Worried About Climate Change? Promote Free Markets!

Every day more and more Americans are growing skeptical of the climate change doomsday claims and plans to ration energy through cap-and-trade type proposals. Despite this, many environmentalists still claim that far-reaching government intervention is needed to achieve greater energy efficiency and lower greenhouse gas emissions to reduce the threat of global warming. Although there has been no statistically significant global warming since at least 1995, the same groups often claim economic growth and lack of comprehensive environmental regulations have created a society that wastes energy and pays no regard to greenhouse gas emissions. But what if less energy use and lower greenhouse gas emissions are a byproduct of limited government and economic freedom? What if environmentalists’ goals can be reached by freer markets and prosperity? Recent Cascade Policy Institute research shows that very phenomenon.

Cascade Policy Institute has found that economic freedom and limited government lead to greater energy efficiency and lesser amounts of emissions. What’s more, advocating for more government control of the economy very well may lead to a less efficient and more greenhouse gas intense economy.

Cascade Policy Institute has found that economic freedom and limited government lead to greater energy efficiency and lesser amounts of emissions. What’s more, advocating for more government control of the economy very well may lead to a less efficient and more greenhouse gas intense economy.

Economic freedom is known to have a profound effect on the efficient allocation of resources. Without subsidies, tariffs, and other government interventions, economic activity operates in the most efficient manner because of competitive pressures to produce more with fewer inputs. This means that energy use per unit of production is decreased with the presence of free markets. Although there is no intrinsic profit incentive for decreasing greenhouse gas emissions, the push to lower energy costs leads to lower amounts of greenhouse gas emissions per dollar of gross domestic product. This is because of the close relationship between energy intensity and greenhouse gas intensity.

Cascade Policy Institute’s (CPI) study reveals an interesting relationship between greenhouse gas emissions, energy efficiency and economic freedom.

Beginning in 1995, The Wall Street Journal and the Heritage Foundation have tracked economic freedom of countries around the world. The index contains ten benchmarks that gauge economic freedoms of countries across the world along with an overall freedom score, which represents the average. Benchmarks are graded on a 0-100 scale with 100 being the most free and 0 being the least free.

When this data was combined with other economic and energy variables, some remarkable relationships were discovered. Analyzing 165 countries over a ten-year period (1995-2004), CPI found that higher levels of economic freedom lead to higher levels of energy efficiency and lower levels of greenhouse gas emissions per dollar of gross domestic product.

In addition to having lower energy and greenhouse gas intensity overall, the more economically free countries have experienced declines in carbon and energy intensity over time, while countries with less economic freedom actually increased their carbon and energy intensity levels over the ten-year range (graph 1 and 2). Also, the analysis found that one additional freedom score point would increase a country’s energy efficiency by 0.82%. With regard to greenhouse gases, one additional freedom score point would decrease the country’s greenhouse gases per dollar of GDP by 1.01%

Thus, a country’s level of economic freedom is a significant and negative factor in determining the amount of energy used and the amount of emissions produced per dollar of GDP. This conclusion contradicts the perceived notion that top-down government regulation is the only way to foster energy efficiency and lower greenhouse gas intensity. Therefore, by advocating for more government intervention into various aspects of the economy, one is essentially advocating for a less energy efficient and more greenhouse gas intense economy.

At the same time most Americans are realizing that the alarmist climate change rhetoric is exaggerated nonsense, overly anxious environmentalists need to take a second look at the merits of free markets and economic prosperity as a potential no-regrets strategy for reducing carbon emissions and energy use.

Click here for graphs related to this Commentary.


Todd Wynn is Vice President at Cascade Policy Institute, Oregon’s free market public policy research center. He received his bachelor’s degree in Business Economics from California State University Long Beach and his masters in International and Developmental Economics from University of San Francisco.

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  • David Appell

    Of course, the “intensity” argument is just a diversionary tactic invented by those who don’t care about their grandchildren’s future. (And they know it.) The relevant parameter regarding damage to the atmosphere and oceans is carbon emissions, not emissions per unit of production. The latter has been declining for at least a hundred years (and probably forever — it’s called “efficiency”), while carbon emissions continue to increase.

    • Steve Plunk

      The debate’s over. Your side fudged it’s numbers and put politics ahead of science.

    • Todd Wynn

      David,

      There is a section in the full report that discusses the issue you brought up. The section titled “Uncertainties and Problems” addresses total emissions versus emissions per unit of production.

      “Although this study reveals that the economic freedom of a
      country has a significant and negative effect on energy and
      carbon intensity, this fact alone does not fully address the issue of
      human-induced climate change. Despite carbon emissions per
      dollar of GDP being lower and decreasing for countries with
      higher economic freedom, the issue of total carbon emissions is
      not addressed. Since anthropogenic climate change is centered
      on reducing total global carbon emissions, an analysis that shows
      carbon intensity declines with greater economic freedom does
      not fully address the concerns over anthropogenic global
      warming. The study does, however, show that economic freedom
      leads to greater levels of energy efficiency which inherently leads
      to less carbon dioxide emitted per unit of GDP. Therefore, higher
      levels of economic freedom make the overall economic system
      emit less carbon into the atmosphere than do lower levels of
      economic freedom. Economic freedom is not the only solution to
      becoming more energy- and carbon- efficient, but it certainly is
      one part of the solution.”

      • David Appell

        Todd, graph 2 in your report is an absolute joke. You have a scattershot of points and try to draw a straight line through them (simply because Excel makes it easy). What is the Pearson coefficient of this line? It’s curious that you don’t say. It can’t be very high. What is an “adjusted” R^2 value? Its mathematical definition? I’ve never heard of such a thing.

        Nor do I see a definition of “economic freedom score.” Did I miss it? What is it exactly?

        • Todd Wynn

          It is a scatterPLOT of points which represent averages in a certain grouping of freedom scores. The straight line obviously represents a trend line. It is fairly easy to see even without a trend line that the least free nations are increasing in intensity and the most free are decreasing in intensity. And, as I have discussed in the commentary and full report, the differences in amount are extremely evident.

          An adjusted R squared has a statistical definition. For the type of model I used, the adjusted R squared or within R squared, depending upon which regression, represents how well the model represents the data. This is also explained in the full report.

          The definition of the economic freedom score is in the appendix of this report as well.

          Thanks for reading it in its entirety before commenting!

          • David Appell

            > It is fairly easy to see even without a trend line that the least free nations are
            > increasing in intensity and the most free are decreasing in intensity.

            In fact, it isn’t easy to see this at all. If I were a professor and you were my student I would flunk you for trying to draw a straight line through a cloud of points that hardly seems better than random.

            Again: please give us the Pearson coefficient of the straight line you have drawn.

            And again: please define, via its mathematical formula, the “adjusted R squared” parameter. Saying it has a “statistical definition” is meaningless. I could not find its mathematical definition in the full report. Did I miss it? If so, please tell me its equation number, or please specify its exact mathematical definition here.

  • David Appell

    Steve Plunk wrote:
    > Your side fudged it’s numbers

    Which numbers, exactly, were fudged, and by whom, exactly? When?

    In fact, the scientific case for AGW is as strong as ever. And, in fact, the last few months have been among the globally warmest months on record, by both surface and satellite measurements. The first decade of this century was the warmest decade since detailed records began.

    • jim karlock

      *JK:* Quit lying David.

      Even your GOD, Phil Jones, head of the CRU and IPCC lead author said the earth quit warming 15 years ago and has been cooling for the last 8 years. He also said that the recent warming rate was nothing unusual compared to other warmings (before most of man’s CO2 release).

      And he admitted that the best case they have for man being the cause of the recently ended (and now reversed) warming is that they can’t explain it by solar or volcanic action.

      It is time for you to admit you have no case – even the top scientists on your side are finally admitting the truth!

      You can see the full text of these questions at: http://www.sustainableoregon.com/jonesinterview.html

      BTW, I hope you caught the survey of meteorologists – they found that 75% of Meteorologists DO NOT think most global warming is human induced! See: http://www.sustainableoregon.com/amssurvey.html

      PS: We are still waiting for your proof that CO2 is capable of causing dangerous warming – it has been over two years now. All you have ever been able to come up with is the flat earth logic in the IPCC report that says it has to be man because we can’t figure out anything else. Laughable!

      Thanks
      JK

      • David Appell

        > JK: Quit lying David.

        Jim, until you can discuss a subject without accusing your opponents of lying — which is, really, the most simplistic of defenses — there’s little reason to engage you.

        > Even your GOD, Phil Jones, head of the CRU and IPCC lead author said the earth
        > quit warming 15 years ago and has been cooling for the last 8 years.

        In fact, he did not say that at all.

        He said, last fall, that there was not warming at a statistically significant level (ie. 95% CL), *barely*. There is nothing magical about a 3-sigma level and that it was about 2.5-sigma is hardly reason to relax or deny AGW. Moreover, the last few months have seen some of the warmest temperatures ever, as measured by both satellites (UAH & RSS) and surface instruments (GISS & HadCRut3), so clearly Jones’ comment needs to be evaluated. Have you asked him, or done your own statistical analysis?

      • David Appell

        Here are Phil Jones actual comments (BBC, 2/13/10), http://news.bbc.co.uk/2/hi/science/nature/8511670.stm# :

        BBC: “Do you agree that from 1995 to the present there has been no statistically-significant global warming”

        Phil Jones: “Yes, but only just. I also calculated the trend for the period 1995 to 2009. This trend (0.12C per decade) is positive, but not significant at the 95% significance level. The positive trend is quite close to the significance level. Achieving statistical significance in scientific terms is much more likely for longer periods, and much less likely for shorter periods.”

        BBC: “Do you agree that from January 2002 to the present there has been statistically significant global cooling?”

        Phil Jones: “No. This period is even shorter than 1995-2009. The trend this time is negative (-0.12C per decade), but this trend is not statistically significant.”

        BBC: “How confident are you that warming has taken place and that humans are mainly responsible?”

        Phil Jones: “I’m 100% confident that the climate has warmed. As to the second question, I would go along with IPCC Chapter 9 – there’s evidence that most of the warming since the 1950s is due to human activity.”

        • jim karlock

          *David Appell:*
          > Even your GOD, Phil Jones, head of the CRU and IPCC lead author said the earth
          > quit warming 15 years ago and has been cooling for the last 8 years.

          In fact, he did not say that at all.

          He said, last fall, that there was not warming at a statistically significant level (ie. 95% CL), *barely*.
          *JK:* No statistically significant means NO WARMING.

          *David Appell:* Have you asked him, or done your own statistical analysis?
          *JK:* Naw, I’ll rely on the BBC interview for this one.

          *David Appell:* Here are Phil Jones actual comments (BBC, 2/13/10), http://news.bbc.co.uk/2/hi/science/nature/8511670.stm# :

          BBC: “Do you agree that from 1995 to the present there has been no statistically-significant global warming”

          Phil Jones: “Yes, but only just.
          *JK:* That was his answer. Are you having trouble with simple English?

          *David Appell:* (continuing the BBC quote of Jones) I also calculated the trend for the period 1995 to 2009. This trend (0.12C per decade) is positive, but not significant at the 95% significance level.
          *JK:* Daid, please note the “Not significant” part of his answer. It has meaning!

          *David Appell:* (continuing the BBC quote of Jones) BBC: “How confident are you that warming has taken place and that humans are mainly responsible?”

          Phil Jones: “I’m 100% confident that the climate has warmed. As to the second question, I would go along with IPCC Chapter 9 – there’s evidence that most of the warming since the 1950s is due to human activity.”
          *JK:* Then there is his answer to this:
          BBC: If you agree that there were similar periods of warming since 1850 to the current period, and that the MWP is under debate, what factors convince you that recent warming has been largely man-made?
          CRU Head, Dr. Jones: The fact that we can’t explain the warming from the 1950s by solar and volcanic forcing
          *JK:* Note the sophisticated logic, worthy of a flat earther: “we can’t explain the warming…by solar and volcanic forcing”, so it must be man caused. Laughable David. Just laughable. It is the logic that creates gods to carry the planets across the heavens because they couldn’t explain it.

          *Lets be clear* Warming doesn’t matter, polar bears don’t matter, melting ice doesn’t , none of AL’s money grubbing alarmist claim mater *if man is not the cause.* And we just saw the best case the warmers can make: it must be man because we can’t figure out any other explanation!!! That is also the best explanation YOU have ever been able to come up with after two years of YOUR BS (and quite a long time of refusing to acknowledge that CO2 is NOT the biggest contributor to warming.).

          Thanks
          JK

  • Rupert in Springfield

    Its an interesting point, that as economic freedom is expanded, ghg’s decreased per dollar of GDP. What that is saying is that more economically free societies are more efficient with their energy use, even though they may, and probably do, use more.

    This ties in very well with David Appells point – which is true. Assuming one subscribes to AGW, then relevant measure is total ghg output, not amount per unit of production.

    This is important because it is an admission that AGW believers will seldom make. Increases in efficiency mean nothing to them if overall output still goes up. Thus even though clearly a more prosperous society is more efficient, were all societies to prosper and become efficient it would mean nothing to AGW believers, as ghg’s would still increase as standards of living increased.

    Condemning the world to stifled economic growth, through a command and control economy has always been the goal of AGW believers. The argument against increasing economic freedom, and thus more efficiency, albeit with higher total ghg, output is proof of that.

    It also puts into remarkable clarity the whole “doing it for our grandchildren’s future” argument. When the solution is a better one than simply being against economic freedom, we will all have more belief in the AGW believers. Until then its pretty clear – they just have a fundamental disagreement with free market prosperity.

    • David Appell

      Rupert wrote:
      > When the solution is a better one than simply being against economic freedom, we
      > will all have more belief in the AGW believers. Until then its pretty clear – they just
      > have a fundamental disagreement with free market prosperity.

      Of course, you have an extremely skewed definition of “free,” seeing that it does not require the emitter/user to pay for the damage such energy production does.

      Why, Rupert, shouldn’t you pay for the environmental, societal, and health damages that are done by the products you use?

      • jim karlock

        *David Appell:* Of course, you have an extremely skewed definition of “free,” seeing that it does not require the emitter/user to pay for the damage such energy production does.
        *JK:* Of course first you have to show damage (from CO2, the oil spill will be cleaned up by BP, a large campaign donor to Obama)).

        You have refused to provide that proof for years now.

        Put up or shut up.

        BTW, have you seen the pictures of Al Gores new multi-million dollar home that you helped him buy with you continually repeating his lies.

        Thanks
        JK

        • David Appell

          I’m not a spokesman or apologist for Al Gore, and have absolutely nothing to do with him. I suggest you contact him directly to inquire about his activities.

          The damages due to AGW are discussed in great detail in IPCC 4AR WG2, and have been estimated by economists at about 5% of GDP/yr by 2100. I know, Jim, that you have repeatedly proven yourself incapable of (and/or unwilling) to reading scientific reports, so repeating these arguments here would be both a vast waste of my time and also useless.

          • jim karlock

            *David Appell:* The damages due to AGW are discussed in great detail in IPCC 4AR WG2, and have been estimated by economists at about 5% of GDP/yr by 2100.
            *JK:* Get real David. The IPCC relies on thousands of greenie propaganda publications for its conclusions. It has ZERO credibility.

            Thanks
            JK

          • David Appell

            > JK: Get real David. The IPCC relies on thousands of greenie propaganda
            > publications for its conclusions. It has ZERO credibility.

            Of course, the IPCC ARs are written by the best climate scientists in the world, who each spend about 3 years on a single AR making sure it represents the best science available.

            Are the ARs perfect? No. No human endeavor is. They do not rely on “thousands” of “greenie propaganda, but on the best available science.

            Of course Jim Karlock doesn’t accept the ARs. They are written by people with far, far more education than he has (Karlock doesn’t have a basic college degree), who spend their entire lives doing research 12-16 hours a day — research that Karlock can’t even understand, and with data he has no idea even exists.

            All he can do is simply deny it. Like this is 3rd grade.

  • David Appell

    Rupert wrote:
    > Its an interesting point, that as economic freedom is expanded, ghg’s decreased
    > per dollar of GDP. What that is saying is that more economically free societies are
    > more efficient with their energy use,

    It says *nothing* about economic systems. It’s simply a statement of human nature and basic economics — no one wants to spend more money than they have to, and everyone, everywhere, seeks to use resources (including energy) more efficiently.

    Can anyone provide statistics showing that a nation — “free” or not — has an increasing energy intensity — anytime, anywhere? I doubt it.

    • Todd Wynn

      David,

      You could click on the graphs showing the least free and the most free nations and see this increasing energy intensity factor.

      Or perhaps you could read the line in the commentary that discusses this issue.

      “In addition to having lower energy and greenhouse gas intensity overall, the more economically free countries have experienced declines in carbon and energy intensity over time, while countries with less economic freedom actually increased their carbon and energy intensity levels over the ten-year range.”

      • Steve Plunk

        Todd, David picks and choose when to be a part of the debate, what to argue, and when to hide. His participation has become an ever increasing nuisance. I choose to respond to him with the very same tactic his camp used against those with scientific skepticism, the debate is over. Mann? Under investigation. IPCC? Admission of using science that would fail you in college. CRC? Investigated and found to have put politics ahead of science. They tried to silence critics instead of pitting science against science. How long do we tolerate those who endlessly drone on without ever addressing the points raised by others?

        People like David Appell deserve no attention and no respect as they have shown no respect for us. They should either be ignored or laughed at.

        BTW, I see the carbon credit trading industry suffered another raid by police again. That’s an indication of what’s really going on, a chance to fleece people of their money by perpetuating a falsehood and selling a cure. Al Gore’s laughing all the way to his new mansion in Santa Barbara.

        • David Appell

          In other words, Steve, you CAN’T substantiate your claims, and as a diversionary tactic complain that I don’t pay attention or are somehow opposed you. I”m not. I simply want to know: who fudged data as you claim, where, and when, and what is your evidence?

          Do you have it or not? It does not appear so. Making such accusations without hard evidence is very low, not to mention dishonest.

          Have you noticed that so far 2 UK investigative committees have found no fault whatsoever with any of the scientists whose emails were stolen in the CRU hack, except that Phil Jones should have done a far better job responding to FOIA requests, which has been admitted since the beginning?

          • Steve Plunk

            Yawn. Anybody have anything credible to say?

          • David Appell

            Another meaningless reply, Steve. Do you have specifics, or not? It certainly doesn’t appear so.

  • David Appell

    Rupert wrote:
    > Condemning the world to stifled economic growth, through a command and control
    > economy has always been the goal of AGW believers.

    This is a vast misdirection as well as oversimplification.

    No thinking person wants to stifle economic growth. Everyone recognizes the benefits of modern society and modern energy usage. Most recognize that future progress will probably require more energy usage per capita, not less.

    So what? Stopping your argument there is just dumb.

    We need to generate more energy _without carbon emissions_. No one is suggesting we go live in tents, except denialist demogagues desperate to score cheap points.

    Nor does anyone want to institute a “command and control economy.” That hardly means there should be no regulations and anyone can be free to do what they want. You are limited in emitting CFCs because they damage the planet (and, in turn, society). You are limited in emitting SO2 because it damages the environment (and, in turn, society). You are limited in dumping your sewage into the street because it damages the environment (and, in turn, society).

    Rupert, should you be free to dump your sewage into the gutter? To throw your trash out the window?

  • Anonymous

    Watts made a fool of David

    http://davidappell.blogspot.com/2010/04/anthony-watts-ignorance.html

    wattsupwiththat.com said…
    Actually David Appell, I’m quite certain the ignorance is yours for not recognizing a bit of satire when you see it. Or maybe it was purposeful. I’m asking.

    And of course you dishonestly left out the rest of what I said, choosing only the part that suited your view:

    “Though I think oceans have a good share of the cause too.”

    …meaning lower aerosols plus changes like PDO increasing a categorical percentage of the warming.

    Of course I know about aerosols, I have an entire section on it at WUWT. See the “aerosols” in the categories selector on the right sidebar. The second story says

    “Asian pollution delays inevitable warming” So yes I’m quite familiar with the issue.

    Or how about the story below it?

    From the BNL press release, some serious questions about climate sensitivity and aerosols.

    Why Hasn’t Earth Warmed as Much as Expected?

    And you know, if you really thought I was missing the point, you could have asked.

    But no, don’t let that get in the way of a good character assassination.

    You’ve posted on WUWT with a “reasonable” stance. I’ve given you quite an extensive discussion opportunity there which you ended with a high note:

    “2010/04/05 at 6:37pm

    Thanks — it’s been fun. But I am unable to keep up with the comments here and still get my work done.

    Perhaps I’ll be back.

    – David”

    You could have asked if I knew about aerosols and reflected -vs- transmitted, you could have looked at the section at WUWT on aerosols, your certainly are no stranger to WUWT, nor even unwelcome.

    Yet you did none of those things, you made an assumption. You assumed I’m ignorant, then abuse me.

    That is not professional at all. I thought better of you given the science magazines you’ve written for. I thought you’d at least do a modicum of checking before character assassination.

    Of course, you can still fix it.

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