a large dispute lies in the science itself. In
his last study, Michaels (2006, 1) very carefully examines "both recent
scientific reports on climate change and the communication of those
reports" to the public. I add that this article appeared before the publi-
cation of the complete Stern Review (2006) report but after the publica-
tion of its political summary and before the political summary of the
Fourth Assessment Report of the Intergovemmental Panel on Climate
Change (IPCC 2007). The fundamental problem, according to Michaels,

lies in the huge discrepancy between the original scientific reports and
the public presentation of their results in the media. The result is the
seemingly deliberate mass dissemination of half-truths, if not of direct
disinformation, by the media, often primarily for the purpose of maxi-
mizing the generous public funds designated for projects dealing with
potential disasters. The more "unforeseeable" the disaster appears, the
more money will be at the disposal of the scientists.
Lubos Motl (2007a, 8), a Czech physicist working at Harvard,
put it similarly in his article "Doubts about Global Warming":
The scientists whose research may lead to different predic-
tions or to different explanations of existing data are routinely
intimidated. They are being accused of collaborating with the
'evil' oil companies, and they are not allowed to use grant
sources and move up in their careers. If someone arrives at
these inconvenient conclusions anyway, his or her articles are
not published. The articles that actually are published are,
again, divided according to an ideological key. The summa-
ries of scientific reports are written by the most politically ac-
tive and, therefore, also by the most biased members of scien-
tific teams.
There is probably nothing to add to this statement. Some of us ex-

perienced this kind of intimidation personally during the Communist
era. The feelings of today' s frustrated authors must be very similar.
Using his extraordinary writing skills, Michael Crichton (2004) de-
scribed this problem precisely and very aptly-for some, probably so
drastically that they did not believe it-in his novel State of Fear. Al-
though fiction, this book should be compulsory reading for anyone
concemed. Similarly, Lord Nigel Lawson (2006, 1), the former British
chancellor of the exchequer, who addressed the same problem, writes
that "the recent attempt of the Royal Society, of all bodies, to prevent
the funding of climate scientists who do not share its alarmist view of
the matter is truly shocking."
A somewhat different argument is deployed by Julian Morris (1998)
in his presentation on "Popper, Hayek, and Environmental Regula-
tion," in which he addresses more general issues dealing with the evo-
lution of scientific theories. He refers to Popper's (1975) critique of the
creation of the scientific monopoly and reminds us of the problem of
monopsony-a situation in which only one buyer exists. In the case of
environmental doctrines, the monopoly buyer is the state. Morris (1998,

3) concludes that because of this mechanism "monies have mostly gone
to scientists whose work either is expected to 'confirm' predictions of
dire climate change through the construction of predictive models, or
already assumes dire climate change and is merely intended to predict
the adverse consequences for man." This situation occurs even when it
is obvious that "the climate (as distinct from tomorrow's weather) re-
mains too complex to predict" (Morris 1998, 4).
Fortunately, not everybody is involved in such a discrediting of sci-
ence. A serious statistical perspective and a refusal to play with numbers
are characteristic of Bjem Lomborg in his 2001 book The Skeptical Envi-
ronmentalist, for example. Unlike in other countries, no deep discussion
of the book occurred in the Czech Republic, not even when it was pub-
lished in Czech. (I attempted to show the fate of this book among en-
vironmentalists and their "fellow travelers" in Denmark, England, and
elsewhere as early as February 2004 in an article called "The Ridiculous
Reactions of Environmental Activists" (Klaus 2004); the English transla-
tion of the article is included in this book as appendix B.)
Motl (2007a, 8) expressed a similar view:
Bj0rn Lomborg put together arguments that potential warm-
ing could prove beneficial for mankind. The modern-day
Danish inquisition, more precisely the Danish Committee on
Scientific Dishonesty, started working swiftly-per order of
environmental activists--on Lomborg's excommunication. It
took a year to rehabilitate him.
Indur M. Goklany (2007, 7) also maintains a similar position:

In one of the most bizarre episodes conceming science and
faith since Galileo's conviction for heresy, a complaint was
filed against Lomborg with a body having the Orwellian name
of the Danish Committee on Scientific Dishonesty (DCSD).
Does speaking about the warming of the Earth make sense if we

see it in the context of the evolution of our planet over hundreds of mil-
lions of years? Every small child is taught at school about temperature
variations, about the ice age, and about the vegetation in the Middle
Ages differing from the vegetation today. Everyone takes notice of the
temperature records (in both directions) during his or her lifetime. In
the Czech Republic, the month of January 2007 was the warmest in the
Figure 6.2. Global Average Temperature, 1880-2003

16.0 , . - - - - - - - - - - - - . . . . , - - - - - - , - - - - - - - - - - - - - - - . .
15.8
15.6
15.4
-
-.....=
~
Q)
-;;
15.2
15.0
.....
Q)
C1.
-~ 14.8
14.6
-global average
14.4
- five-year average
14.2
14.0 -f-.-.-.-,..._.....,...........,...'"""'"T"'"'"'"T'""'"~.,..........~.,_..,..,.......,......,....,-.-.............,...--,...........,.........,....~...,........,.........,.....................,..,...,..,.,.........,............,-.-............,...........,........,.......-J
~~
~$~~~~~~~~~~¢~~~$~##~~~~~~~~~~~
~~~~ ~~~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
year
Source: Crichton 2005
past 46 years. Can one speak about previous global warming occurring
46 years ago, or was it merely an accidental deviation that occurred at
that time?
Figures 6.2 and 6.3 show how easy it is to present the same time
series differently. Figure 6.2, because of the choice of scale of the time
series can make the situation seem dramatic. Figure 6.3, in contrast,
makes it seem stable.
How should we look at the recent developments of climate? Motl
(2007a, 8) accurately says: uThe statement that warming in the 20th cen-
tury is unprecedented was incarnated into the so-called hockey-stick
graph, which became the symbol of the Third UN Report on Climate
[IPCC 2002]. According to this graph, the average temperature for the
past 900 (or more) years had remained essentially constant and sharply
increased around the year 1900 (as a result of human activities). Thanks
to relative outsiders Steven Mcintyre and Ross McKitrick it tumed out
that the 'hockey-stick graph' was based on erroneous statistical meth-
ods. The original 'hockey-stick graph' was quietly erased from the new
2007 UN Climate Report, and everyone is pretending that it never ex-
isted." In a Washington lecture, Crichton (2005) spoke very similarly
Figure 6.3. Global Average Temperature, 1880-2003

16.0
15.0
14.0
13.0
--"'
0 12.0
.....
-
Q)
=
«< 11.0
Q)
.....
a.
-E
Q) 10.0
9.0
-global average
8.0
five-year average
7.0
6.0 -f-.-.-.-,._....,..........,..........,.........,..,.......,......._.,.,....,.......,...,..,.,..._,...,...,~,...........,........,...........,........,......,....,......,...........,......,._,..,....,..,...,.--...,......-..,.............,....,..,..,....~.....,.......................,,...........,.............
"v~~~&~~$~~~~~~~~~~~~~~#~~~~~~~~~
'\! 'v "v 'v '-;, "-;, ._. -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; -. .; "
~
year
Source: Crichton 2005
about the fate of this hockey-stick graph, the original author of which
was Michael Mann in 1998.
Michaels's (2004) book, with the characteristic title Meltdown, de-
voted to the "nonmelting" of glaciers, is also absolutely convincing
in this respect. A similar article in the Czech context was written by
Jan Novak (2007) under the title "The Climate Is Getting Drastically
Warmer: Is There a New Ice Age Coming?" Novak emphasizes particu-
larly the long-term nature of climate evolution. If people were to live a
thousand years, he says, "They would see greater curiosities ... farms
in Greenland, white Christmas in midsummer, wine grapes in currently
inhospitable Newfoundland, or frozen oceans near the coast of Europe"
(2007, 1). The victims of global warming theories should also be aware
of "the Dutch masters having painted skaters on the frozen North Sea."
"What we call global warming today," Novak (2007, 2) argues, "began
probably well before the industrial revolution"-that is, before the hy-
pothetically destructive effect of humans on world climate.
Another Czech author, Jaroslav Balek, offers similar arguments in the
article "Hydrological Consequences of the Climatic Changes." Accord-
ing to Balek (2006, 357), "the variability and the changes of climate have
always been caused by extemal periodic phenomena." He continues:
In the history of the planet, intensive human activities have

been taking place for a very short time, whereas the more or
less substantial climate changes have been taking place con-
stantly, well before any kind of human activity could play a
role in the process" (368).
George Kukla of Columbia University, another Czech author, uses

a very similar argument: "The current warming is a natural process,
caused by the changing geometry of the orbit of the Earth around the
Sun. There is no way mankind can stop it, even if it indeed wanted to"
(personal correspondence with author in 2007). Kukla says that it is a
process to which "mankind-at least for the time being-contributes
only minimally. It contributes, but it certainly does not cause it!"
On the basis of very thorough statistical analysis, Ross McKitrick
(2005) refutes the idea of a fundamental global warming in his arti-
cle "Is the Climate Really Changing Abnormally?" He argues that "the
late twentieth century [is] pretty much in the middle of natural climate
fluctuations" (McKitrick 2005, 10) and that it "'is no longer climatically
unique in comparison to recent history" {McKitrick 2005, 11).
S. Fred Singer and Dennis T. Avery {2005) offered an important
argument in this respect in their study "'The Physical Evidence of
Earth's Unstoppable 1500-Year Climate Cycle." They summarize ex-
tensive scientific literature devoted to long-term fluctuations of tem-
perature on Earth. The study is an abridged version of their similarly
titled book (Singer and Avery 2006). The basic hypothesis of the au-
thors is obvious from the title: the existence of a "'1,500-year climate
cycle (plus or minus 500 years}," and its "unstoppable" character
(Singer and Avery 2005, 1).
Singer and Avery do not deny that some warming, though very
mild, does occur. However, on the basis of their very extensive analy-
sis, they are convinced that this mild warming is a part of that 1,500-
year cycle and that human activity has played only a minor role in it.
They speak about the Medieval Warming (the period from about 950
to 1300}, about the Little Ice Age (the period from about 1300 to 1850},
and finally about a Modem Warming Period (after 1850). They present
a number of scientific arguments and proofs.
What is, in my view, of lesser significance (in the context of this dis-
cussion}, are Singer and Avery's interpretations of the causes of this
cycle, which according to them is not endogenous, but exogenous and
related to the behavior of

the Sun, which-and this is I personally believe that there should
widely known and accepted- be some slight warming. But I think
is not constant. Sallie Baliunas the warming will be much less than
(2003), of the Harvard-Smith- the current models predict. Much less.
sonian Center for Astrophys- And I think it will be barely detectable.
ics, came up with similar ar-
guments, saying that "the key S. Fred Singer (2000)
aspect of the natural variabil- Atmospheric physicist, University of Virginia
ity of climate on Earth is the
Sun" and that so far, "we do not understand the solar cycles well enough
to incorporate their effects into our climate change models."
The arguments of Singer and Avery (2006) about the evolution of
glaciers, which are very similar to Michaels's argument, are also con-
vincing. Glaciers, too, have a very predictable evolution in the course of
this 1,500-year cycle. They have largely retreated since 1850, although-
and this finding is somewhat surprising-" there is no evidence that the
Arctic glaciers have shrunk faster during the twentieth century"; on
the contrary, "the glaciers are losing less mass per year as time goes
by" (Singer and Avery 2006, 137). Alpine glaciers have shown a simi-
lar trend. From 1850 until today, they lost 60 percent of their ice. What
is interesting, however, is how this process progressed over time. They
lost 20 percent of their mass in the period from 1855 to 1890, remained
constant in the period from 1890 to 1925, lost an additional 26 percent
in the period from 1925 to 1960, remained constant again in the period
from 1965 to 1980, and lost another 5 percent of ice after 1980. Only
then did the environmental movement emerge, and laypersons-not
scientists-took notice of this phenomenon. The correlation between
the retreat of glaciers and the greenhouse effect is therefore evidently
zero. I do not intend to explore this issue in detail, but these facts are
very important.
The debate about the rise of sea levels is similar. Singer (2006, 1)
points out that since the last ice age, 18,000 years ago, the sea level has
risen by 120 meters! Over the past centuries, the rise of sea levels has
continued at a rate of about 18 centimeters every 100 years. Singer be-
lieves that no acceleration of this process is occurring, and one will not
occur in the future (contrary to the opinions of James Hansen, whose ar-
gument was taken over by AI Gore; Hansen predicted that the sea level
in the 21st century will rise not by 18 centimeters but by six meters).
I was more intrigued by

The area around Kilimanjaro has been something else of crucial im-
cooling, yet the snows (ice) have been portance. In 1990, the first
retreating for more than 100 years .... United Nations Intergov-
Instead of retreating due to warming, ernmental Panel on Climate
the ice is vanishing from declining Change report estimated,
atmospheric moisture. with a high degree of confi-
dence, a rise of sea levels of
Christopher C. Horner (2007, 213) 66 centimeters in the 21st cen-
Competitive Enterprise Institute tury (which is too little ac-
cording to Hauser and too
much according to Singer). In 1996, the second panel lowered the esti-
mate to 49 centimeters (with a variability ranging from 13 to 94 centi-
meters). In 2001, the third panel published only the range of 9 to 88 cen-
timeters (without identifying any specific, most probable figure). The
latest IPCC report, in 2007, came up with a more sober estimate of 18 to
59 centimeters. For many years, I have dealt with time series analysis,
and hence I do not in any way criticize the shifts that occur because of
increasing number of data and greater complexity of models used to
estimate the time series parameters. I do, however, criticize efforts to
use these data to create the impression that the situation is becoming
more and more dramatic. Goklany (2007, 181) quotes from a 2006 paper
by Church and White stating that one can anticipate a sea level rise by
2100 from 28 to 34 centimeters. That is a sensible estimate.
An absolutely fundamental article on this issue--especially for a
nonscientific reader-was published by Jack M. Hollander, the profes-
sor emeritus of energy and resources at the University of California,
Berkeley, under the title "Rushing to Judgment." Hollander (2003, 64)
also considers cycles of warming and cooling as "part of Earth's natu-
ral climate history for millions of years" and therefore views it as en-
tirely natural that Earth has warmed in the past two centuries, while
it "cooled for more than five centuries" before. He believes that many
strong statements about global warming, its causes, and its effects "are
based more on politics than on science," because the "scientific uncer-
tainties about all these matters are great." He adds, "In the current po-
liticized atmosphere, ... legitimate scientific differences about climate
change have been lost in the noise of politics." The words "scientific
differences" and "political [and I would add also media] noise" are
very good.
Hollander (2003, 65) mentions that "without greenhouse gases

Earth would be too cold, all water on the planet would be frozen, and
life as we know it would never have developed." At the same time he
says that "empirical science has not established an unambiguous con-
nection between the carbon dioxide increase and the observed global
warming" (Hollander 2003, 66). He argues that "the air at Earth's sur-
face warmed about 0.6 Celsius over the period from the 1860s to the
present. [which] ... does not correlate with the growth in fossil fuel use
during that period .... [because] about half of the observed warming
took place before 1940" (Hollander 2003, 67). On the contrary, the sur-
face of the Earth cooled, according to Hollander, from 1940 to 1980 by
0.1 °C, but in the following two decades warmed again by 0.3°C. (For
clarity's sake, I must add that other authors see the cooling trend only
until the mid-1970s.)
Another interesting argument of Hollander's is the regional one.
On the territory of "the United States, despite the presence of large ur-
ban areas, surface cooling after 1930 far exceeded that of Earth as a
whole, and the surface temperature has subsequently warmed only to
the level of the 1930s" (2003, 68).
Hollander's (2003, 74) conclusion is clear: "During all of recorded
history, humans have survived and prospered in climate zones far
more different from one another than those that might result from the
changes in global temperatures now being discussed." I believe this
finding is absolutely crucial.
Ivan Brezina (2007a, 62) addresses a similar issue in the article "The
Myth of the Scientific Consensus about Global Warming," in which he
asks: "Why are the voices of scientists, who question the superficial
notion of global warming, silenced?" He refers to the Czech climatol-
ogist J. Svoboda, according to whom "we find ourselves in the warm
part of a natural climate fluctuation," adding that "today's warming
is slowly coming to an end and it will be getting colder" (Brezina
2007a, 62). Similarly, Brezina asks why the media do not mention the
Heidelberg Appeal (1992) or the Leipzig Declaration (1996), which
says that "contrary to the conventional wisdom, there does not exist
today a general scientific consensus about the importance of green-
house warming" (Brezina 2007a, 64). Nor do they speak about the
Oregon Petition (1998), which is based on the fact that "there is no
convincing scientific evidence that human release of carbon dioxide,
methane, or other greenhouse gasses is causing or will, in the foresee-

able future, cause catastrophic heating of the Earth's atmosphere and
disruption of the Earth's climate" (2007a, 64). These documents were
signed by thousands of scientists. Brezina (2007a, 66) also quotes the
former president of the American Meteorological Society, Malcolm
Ross, who noted that "the idea that humans have significantly en-
hanced global warming is by far the most massive abuse of science"
he had ever seen.
Motl (2007a, 8) says just about the same: "The idea that climate
changes are something that was created by man is utterly naive." He
is convinced, on the contrary, that "it is impossible to reach any def-
inite conclusions" about these matters, and that ~.~man-made global
warming theory has not been verified as much as demanded by sci-
ence." (Motl2007a, 8)
The previously mentioned Heidelberg Appeal from the time of the
1992 Earth Summit in Rio de Janeiro was originally signed by 425 scien-
tists. Today, it has more than 4,000 signatories, including 72 Nobel Prize
winners. (I noticed that besides numerous economists, such as Gerard
Debreu, Wassily Leontief, Harry M. Markowitz, and Jan Tinbergen, the
list includes the very interesting futurologist and prolific writer Alvin
Toffler, as well as Elie Wiesel).
The Heidelberg Appeal includes the following statements:
[A] Natural State, sometimes idealized by movements with
a tendency to look towards the past, does not exist and has
probably never existed since man's first appearance in the
biosphere ....
We fully subscribe to the objectives of a scientific ecol-
ogy for a universe whose resources must be taken stock of,
monitored, and preserved. But we herewith demand that this
stock-taking, monitoring, and preservation be founded on
scientific criteria and not on irrational pre-conceptions....
We ... forewarn the authorities in charge of our planet's
destiny against decisions which are supported by pseudo-
scientific arguments or false and non-relevant data ....
The greatest evils which stalk our Earth are ignorance and
oppression, and not Science, Technology, and Industry, whose
instruments, when adequately managed, are indispensable
tools of a future shaped by Humanity, by itself and for itself,
overcoming major problems like overpopulation, starvation,
and worldwide diseases.
It is probably needless to add anything to this statement.

When I was working on this book, the publication of the Sum-
mary for Policymakers of the UN Intergovernmental Panel on Climate
Change's Fourth Assessment Report (which preceded the publication
of the whole text) caused quite a sensation (see IPCC 2007). At the end
of January and the beginning of February 2007, it attracted widespread
attention from around the world because it suggested that "'immense
changes"-based on what was at the time an unpublished report-
were in sight.
I will not comment on the report itself with insufficient knowledge
of its contents. I believe, however, something else is worth noticing.
What I have in mind is an alternative document, the Independent Sum-
mary for Policymakers (McKitrick et al. 2007), which was prepared on the
basis of IPCC data, but independently of IPCC, by a group of 10 promi-
nent scientists from six countries for the Fraser Institute in Vancouver,
British Columbia. In addition to those 10 authors, another 54 scientists
from 15 countries were asked to go through this "'second" summary
and thoroughly examine its contents. When asked to assess the extent
to which this McKitrick and colleagues' summary of the IPCC work
is fair and just, they came up with an average rating of 4.4 on a scale
from 1.0 to 5.0 (the higher the rating, the better), which is-taking into
account the considerably differing views on this subject in today's cli-
matology-a remarkably good result. That is why I, as a layperson, can
confidently use it as a starting point for my further reasoning.
The reason this alternative summary report was drafted lies in the
shortcomings of the "'first" summary, in which "'some research that con-
tradicts the hypothesis of greenhouse gas-induced warming is under-
represented, and some controversies are treated in a one-sided way"
(McKitrick et al. 2007, 5). Moreover, it "is produced, not by the scientific
writers and reviewers, but by a process of negotiation among unnamed
bureaucratic delegates from sponsoring governments. Their selection
of material need not reflect the priorities and intentions of the scientific
community itself."
What McKitrick and colleagues (2007, 5) also view as highly contro-
versial is the fact that even though the IPCC presents a list of participat-
ing scientists, whether these scientists agreed with the resulting text or
whether they "'have lodged serious objections" is not made clear. Com-
monly in the past, '-~while their objections [were] ignored, they [were]
acknowledged in the final document, giving the impression that they

endorsed the views expressed therein."
Here are the conclusions of the Independent Summary for Policymak-
ers, which I find most important:
• "The IPCC gives limited consideration to aerosols, solar activ-
ity, and land-use change for explaining 20th century climate
changes," even though "some evidence suggests that solar ac-
tivity has increased over the 20th century to historically high
levels" (McKitrick et al. 2007, 7).
• "There are historical examples of large, natural global warming
and cooling in the distant past. The Earth is currently within a
warm interglacial period, and temperatures during the last in-
terglacial period were warmer than present" (McKitrick et al.
2007, 7).
• "The hypothesis that greenhouse gas emissions have produced
or are capable of producing a significant warming of the Earth's
climate since the start of the industrial era is credible and merits
continued attention. However, the hypothesis cannot be proven
by formal theoretical arguments, and the available data allow the
hypothesis to be credibly disputed" (McKitrick et al. 2007, 8).
• "The term 'greenhouse effect' is an inappropriate metaphor"
(McKitrick et al. 2007, 9).
• "The growth rate of C02 emissions ... is equal or slightly below
the growth rate of world population," which means that per
capita carbon emissions have not increased for 30 years (McK-
itrick et al. 2007, 11).
• "Aerosols play a key role in the Earth's climate, with a poten-
tial impact more than three times that of anthropogenic carbon
dioxide emissions, but their influence remains subject to low or
very low scientific understanding" (McKitrick et al. 2007, 12).
• "Solar activity was exceptionally high in the 20th century in the
context of the last 400 years" (McKitrick et al. 2007, 14).
• "The average temperature trend in the lower atmosphere over
the period 1979-2004 ranges from 0.04°C/ decade to 0.20°C/ de-
cade" which-extrapolated to a century scale-compares to the
low end of "0.14°C to 0.58°C/ decade" (McKitrick et al. 2007,
19).
• "A global average temperature data collected over land, com-

bined with ocean surface measurements ... exhibits an upward
trend from 1900 to 1940, and again from 1979 to the present"
(McKitrick et al. 2007, 20), but "the significance of trends in tem-
perature and precipitation data is likely to have been overstated
in previous analyses" (McKitrick et al. 2007, 21). McKitrick and
colleages (2007, 21) strongly draw attention to the fact that "the
results of trend analysis often depend on the statistical model
used." Having worked with statistical and econometric models
for 15 years, I am well aware of their faults.
• "Perceptions of increased extreme weather events are poten-
tially due to increased reporting. There is too little data to reli-
ably confirm these perceptions." The authors even say that the
results are sensitive to the analysis period, for example, "the
inclusion of the exceptionally hot European summer 2003"
• "While global sea level rose by approximately 120 metres dur-
ing the several millennia that followed the end of the last gla-
cial maximum, the level stabilized between 3000 and 2000 years
ago" (McKitrick et al. 2007, 28). In the past 2,000 years, the
change has been close to zero. "'Current data suggest a global
mean sea level rise of between 2 and 3 millimeters per year"
• "Most of the Earth's alpine glaciers receded or disappeared be-
tween 9,000 and 6,000 years ago" and "began growing thereaf-
ter, up to the 1800s" (McKitrick et al. 2007, 30). Only then did
they start receding again, even though their retreat has stopped
in the past years.
• "Through much, if not most, of the last 100 million years, tem-
peratures were warmer than at present, including a super-warm
interval approximately 50 million years ago" (McKitrick et al.
2007, 34). The largest glaciation occurred 21,000 years ago;
• Today's research resolutely rejects the hypothesis of the thou-
sand-year "hockey-stick" fluctuation of global temperatures
that became the basis for the Third IPCC Report in 2001.
• The Fourth IPCC Report also shows "that different models can
produce results spreading over more than a factor of 10 for long
(climate) time scales exceeding 100 months" (McKitrick et al.

2007, 39).
• Despite all uncertainties, it seems likely that the rise of temper-
atures and C02 levels "will cause a sea level increase of about
20 centimeters, plus or minus 10 em over the next 100 years"
• "The definition of climate change assumes stationarity of the
climate system," which does not correspond to reality, because
"the climate is subject to natural variability on all time scales,
from days up to centuries" (McKitrick et al. 2007, 47).
• Absolutely fundamental is their strong conclusion that "due
to the uncertainties involved, attribution of climate change to
human cause is ultimately a judgment call" (McKitrick et al.
2007, 51).
• Similarly essential is the fact that "there is no compelling ev-
idence that dangerous or unprecedented changes are under-
way" (McKitrick et al. 2007, 52).
• The study concludes by saying, "There will remain an unavoid-
able element of uncertainty as to the extent that humans are con-
tributing to future climate change" (McKitrick et al. 2007, 52).
My feeling is that this analysis is impossible to overlook. Michael
Crichton (2005) made a similar, detailed analysis of the IPCC report.
He engaged in this task by closely analyzing individual statements of
the report, which is a method I am myself very fond of. One must ana-
lyze sentences as well as their implications. People do not often do that.
Sadly, nobody pauses to think about statements such as the following:
"climate may be partly predictable," "the state of science at present
is such that it is only possible to give illustrative examples of possi-
ble outcomes," or "the complexity of climate model leaves room for a
subjective component in any assessment." All of these, emphasized by
Crichton, are taken from the Third Report of the UN panel (IPCC 2002).
Are these examples sufficiently telling for my readers? For me, they are
. .
very convincing.
This issue has not only a time but also a space dimension, because
the processes in question clearly are not at all symmetrical and evenly
distributed around the planet. Would eventual global warming repre-
sent an advantage or a disadvantage for everyone, for a majority, or for
a minority? Apparently, it would be beneficial for some and harmful
for others. The rise of sea levels could be threatening for the inhabit-
ants of that small island in the Pacific, about which Crichton so con-
vincingly writes in his fiction (not science fiction). However, the rise
of temperature could make a vast part of Siberia-which is several
thousand times larger-habitable. Economics Nobel laureate Thomas
C. Schelling (2002a) says that "people have been migrating great dis-
tances for thousands of years, experiencing changes in climate greater
than any being forecast."
Motl (2007a, 8) puts it very well too: uNo one can explain why, over
the course of the last 25 years, global warming was only occurring in
the Northern Hemisphere and not in the Southern Hemisphere. No one
knows the reason why the world's oceans were cooling between 2003
and 2005, or why Greenland has become colder since the 1930s, why
2006 was so much colder than 2005, and why the global mean tempera-
ture was decreasing between the 1940s and the 1970s when mankind
was emitting almost as much carbon dioxide as it does today."
What was entirely new to me was Motl's (2007a, 8) statement that
"global warming takes place not only on Earth but also on Mars, Ju-
piter, Satum, and even on Pluto"! A friend of mine told me that if this
statement were true, it would not at all be necessary to write this book.
It would be sufficient to keep repeating this single sentence over and
over agam.
.
Because of advances in technology, increases in disposable wealth,
and the ability of countries to organize themselves, the adaptability of
different countries and world regions to any changes will undoubtedly
be uneven to a great extent. To draw any conclusions ahead of time is
wrong.
It would be useful to start seriously debating all these issues, with-
out yielding to the dictates of political correctness. I read a quote some-
where by Wolfgang Pauli, the Nobel Prize winner in physics, concern-
ing a different matter, a different theory: .uThat theory is worthless.
It isn't even wrong!" The global warming theory and the hypothesis
about its causes that is widely spread today may be wrong, perhaps
worthless, but in any case, it is extremely dangerous.
Chapter 7
What to Do?
The answer is nothing • The motivation of socialists and environmentalists to regulate

and plan is counterproductive • The need is for human freedom to be prioritized in the
debate • Economic growth is the solution to environmental problems • What individu-
als can do to reduce harm • The harm inflicted by interventions in the name of ecology,
especially the Kyoto Protocol • What we must not do
The first and, in fact, the only reasonable answer to the question in the
title of this chapter is "nothing," or rather "nothing special." It is nec-
essary to let the spontaneity of human activity-unrestrained by any
missionaries of absolute truths-take its course, or else everything will
get worse. The aggregate outcome of independent actions of millions
of informed and rational individuals-unorganized by any genius or
dictator-is infinitely better than any deliberate attempt to design the
development of human society.
Communism demonstrated that megalomaniac human ambitions,
immodesty, and lack of humility always have a bad end. Although
the system of human society is to some extent robust, although it has
its natural defense mechanisms and can bear a lot (just as nature it-
self can), every attempt to command the wind and the rain has so far
always turned out to be very costly and ineffective in the long term
and to have devastating effects on freedom. The attempts of the en-
vironmentalists cannot lead to different ends. In any complex system
(such as human society, econ-

We are not "skeptics" about warming. omy, language, legal sys-
It is possible to accept the general tem, nature, or climate), ev-
consensus about the existence of ery such attempt is doomed
global warming while having valid to failure. Humankind has
questions about the extent of warm- already had this experience
ing, the consequences of warming, and-together with the vari-
and the appropriate responses. In ous "revolts of the masses"
particular, one can remain a policy (as Ortega y Gasset put it in
skeptic, which is where we are today, his famous book La rebeli6n de
along with nearly all economists. las masas}-again and again
has tried to forget it. In our
Steven F. Hayward and part of the world, we know
Kenneth P. Green (2007, 1) this all too well, or at least we
American Enterprise Institute should.
Socialists and environ-
mentalists have usually believed that the more complex a system, the
less it can be left to itself and the more it has to be masterminded, reg-
ulated, planned, and designed. That belief is not true. Ludwig von
Mises, Friedrich A. Hayek, and the whole Austrian school of economics
have-for some, perhaps a bit counterintuitively-demonstrated that
just the opposite is the case. It is possible to control and design only
simple systems, not complex ones.
A complex system cannot be effectively organized through any de-
liberate human plan (or "human design," to use Misesian terminol-
ogy). The only way to build it properly, without tragic mistakes, is
through truly free "human action" (the title of von Mises' s most impor-
tant book}-that is, through the aggregation of the behavior of millions
or billions of individuals. This basic conceptual guideline also applies
to environmental issues, including global warming.
I mentioned "free human action," that is, freedom. This is not just
an empty phrase or an obligatory declaration of faith on my part. I
have repeatedly stressed that it is all about freedom, not about na-
ture (or climate). There are deliberate attempts to shut down debate
about this. Environmentalists constantly keep imposing the term "en-
vironment," yet nobody speaks about human freedom. A few years
ago, I suggested discussing the "environment for life" instead, \vhich
would-at least to a certain extent-shift this issue from the exclu-
sive focus on nature toward a focus on society and its organization. I
What to Do? 69
more than agree with William

C. Dennis from the Liberty The right to have children should be
Fund, who argued that uthe a marketable commodity, bought and
best environment for man is traded by individuals but absolutely
the environment of liberty" Ii mited by the state.
(Dennis 2000). I insist it is the
only true standard against Kenneth Boulding (1910- 1993)
which all environmental con- Professor of economics,
cepts and categorical requests University of Colorado at Boulder
should be measured. Today' s (as quoted in Horner 2007, 31)
debate about global warming
is therefore essentially a debate about freedom. The environmentalists
would like to mastermind each and every possible (and impossible)
aspect of our lives.
This book of mine does not in any way imply that while reject-
ing the substance of environmentalists' proposals, we should not
encourage and promote ecological awareness, ecological sensibility,
and ecological attentiveness. It does not suggest that people could
not or should not do thousands of things with greater ecological sen-
sitivity and therefore in a much better way than they do today. Nor
does it mean that it is not possible and necessary to have a reason-
able-meaning non-" environmentalistic"-policy of environment
protection. (It is very much like a need to have a social policy without
socialism.)
It is not necessary to forcefully limit or prohibit everything from
above or-seemingly more liberally-to raise prices prohibitively.
It is plain wrong to slow down economic growth, because only eco-
nomic growth can deal with emerging ecological problems, and in the
long run solve them. Through the two primary factors discussed in
chapter 3-technological progress and the possibilities resulting from
treating nature more considerately and increasing the wealth of soci-
ety-economic growth leads to the shift in demand from subsistence
goods to luxury goods, among which environmental protection ranks
at the top of the list. 1
1 With the increa se of wealth, people do n o t b eh av e in a Veblenian m anner-or to be m ore

precise, not only in a Veblenian manner. (See Thor s tein Ve blen 's The Theory of the Leisure Class,
originally published in 1899.)
Let us remain focused on the thousands of little things that we can

do. Let us switch off needlessly burning lamps. Let us avoid wasting
energy by unreasonable heating or-even more unreasonable-cool-
ing, because it is often enough to open the window. Let us not surround
ourselves with useless gadgets-that is, unnecessary electronic appli-
ances that tend to divert our attention and focus. Let us not get the big-
gest possible cars. Let us not label public transportation as "transpor-
tation for the underprivileged," a label I consider offensive. Let us not
exhibit greed in our personal property and possessions, particularly
not with imports from the most distant places.
Some time ago I was in Japan, and there I visited the city of Beppu
on the island of Kyushu, known for its mineral springs. During din-
ner, we were offered very fine mineral water, which springs from the
ground practically everywhere; yet the next day-when having lunch
at the local, though very cosmopolitan, university-we were served
the French Evian. I thought how ecologically demanding it must be
to transport ordinary water in heavy glass bottles halfway across the
world to a place that already has more than enough of it. And I daresay
that the nonimported water was better. That is exactly what ecology, or
considerate treatment of nature, should be about.
Besides thousands of little things, we also have to do a few ma-
jor things. I have in mind things of a systemic nature, not specifically
ecological ones. It is necessary to create-and prevent the destruction
and disintegration of-a social system that must be able to (a) secure
human freedom by means of its democratic political mechanisms and
(b) secure economic rational-
ity by means of its dominant
Every citizen is given a free annual economic mechanisms (that
quota of carbon dioxide. He or she is, market, flexible prices)
spends it by buying gas and electric- and clearly defined prop-
ity, petrol and train and plane tickets. erty rights. Such a system is
If they run out, they must buy the rest identical with ecological ra-
from someone who has used less than tionality and represents the
his or her quota. only path to prosperity and
wealth.
George Monbiot (2006) A detailed analysis of these
British journalist issues goes well beyond the
The Guardian possibilities and objectives of
this small book. Our Commu-
What to Do? 71
nist experience has, however, told us a lot about the causes of ecological
problems. We therefore find it worse than irrational when environmen-
talists criticize the market, prices, private property, and the profit motive,
labeling them the culprits of the world's ecological problems. Many of
us have known theoretically for a long time--and the communist experi-
ence, we hope, convinced others also--that without the market, prices,
private ownership, and profit, neither human beings nor nature can be
treated decently.
These systemic prerequisites are one thing; another is concrete eco-
logical interventions. I do not speak about normal, rational human be-
havior motivated by self-interest, but about absolute bans on chemical
products (such as the infamous history of the banning of DDT), about
the maximalist European REACH (Registration, Evaluation, Authori-
zation, and Retriction of Chemicals) directive, about the compulsory
construction of windmills, and about the exhaust emission limits for
motor vehicles. The apex for all of this, however, is the Kyoto Protocol,
evidently a fatal mistake for the following reasons:
• It sets unnecessary objectives, because far too many uncertain-
ties exist in the debates on climate change.
• It solves the insoluble because neither exogenous effects nor
natural endogenous processes can be "solved."
• It inhibits economic growth, which is the only guarantee that fu-
ture challenges, including ecological ones, can be coped with.
• Even if adhered to, it will not have a significant effect.
• It pushes other, far greater, more urgent, and more "solvable"
priorities of the current world away from our attention.
S. Fred Singer (2006, 1) strongly objects to the effort to "stabilize the
climate," which is, in his view, absurd because "the climate has always
been changing . . . though on average it has not changed very much
since the beginning of time." The climate as a whole demonstrates "a
remarkable stability, even with huge variations in the atmospheric lev-
els of greenhouse gases like carbon dioxide (more than ten times the
present level some 500 million years ago and declining ever since)."
That's why he considers any attempts to stabilize the climate through
the method of "stabilizing the concentration of greenhouse gases in the
atmosphere'' (Singer 2006, 4) to be completely wrong. He criticizes the
Intergovernmental Panel on Climate Change opinion that "we would
have to reduce emissions worldwide by between 60 to 80 percent in
order to stabilize the level of

carbon dioxide in the atmo-
Why should we devote our scarce
sphere" (Singer 2006, 4). Are-
resources to what is essentially a non-
duction of that sort was not
problem, and ignore the real problems
even part of the Kyoto Proto-
the world faces: hunger, disease, de-
col, because it would not have
nial of human rights-not to mention
been feasible. The only thing
the threats of terrorism and nuclear
that can be accomplished by
wars? this extremely costly and am-
bitious project is to "delay
S. Fred Singer (2007)
Atmospheric physicist, University of Virginia the increase in greenhouse-
gas levels by about six years"
(Singer 2006, 4). The effect on
the climate as such will be completely negligible-amounting to two-
or three-hundredths of a degree Celsius, which cannot even be mea-
sured by regular thermometers.
Bj0m Lomborg (2007) has a similar view on the possible effect of the
Kyoto Protocol. In an interview for ICIS Chemical Business, he says that
if the Kyoto Protocol were fully implemented for the rest of the century,
"we could have postponed global warming in 2100 by five years.... The
temperature we would have seen in 2100, we would see in 2105."
An equally prominent scientist, Patrick J. Michaels (2007), says al-
most the same thing in his article "Live with Climate Change": "If ev-
ery nation on Earth lived up to the United Nations' Kyoto Protocol
on global warming, it would prevent no more than 0.126 degrees F of
warming every 50 years." His conclusion is therefore even stronger:
"Climatically, Kyoto would do nothing."
I am afraid that none of this is known to many viewers of AI Gore's
film, nor will they learn it by watching the film. And that is precisely
what this issue is all about. It is not about insensitivity toward nature. I
agree with Michaels (2007) that we have more time than the alarmist en-
vironmentalists keep telling us. His conclusion also seems quite credible:
"Once warming is established, it tends to take place at a constant, not at
an increasing, rate. Reassuringly, the rate has been remarkably constant,
at 0.324 degrees F per decade, since warming began around 1975." I espe-
cially agree with his most important conclusion, which is connected with
the first sentence of this concluding part of my book: "The best policy is
to live with some modest climate change now and encourage economic
development, which will generate the capital necessary for investment
What to Do? 73
in the more efficient technologies in the future." In other words: "yes" to

the protection of the environment, "no" to environmentalism.
***
So what to do?
• Instead of striving for the environment, let us strive for
freedom.
• Let us not put climate change before the fundamental questions
of freedom, democracy, and human well-being.
• Instead of organizing people from above, let us allow everyone
to live his or her own life.
• Let us not succumb to fashionable trends.
• Let us not allow the politicization of science and let us not accept
the illusion of "scientific consensus," which is always achieved
by a loud minority, never by a silent majority.
• Let us be sensitive and attentive toward nature, and demand
the same from those who speak about the environment most
loudly.
• Let us be humble but confident in the spontaneous evolution of
human society. Let us trust in its implicit rationality, and let us
not make efforts to slow it down or divert it in any direction.
• Let us not scare ourselves with catastrophic forecasts or use
them to defend and promote irrational interventions in human
lives.
One of the first books I published at the beginning of the 1990s was
called I Don't Like Catastrophic Scenarios. In the foreword, I wrote: "In
our rather chaotic times, I want to spread optimism, self-confidence,
trust in the inner strength of each individual, as well as in our 'collec-
tive' ability to find a way out, to find a positive solution." That is ex-
actly what this book tries to achieve.
When I was completing this last paragraph, the Associated Press
published a press release about a Belgian delegate to the Intergovem-
mental Panel named Julian Vandeburie who compared the current situ-
ation in the world to the Munich peace conference in 1938 by saying,
"We are at the same moment." Such people really do not understand
anything at all, but the rest of us can.
Appendix A
Answers to Questions from the U.S.

House of Representatives' Committee
on Energy and Commerce, on the
Issue of Mankind's Contribution to
Global Warming and Climate Change
Concerning mankind's contribution to climate change and in keep-

ing with obligations toward the welfare of our citizens: What, in
your view, should policymakers consider when addressing climate
change?
[S]o-called climate change, and especially man-made climate

change, has become one of the most dangerous arguments aimed at
distorting human efforts and public policies in the whole world.
My ambition is not to bring additional arguments to the scientific
climatological debate about this phenomenon. I am convinced, how-
ever, that up to now this scientific debate has not been deep and serious
enough and has not provided sufficient basis for the policymakers' reac-
tion. What I am really concerned about is the way [that] environmental
topics have been misused by certain political pressure groups to attack
fundamental principles underlying [a] free society. It becomes evident
that while discussing climate we are not witnessing a clash of views
about the environment but a clash of views about human freedom.
As someone who lived under Communism for most of my life, I feel

obliged to say that the biggest threat to freedom, democracy, the mar-
ket economy, and prosperity at the beginning of the 21st century is not
Communism or its various softer versions. Communism was replaced
by the threat of ambitious environmentalism. This ideology preaches
Earth and nature, and under the slogans of their protection-similarly
to the old Marxists-wants to replace the free and spontaneous evolu-
tion of mankind by a sort of central (now global) planning of the whole
world.
The environmentalists consider their ideas and arguments to be
an undisputable truth and use sophisticated methods of media ma-
nipulation and [public relations] campaigns to exert pressure on poli-
cymakers to achieve their goals. Their argumentation is based on the
spreading of fear and panic by declaring the future of the world to
be under serious threat. In such an atmosphere, they continue push-
ing policymakers to adopt illiberal measures; impose arbitrary limits,
regulations, prohibitions, and restrictions on everyday human activ-
ities; and make people subject to omnipotent bureaucratic decision
making. To use the words of Friedrich Hayek, they try to stop free,
spontaneous human action and replace it by their own, very doubtful
human design.
The environmentalist paradigm of thinking is absolutely static.
They neglect the fact that both nature and human society are in a pro-
cess of permanent change, that there is and has been no ideal state
of the world as regards natural conditions, climate, distribution of
species on Earth, etc. They neglect the fact that the climate has been
changing fundamentally throughout the existence of our planet and
that there [is evidence] of substantial climate fluctuations even in
known and documented history. Their reasoning is based on histori-
cally short and incomplete observations and data series [that] can-
not justify the catastrophic conclusions they draw. They neglect the
complexity of factors that determine the evolution of the climate and
blame contemporary mankind and the whole industrial civilization
for being the decisive factors responsible for climate change and other
environmental risks.
By concentrating on the human contribution to climate change, the
environmentalists ask for immediate political action based on limiting
economic growth, consumption, or human behavior they consider haz-
Appendix A 77
ardous. They do not believe in the future economic expansion of soci-

ety, they ignore the technological progress future generations will en-
joy, and they ignore the proven fact that the higher the wealth of society
is, the higher is the quality of the environment.
The policymakers are pushed to follow this media-driven hyste-
ria-based on speculative and hard evidence lacking theories-and
to adopt enormously costly programs, which would waste scarce re-
sources, in order to stop the probably unstoppable climate changes,
caused not by human behavior but by various exogenous and endog-
enous natural processes (such as fluctuating solar activity).
My answer to your first question (i.e., what should policymakers
consider when addressing climate change) is that policymakers should,
under all circumstances, stick to the principles [a] free society is based
on [and] that they should not transfer the right to choose and decide
from the people to any advocacy group claiming that it knows better
than the rest of the people what is good for them. Policymakers should
protect taxpayers' money and avoid wasting it on doubtful projects
[that] cannot bring positive results.
How should policies address the rate and consequences of climate

change, and to what extent should regulation of emissions of green-
house gases be a focus of any such policies?
Policies should realistically evaluate the potential our civilization

has, as compared with the power of natural forces influencing climate.
It is an evident waste of society's resources to try to combat an increase
of solar activity or the movement of ocean currents. No government ac-
tion can stop the world and nature from changing. Therefore, I disagree
with plans such as the Kyoto Protocol or similar initiatives, which set
arbitrary targets requiring enormous costs without realistic prospects
for the success of these measures.
If we accept global warming as a real phenomenon, I believe we
should address it in an absolutely different way. Instead of hopeless
attempts to fight it, we should prepare ourselves for its consequences.
If the atmosphere warms up, the effects do not have to be predomi-
nantly negative. While some deserts may get larger and some ocean
shores [may flood], enormous parts of the Earth-up until now empty
because of their severe, cold climate-may become fertile areas able to

accommodate millions of people. It is also important to realize that no
planetary change comes overnight.
Therefore, I warn against adopting regulations based on the so-
called precautionary principle, which the environmentalists use to jus-
tify their recommendations, the clear benefit of which they are not able
to prove. Responsible politics should take into account the opportu-
nity costs of such proposals and be aware of the fact that wasteful en-
vironmentalist policies are adopted to the detriment of other policies,
thus neglecting many other important needs of millions of people all
over the world. Each policy measure must be based on a cost-benefit
analysis.
Mankind has already accumulated tragic experience with one very
proud intellectual stream that claimed that it knew how to manage so-
ciety better than spontaneous market forces. It was Communism, and
it failed, leaving behind millions of victims. Now, a new "-ism" has
emerged that claims to be able to manage even nature and, through it,
people. This excessive human pride-just as the previous attempts-
cannot but fail. The world is a complex and complicated system that
cannot be organized according to an environmentalist human design
without repeating the tragic experience of wasting resources, suppress-
ing people's freedom, and destroying the prosperity of the whole hu-
man society.
My recommendation, therefore, is to pay attention to the thou-
sands of small things that negatively influence the quality of the en-
vironment and to protect and foster fundamental systemic factors
without which the economy and society cannot operate efficiently
(i.e., to guarantee human freedom and basic economic principles
such as the free market, a functioning price system, and clearly de-
fined ownership rights. They motivate economic agents to behave
rationally. Without them, no policies can protect either the citizens or
the environment.
Policymakers should resist environmentalist calls for new policies
because there are too many uncertainties in scientific debates on cli-
mate change. It is impossible to control natural factors causing climate
change. The negative impact of the proposed regulation on economic
growth is to the detriment of all other possible risks, including the en-
vironmental ones.
Appendix A 79
What will be the effect on national economies, consumer well-being,

job creation, and future innovation under various climate change
policy scenarios that have come to your attention?
If the policymakers accept the maximalistic environmental de-

mands, the effects on national economies will be devastating. It would
stimulate some very small parts of the economy while leaving a bigger
part choked by artificial limits, regulations, and restrictions. The rate
of growth would decline, and the competitiveness of firms on interna-
tional markets would be seriously affected. It would have a negative
impact on employment and job creation. Only rational policies, [by]
making spontaneous adjustments possible, can justify government
intervention.
What impact and effectiveness will so-called cap-and-trade policies

have upon the reduction of climate change threats and our ability to
address these threats in the future?
Cap-and-trade policies are a technical tool to achieve pollution re-

duction goals by more market-compatible means. They can help if the
general idea behind the scheme is rational. I do not believe the whole
idea to combat climate change by emission limits is rational, and I,
therefore, consider the technicalities of its eventual implementation to
be of secondary importance.
What is the moral obligation of developed countries to the develop-

ing countries of the world? Should developed countries embark on
large emissions reduction schemes while developing countries are
allowed to continue to increase emissions unabated?
The moral obligation of developed countries to developing coun-

tries is to create such an environment [that] guarantees free exchange
of goods, services, and capital flows; enables utilization of compara-
tive advantages of individual countries; and thus stimulates economic
development of the less developed countries. Artificial administrative
barriers, limits, and regulations imposed by developed countries dis-
criminate [against] the developing world, affect its economic growth,

and prolong poverty and underdevelopment. The environmental-
ist proposals are an exact example of such illiberal policies that are so
harmful for the developing countries. They will not be able to cope
with the limits and standards imposed on the world by irrational en-
vironmental policies, they will not be able to absorb new technological
standards required by the anti-greenhouse religion, their products will
have difficult access to the developed markets, and as a result the gap
between them and the developed world will widen.
It is an illusion to believe that severe anti-climate change policies
could be limited to developed countries only. If the policies of the en-
vironmentalists are adopted by developed countries, sooner or later
their ambitions to control and manage the whole planet will spread the
emissions reduction requirements worldwide. The developing coun-
tries will be forced to accept irrational targets and limitations because
"Earth is first" and their needs are secondary. The environmentalist [ar-
gument] gives ammunition to protectionists of all colors who try to
eliminate competition coming from newly industrialized countries.
Therefore, the moral obligation of the developed countries is not to in-
troduce large emissions reduction schemes.
Appendix 8
The Ridiculous Reactions

of Environmental Activists
It should be clear by now to everyone that activist environmentalism

(or environmental activism) is becoming a general ideology about hu-
mans, about their freedom, about the relationship between the individ-
ual and the state, and about the manipulation of people under the guise
of a "noble" idea. It is not an honest pursuit of "sustainable develop-
ment," a matter of elementary environmental protection, or a search
for rational mechanisms designed to achieve a healthy environment.
Yet things do occur that make you shake your head and remind your-
self that you live neither in Joseph Stalin's Communist era, nor in the
Orwellian utopia of 1984.
In 2001, the highly regarded Cambridge University Press published
a book by the Danish author Bjem Lomborg called The Skeptical Envi-
ronmentalist. It is a book that reads well and is, therefore, accessible to
a wide range of readers. It is a book that is, in fact, an extensive sta-
tistical study on the state of the environment. It is a book that does
not bring anything revolutionary to a reader familiar with the subject,
anything he or she would not know from somewhere else. It is a book
that concludes that environment-related problems can be solved in a

wealthy and developed society only through wealth and technology
and not through any catastrophic scenarios that would require world-
wide measures slowing down the economic growth and the natural
evolution of human society. Thus, it is an optimistic book, which makes
it very different from the traditional pessimistic writings of environ-
mentalists. The book is also full of information on how environmen-
talists overstate various dangers, how they choose one-sided statistics,
and how they misinform the public. But my objective, in this respect, is
not to write a review of Lomborg' s book.
Something else is interesting. There are many such texts, but none
of them has provoked such a counterattack and such hatred. It is prob-
ably because the author is a sympathizer whose aim is to protect the en-
vironment. He is an insider. This fact has created an incredible reaction
and incredible attempts to silence the book (and its author). I must give
at least one example. The Danish Committee on Scientific Dishonesty
(what an Orwellian notion!) condemned the book for being at variance
with good scientific practice. This one-sided opinion of a panel full of
Lomborg' s adversaries did spark a reaction in the form of an open let-
ter signed by 300 Danish academics protesting this conclusion; yet at-
tacks of this sort-unheard of in a world where hundreds of scientific
books of differing quality are published every day-still continue.
The famous ecological activist Paul Ehrlich, who wrote The Popu-
lation Bomb" (1968)-a book that is today, I hope by everyone, consid-
ered utterly absurd-went so far as to attack the Cambridge University
Press for not carrying out standard review procedure, an allegation that
tumed out to be completely untrue and was explicitly and unequivo-
cally refuted.
This sequence of events indicates that activist environmentalists do
not want people to read Lomborg' s book because it shows too con-
vincingly how they work with facts and reaches different conclusions
than they do-namely, that wealth and technology can solve ecological
problems. How could it happen? Why don't similar committees on sci-
entific dishonesty attack the evident mistakes of eccentric environmen-
talists? Why doesn't Paul Ehrlich (and many others) say that they were
completely wrong 30 years ago when-in neo-Malthusian fashion-
they predicted worldwide overpopulation before 2000? Why doesn't
Paul Ehrlich admit that he lost his famous public bet with Julian Simon
Appendix B 83
(described in Lomborg's book) on whether the scarcity of natural re-

sources is dramatically increasing or decreasing?
On my part, I have not tried to write a review of The Skeptical En-
vironmentalist but rather to explain why it was so painful for the envi-
ronmentalists. The book should be published in the Czech Republic. 1 It
would be interesting to see what our local environmentalists-Messrs.
Patocka, Kuzvart, and Moldan-would have to say about it. I will be
following their reaction very closely.
February 2004
1 The book was finally published in Czech in April 2006.

Appendix C
Should We Replace the Nuclear

Power Plant of Temelin by
Wind Power Plants?
Abbreviations
• MW = megawatt
• NPPT = nuclear power plant of Temelin
• WPP = wind power plant
Selected Entry Data

Maximum NPPT net output
(i.e., omitting its own power consumption) 1,900 MW
Output of a classic WPP 2MW
WPP maximum output use in Germany in 2006 1 17%
Anticipated WPP maximum output use in the Czech Republic2 23%
1 That is, during 2006, all WPPs in Germany put together produced only 17 percent of the total
installed output.
2 Anticipated use for the planned WPP construction in the Dukovany area.
Entry Assumptions for the Calculation

1. For the purposes of general comparison, a WPP with a maximum
output of 2 MW is assumed.
2. The selected type of WPP is a KV Venti 2 MW model with the fol-
lowing parameters:
Rotor diameter 90 meters

Height of the pole 105 meters
Weight of the WPP alone 335 tons
Weight of the concrete base 1,472 tons3
For the purposes of this calculation, a minimum distance between

two WPPs with regard to technological and safety parameters is set at
50 meters (i.e., the distance between the poles is 140 meters).
3. The estimate of the feasible maximum installed output use of

WPP--derived from the average annual WPP use in Germany in
2006 and from the anticipated use of WPP in the Dukovany area-
is 20 percent.
4. The minimum land area needed for a construction of one WPP is 2
hectares.
Final Reference Calculation

Number of WPPs whose maximum output = NPPT output 950 units
Number of WPPs whose real output= NPPT output3 4,750 units
Amount of material needed for WPPs
whose real output = NPPT output 8.6 million tons
Stretch of land needed for WPPs
whose real output= NPPT output 95 square kilometers
length of line formed by WPPs situated one next
to the other whose real output= NPPT output 665 kilometers
3 Because of wind instability, the estimated use is not the same throughout the whole year; that
is, it does not represent a real equivalent to the NPPT output, which-compared with WPP- is far
more stable in time.
Appendix C 87
Possible Interpretation of This Reference Calculation

Under conservative assumptions (in favor of the WPP), the output of
the Temelin power plant could be replaced by 4,750 wind power plants,
the construction of which would require 8.6 million tons of material.
Provided that these WPPs were constructed next to each other, they
would create a 665-kilometer-long and 150-meter-high line, which cor-
responds approximately to the distance between Temelin, situated in
the south of the Czech Republic, and Brussels in Belgium!
This comparison does not take into account the fact that the stabil-
ity of the real output of wind power plants is very low. To secure the
real energy needs of a given region, a standby, classic source of energy
is, therefore, indispensable at all times.
Appendix D
Speech at the United Nations

Climate Change Conference,
New York, September 24, 2007
Distinguished colleagues, ladies, and gentlemen:

Responsible politicians know that they have to act when it is neces-
sary. They know that their duty is to initiate public policy responses to
issues that could pose a threat to the people of their countries. And they
know that they have to form partnerships with colleagues from other
countries when a problem cannot be confined to national boundaries.
To help doing so is one of the main reasons for the existence of institu-
tions such as the United Nations.
However, the politicians have to ensure that the costs of public poli-
cies organized by them will not be larger than the benefits achieved.
They have to carefully consider and seriously analyze their projects
and initiatives. They have to do it, even if it may be unpopular and if it
means blowing against the wind of fashion and political correctness. I
congratulate Secretary-General Ban Ki-moon on organizing this confer-
ence and thank him for giving us an opportunity to address the impor-
tant, but one-sided debated issue of climate changes. The consequences
of acknowledging them as a real, big, imminent, and man-made threat
would be so enormous that we are obliged to think twice before mak-

ing decisions. I am afraid it is not the case now.
Let me raise several points to bring the issue into its proper
context:
1. Contrary to the artificially and unjustifiably created worldwide

perception, the increase in global temperatures has been-in the
last years, decades, and centuries-very small in historical compar-
isons and practically negligible in its actual impact upon human be-
ings and their activities.
2. The hypothetical threat connected with future global warming de-
pends exclusively upon very speculative forecasts, not upon un-
deniable past experience and its eventual trends and tendencies.
These forecasts are based on relatively short time series of relevant
variables and on forecasting models that have not been proved very
reliable when attempting to explain past developments.
3. Contrary to many self-assured and self-serving proclamations,
there is no scientific consensus about the causes of recent climate
changes. An impartial observer must accept the fact that both sides
of the dispute-the believers in man's dominant role in recent cli-
mate changes, as well as the supporters of the hypothesis about
their mostly natural origin-offer arguments strong enough to be
listened to carefully by the nonscientific community. To prema-
turely proclaim the victory of one group over another would be a
tragic mistake that I'm afraid we are making.
4. As a result of this scientific dispute, there are those who call for im-
minent action and those who warn against it. Rational behavior de-
pends-as always-on the size and probability of the risk and on
the magnitude of the costs of its avoidance. As a responsible politi-
cian, as an economist, as an author of a book about the economics
of climate change, with all available data and arguments in mind, I
have to conclude that the risk is too small, the costs of eliminating
it are too high, and the application of a fundamentalistically inter-
preted "precautionary principle" is a wrong strategy.
5. The politicians-and I am not among them-who believe in the
existence of significant global warming and especially those who
believe in its anthropogenic origin remain divided: Some of them
are in favor of mitigation (which means controlling global climate
Appendix D 91
changes) and are ready to put enormous amounts of resources into

it, while others rely on adaptation to it, on modernization and tech-
nical progress, and especially on [the] favorable impact of the fu-
ture increase in wealth and welfare (and prefer spending public
money there). The second option is less ambitious and promises
much more than the first one.
6. The whole problem does not only have its time dimension, but a
more than important spatial (or regional) aspect as well. This is
highly relevant especially here, in the UN. Different levels of de-
velopment, income, and wealth in different places of the world
make worldwide, overall, universal solutions costly, unfair, and to
a great extent discriminatory. The already developed countries do
not have the right to impose any additional burden on the less de-
veloped countries. Dictating ambitious and, for them, entirely in-
appropriate environmental standards is wrong and should be ex-
cluded from the menu of recommended policy measures.
My recommendations are as follows:
1. The UN should organize two parallel IPCCs [Intergovemmental

Panels on Oimate Change] and publish two competing reports. To
get rid of the one-sided monopoly is a sine qua non for an efficient
and rational debate. Providing the same or comparable financial
backing to both groups of scientists is a necessary starting point.
2. The countries should listen to one another [and] learn from [the]
mistakes and successes of others, but any country should be left
alone to prepare its own plan to tackle this problem and decide
what priority to assign to it among its other competing goals.
We should trust in the rationality of man and in the outcome of

spontaneous evolution of human society, not in the virtues of political
activism. Therefore, let's vote for adaptation, not for the attempts to
mastermind the global climate.
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BLUE PLANET in

What Is Endangered: Climate or Freedom?

Competitive Enterprise Institute

© Vaclav Klaus 2007

Cover design by Carolyn McKinney, photography by Els Overkleeft

Printed in the United States of America

1. Definition of the Problem 1

increase freedom in his country is both a boon and an honor. And I am

cise their comparative advantages. They should work with us to ad-

Fred L. Smith Jr.

We are living in strange times. One exceptionally warm winter was

It is exactly these issues that I want to address in my book, which

Definition of the Problem

What is at stake is human freedom • Environmentalism as a quasi-religious ideology •

The ultimate victims will be the

social sciences either, even though it operates on their territory. In this

should be considered an obstacle to human activity, especially if those

attention to details or costs

conviction of classical liberals that human '"'ideas and skills"

It is an ideologically and environmentally oriented lecture

Gore's moralism is also symptomatic of environmentalists. Petrik

Petrik's (2006, 84), conclusion is clear: "The main subject matter of

history of human civilization is approaching" to be nearly fantastic (see

2. The overdeveloped countries must be de-developed;

3. The underdeveloped countries must be semi-developed;

4. Procedures must be established to monitor and regulate

Ehrlich (1971) even recommended decreasing the U.S. population

refusal to consider alterna-

and seminal treatise to accompany the birth of the German Greens"

present some of the more technical conclusions of the recent discussion

Resources, Their Exhaustibility,

In the previous chapter, I mentioned the variability of the environ-

In the early 1970s, Donella H. Meadows and colleagues (1972) pre-

1996, 35). This statement is ab-

human creativity could produce offsetting geometric supply growth

ter than the speculations of the environmentalists). Without scarcity,

The Wealth Effect and

In "Costs and Benefits of

The well-known Stern Review on the Economics of Climate Change

century, the per capita GNP

Figure 3.1. C0 2 Emissions as a Function of Time

lieved the hypothesis that economic growth (and particularly indus-

Figure 3.2. Relationship between Quality of Environment and Level of Income

income per capita

Nobel laureate Simon Kuznets. Kuznets proved that a relatively firm

Figure 3.3. Environmental Transition

The importance of intergenerational comparisons • How economists tackle the issue

erences." Only this hypothesis enables "intertemporal comparisons of

tion context changes in time. This change of context is absolutely fun-

This expectation-perhaps even intuitively-is easily comprehen-

From this formula, it is obvious that because of discounting (d is

spell these assumptions out" (Summers 2007). He would therefore rec-

this assumption is funda-

Another immensely problematic matter that must be mentioned ex-

in the reduction of tempera-

word "damage." We should very carefully distinguish between "dam-

What Is Really Happening with

It may be worthwhile to start this chapter with some illustrative data.

Figure 6.1. Average Annual Temperature in Opava, Czech Republic, 1921-2006