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Pascal's Wager: A Bet for All Seasons

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Among the responses to my last column on climate change was a comment from Bookzilla saying, "Suppose we limit carbon emissions and convert our society to renewable energy. If it turns out that climate change was only a fantasy, we end up with... clean air and no dependence on Loony Tune fundamentalist nations for our energy. If climate change is a true threat, then humanity gets a reprieve and a fighting chance." It's a perfect rejoinder to the climate change skeptics who believe that inaction is preferable to costly fixes that might not be needed.

It is, in effect, a green Pascal's Wager. The 17th century French philosopher Blaise Pascal formulated a neat little "bet": even if you don't have a clue if God exists, take steps to profess belief, because the downside of that wager is nil whereas the upside is pretty desirable. Or, the obverse -- if you disbelieve in God and act that way, and are wrong... well, good luck.

And so it is with climate change, as the elegantly named Bookzilla so succinctly explained. If we make the adjustments needed to prevent and reverse our greenhouse gas emissions, we not only will be doing the right thing to abate the effects of those emissions -- namely, catastrophic climate change. We will be investing in efficiency and alternative fuels that have other major benefits.

First, a time out for a new statistic: the last 12 months in the U.S. were the hottest in recorded history. The chances of June's high temperatures -- 2 degrees above the last century's average -- happening randomly were one in 1.5 million. Wildfires continue in much of the West, and now in Europe, too. Insurance companies report that claims for damage from the fires last month will reach $500 million in Colorado alone.

When many scientists pointed to these temperatures and wildfires, among other evidence, as indicative of climate change and possibly the "new normal," the Republican right howled that alarmism was afoot. The peculiar attitude of the right is that all this evidence is either a massive hoax perpetrated by thousands of scientists or part of an ideologically driven agenda to destroy capitalism.

Both are absurd, but let's try a thought experiment -- Pascal's Green Wager -- to answer in part the right's steadfast resistance to climate change remedies. What if we took the steps -- in many respects, drastic steps -- to reduce our greenhouse gases even if climate change scientists were somehow wrong? Would such investments in clean technologies be a colossal waste?

Consider one familiar example. Automobiles are responsible for a major piece of greenhouse gases -- 16 percent of those emitted in the U.S. -- and the specter of large countries like China and India rapidly expanding their car fleets is harrowing. Miles-per-gallon averages in the U.S. will rise steadily if they aren't set back by, say, a new president. Obama announced one year ago that the target for 2025 is 54.5 MPG. But that's 13 years away. An investment in really efficient cars -- 100 MPG or more -- would surely make sense if whoever does this can dominate the global market. Asian car ownership, for example, is predicted to rise from 55 million in 2003 to 420 million in 2030.

Someone will make a very efficient car for those markets, a commitment to increasing the fleet average like this, and selling in China and India. Who will that be? Japan, Korea, Brazil? Why not America? To do so would be good industrial policy and a hedge against global warming.

Even without thinking of the benefit to curbing climate change, a five-fold increase in auto efficiency from its current status would be a boon to the economy and our strategic interests in the world. Sharp reductions in gasoline use would perhaps get us out of the foreign policy disasters that have beset us in the Middle East particularly for 50 years, at a cost that likely exceeds $5 trillion. Making efficient automobiles is also a direct good for the American economy. American car makers abandoned efficiency when they fell in love with SUVs, which nearly brought down the whole industry. That at least suggests another path needs taking. The technologies certainly exist to push the MPGs way up (I was driving a Datsun that got 40 MPG more than 30 years ago) if consumers could be lured away from size and horsepower. And new designs can achieve much more -- hybrids and electric cars that recognize people's real needs.

Expansion of mass transit is the other, near-term attainable goal on this. Do you ever see subway trains less than crowded during rush hour? People want good mass transit. And there are extra benefits here, too. The trains we typically buy for mass transit aren't even made in the United States for the most part, but could be. There are many jobs in this in addition to reduced congestion, alternatives for commuting, and of course less pollution. That is system efficiency -- thinking about entire transportation needs as a system to reduce energy consumption and provide service.

In fact, efficiency is at the heart of innovation, which is the heartbeat of economic growth and prosperity. Making our energy use more efficient broadly across several industries -- refrigeration and cooling, manufacturing, service delivery -- always pays off by lowering overall costs. To realize this potential, some industries need investment to develop or refine technologies, some need regulation (standards for home refrigerators, which are the largest consumer of electricity in the house), some need public education. All will provide good returns. And in the press of concern about climate change, you can bet Europeans and East Asians particularly are innovating to reduce energy consumption. The U.S. will, like the auto industry when the first oil price shock hit in 1973-4, be far behind global competitors unless industrial policies and energy policies combine creatively and urgently.

I think Pascal's Green Wager is a good bet, although we need to recognize two additional aspects. Because efficiency (and other investments like reforestation and renewables) pays back social and economic benefits regardless of the climate argument, it is attractive, but it may not always be profitable. We shouldn't subject every social investment to market imperatives. Some actions will never provide the returns that Wall Street managers demand.

Moreover, they can't be accomplished through market incentives alone. Carbon taxes, efficiency standards, federal investments (such as enormous purchases of highly efficient autos for federal use), and other measures do not conform with market economics. We need to be able to measure the returns in other valued outcomes -- clean air and water, rejuvenated forests, biodiversity. These concepts aren't new, either. But the fight for them is everlasting.