Bill Gates's recent comments about the importance of adaptation echo former World Bank chief economist Larry Summers's response to the concept of “sustainability,” the moral rock on which the church of climate change was built.

Though still a “serious” problem, Gates no longer regards human-caused climate change as an existential threat. “People will be able to live and thrive in most places on Earth for the foreseeable future,” Gates said. “Surprisingly, excessive cold is far deadlier [than extreme heat], killing nearly ten times more,” he admitted.

The Hoover Institution’s Bjorn Lomborg also notes that, “climate-related deaths from droughts, storms, floods, and fires have declined by 97% over the last century from nearly 500,000 annually to fewer than 15,000 in the 2020s. That’s a real human cost but far from cataclysmic.” 

Over the centuries, religious doctrines have shifted with changes in the science of the times.

Medieval Christian societies shifted their perspectives following the discovery that the sun does not revolve around the earth and eventual recognition that the profit motive contributes to economic growth and higher living standards in market-driven economies.

This is where the perspectives of the younger Summers, who later served as President Clinton’s Treasury Secretary and chaired President Obama’s National Economic Council, become relevant.

He, too, was and is worried about human-caused global warming. But in a May 30, 1992, letter to a worrywart Economist magazine, he wrote,

“The argument that a moral obligation to future generations demands special treatment of environmental investments is fatuous. There is no intellectually legitimate case for abandoning accepted techniques of cost-benefit analysis in evaluating environmental investments, either by using abnormally low discount rates, or worse yet, invoking special criteria regarding sustainability... We can help our descendants as much by improving infrastructure as by improving rain forests, as much by educating children as by leaving oil in the ground, as much by changing our scientific knowledge as by reducing carbon in the air.”

Noting that U.S. living standards were “three times higher than 60 years ago,” he asked whether his grandparents should have “reduced their standard of living, when life was considerably more brutish and short than now, to leave raw materials in the ground for my benefit?... More should be done... But… in every case, the question returns to trade-offs between costs and benefits. Chanting the mantra of sustainability is not enough… Surely it is ethically relevant that our grandchildren will in all likelihood be much better off than we are.”

Since then, real U.S. GDP per capita, adjusted for inflation, has more than doubled. Past is not always prologue, but wars, pestilence, and soaring budget deficits have yet to slow our economy down.

Of particular concern to Summers was environmentalists’ use of what he called “abnormally” low interest rates to discount future benefits and costs.

He noted that “each investment, environmental and non-environmental [must be held] to a test of opportunity cost. Each project must have a higher return (taking into account both pecuniary and non-pecuniary benefits) than alternative uses of the funds. Standard public non-environmental investments like sewage treatment facilities, education programs, or world bank transport projects have returns of more than 10%.”

Discount rates are a very important consideration for climate policy. Based on rates between 1.5 percent and 2.5 percent, President Biden’s EPA air quality regulators used a $190 per ton of carbon dioxide emission as their “Social Cost of Carbon” to value climate-related damages in their cost-benefit analyses of automobile and stationary source regulations, up from the Obama administrations’ $30 to $50 per ton based on rates between 3 percent and 5 percent.

If my AI robot is to be trusted, at Summers’ 10 percent recommended discount rate the Social Cost of Carbon would fall to just 18 cents per ton. This is the opportunity cost of foregoing investments in poverty reduction to keep the air from getting a tiny bit warmer. 

Summers allowed “that environmental damage is both uncertain and possibly irreversible.” But, he said, “the right way to allow for the unusual riskiness of environmental decisions is to estimate the benefits generously making special allowance for the value of options that they preserve… To reduce the discount rate to allow for risk… reflects an elementary fallacy. To apply a specially low discount rate merely increases the weight attached to events in the distant future as compared to events in the near future, which makes no sense.”

As Stevin Koonin, former Undersecretary for Science in the Obama Department of Energy, notes, fossil records from previous warm periods indicate biodiversity thrived under higher CO2 levels, and many extinction forecasts are based on models that do not include adaptation, migration, or evolutionary changes. Says Koonin, “Species extinction is a serious issue, but pinning it mostly on climate change distracts from solvable problems like poaching and land conversion.”

Paul Samuelson, who was a Nobel Laureate and Larry Summers' uncle, once responded to a question about changing some of his views over the years by saying, "When I get new information, I change my mind. What do you do?”

Kudos to Bill Gates for changing his mind. We can only hope the church of climate change will change its mind with the changing science of our times.

Tom Walton is an economic policy advisor with The Heartland Institute.

Image: AT via Magic Studio