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Economic and political stakes

Calculating the costs

November 27, 1997

(CNN) -- Over the past 40 years, the water level in Louisiana has risen by a few inches, thanks to a combination of natural forces and man-made changes. The result: more than 1,000 square miles of local land have been wiped out.

By some estimates, global warming could raise the sea level another 6 to 37 inches by the year 2100 as a warmer ocean expands and glacial melting increases. At the high end of that estimate, the city of New Orleans could be flooded.

An obvious solution seems to be to wage an all-out war against global warming. But that's a double-edged sword.

If, for instance, the United States joins other governments in agreeing to reduce the use of oil and gas, Louisiana's oil-based economy would be pounded. Jobs would be lost. Businesses would vanish.

Louisiana's dilemma illustrates the many difficult political, environmental and economic trade-offs that industrialized nations will face next month when they meet in Kyoto, Japan, to seek a common response to the threat of global warming.

Weighing the factors

Energy consumption breakdown

Per capita energy consumption, in millions of British thermal units (BTUs), 1995

*One quad equals a quadrillion Btus (British thermal units)

SOURCE: Energy Information Administration

Economist Fred Smith is among those who believe that less pollution will mean fewer jobs. Blue-collar workers, he says, may suffer the most; in Australia, for example, 90,000 coal miners might have to quarry the want ads.

"(It) could literally rip the guts out of the whole engine of economic growth," Smith says.

Some environmentalists and scientists argue that the failure to take action to reverse the sharp rise in carbon dioxide emission levels would imperil the world's climate, ultimately washing away major resources -- such as the valuable wheat- growing areas of the American Midwest.

Environmentalist Chris Flavin makes his case with a gentle reminder: some 150 years ago, people couldn't imagine putting their horses out to pasture. "Railroads -- people were scared of them initially," says Flavin. "No one wanted to invest in what was seen as an expensive technology."

But that expensive technology paid off in the long run. "I think if we do this in an intelligent way, we are going to end up with more comfortable homes, probably much nicer vehicles and easier ability to get around where we need to go and probably all at a lower cost," Flavin argues.

So who will be the Henry Ford -- or the Bill Gates -- of this technological revolution? Will it be the entrepreneurs who can perfect solar or wind power or make less power-hungry refrigerators, stoves and computers?

It's hard to say; according to analysts, there will be too many scenarios to predict.

Cleaner air and water carry high price

A gallon around the globe

Cost of a gallon of premium gasoline, including taxes, in U.S. dollars as of October 13, 1997

** Price for regular gasoline (premium price not available)

SOURCE: Energy Information Administration

But some short-term forecasts remain troubling. Imagine paying 50 cents more for a gallon of gasoline. Consider what your power bill may look like with a 40 percent increase.

The bottom line: The Kyoto summit may mean consumers pay much more for energy while using less of it.

"Energy is such a pervasive part of the modern world economy that the types of policies, the 30 or 40 percent reductions in carbon use that are talked about seriously at the Kyoto- style negotiations, are civilization-destroyers," Smith says.

Indeed, the relative cost of any agreement reached at Kyoto will depend on its time frame.

A phased-out implementation, all sides agree, will give firms and consumers a chance to replace expensive equipment and appliances as they wear out, instead of all at once.

Most developed countries favor plans with deadlines of 2010 or after. All fear that imposing stiff controls faster than that would create many more difficulties for their own economies.

So what will it be? A less-polluted, post industrial utopia? Or a great global depression?

Probably neither, but in the climate leading up to Kyoto, it seems sides already have been picked.