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I've been involved lately in a debate about global warming that has forced me to think through the issue. I was taken aback by the views of an educated neighbor who denies that it is happening - I was as shocked as though I was hearing holocaust denial. He provided me some reading material, so I had to react. Here are my thoughts, and I would love to hear yours.

Most of these thoughts would have applied before I read the material, by the way. I'm not a climate scientist or even an earth scientist, so you can read my thoughts as coming from a reasonably informed layman, and certainly not a specialist.
• I totally agree that climate models are highly unreliable and primitive. I understand the GIGO principle, and I have a lot of faith in the ability of combinations of technical innovations and economic incentives to alter predicted outcomes, as evidenced all the way from Malthus to the Club of Rome.
• The evidence against climate change is equally weak however, and the advocates like Richard Lindzen (MIT) of that position strike me as more than somewhat panglossian. I see two general approaches from the denyers: One is to measure actual climate change, and finding no relationship or an inverse relationship based on a simple regression between average temperature and time, conclude that there is nothing to global warming. This "modeling" approach is even weaker than the climate models that are being criticized. I put them in the same category as arguments that there is no scientific proof that smoking is linked to cancer. The second approach is to conclude that since global average temperatures are within historical extremes, that any warming trend that may exist is normal and we should just get over it.

My big problem with all this is that I do not believe that diagnostics that simply rely on looking at average temperatures is revealing. The earth's climate is the result of highly complex interactions of multiple forces ranging from sunlight reflected from ice on the poles, to the actions of ocean currents, forest coverage, passing events like volcanic ash, and yes, human action including the atmospheric impacts of industrialization. The climate models have probably not captured the first order effects of all these factors, much less the second or third order ones. But I have studied system dynamics enough to understand that any dynamic inter-related system that is subject to hysteresis and variable time lags is vulnerable to wild gyrations when the system is disturbed, although those gyrations may come slowly and build from apparently small causes.

As an economist, I generally look for changes in systems at their margins, not at their average, just as a pool of water dries up from the surface and retreats from its banks, not from its depths. I also am a fan of catastrophe theory (see Rene Thom), which suggests that systems can exhibit smooth predictable change until a threshold is passed, and then exhibit a sudden and non-linear change of structure. I also am enough of a statistician to understand the difference between Type I and Type II errors and enough of an economist to attribute costs to each, especially when the costs of reversing an error are very high.

So put all that together, and I see evidence at the margins that something is happening to the climate - at the margins, some cities and coastlines are being drowned, storms of surprising strength seem to be showing an increase, ice is certainly melting at the poles and glaciers are shrinking, polar bears are drowning and weather patterns are appearing outside the norms. Add to that Chinese pollution, the loss of Amazon rain forests, and disturbances in the cycle of rainy and dry seasons in Africa, and the causes for concern start to rise.

Is all that evidence of global warming? Not conclusively, but then I start thinking about Type I and Type II error - if there is no global warming but we act to prevent it, there may be some detriment to economic growth, although I suspect that the net effect of that impact would actually be positive as carbon trading will probably create innovation, jobs and growth in response to the price incentives that are the justification for such trading systems. (And just because Enron wanted to make a business of emissions trading doesn't make it a bad thing. Their problems were not due to that. There is an active market in emissions trading in Los Angeles and also in the EU.) But if there is global warming and we do nothing, the result will be quite unpredictable, although those impacts will fall more on our children and grand children. I certainly do not want my descendants cursing their forebears for doing nothing when they still had the chance.

And to argue that global warming is unambiguously beneficial because it will increase farming yields strikes me as the worst sort of chicanery. To look at simple averages does not reveal the full potential for local dislocations that are impossible to model, but are likely to be very significant - storms, flooding, droughts, forest fires, desertification, population movements and associated wars for resources - these things have happened in the past, and they were often a result of local climate changes. It is the apparently anomalous local changes at the margin that eventually reveal themselves in changes of averages. It took decades for the computer revolution to start showing up in US productivity numbers. But that doesn't mean that the computer revolution wasn't happening.