Australia's choices in dealing with global warming are important. Because the Kyoto Protocol is based on uncertain science and does not constitute conclusive scientific evidence regarding the effect of human activity on global warming, it is very difficult for economists to perform complete cost-benefit analyses of the economic, social and environmental consequences of the policy. Even if adverse consequences of global warming could be identified and measured with complete certainty, these consequences must be valued at the time they occur, and some allowance must be made for the fact that the value today of costs and benefits in the future - particularly in the distant future - is not the same as their value when they actually occur.
Ill-conceived, poorly chosen policy responses might marginally reduce potential global warming costs, but they could cost every ordinary Australian more than their share of potential global warming costs.
The Kyoto Protocol is a good example of such a flawed policy response. It involves measures that would have large negative social and economic impacts on all Australians. The OECD estimates that by 2100 the actual worldwide economic cost of Kyoto will be more than US$900 billion annually. Yet the Intergovernmental Panel on Climate Change concedes that full Kyoto compliance would reduce predicted warming to the year 2100 by only a fraction of one degree.
Thus, even if we accept the dire predictions regarding the economic, social, and environmental consequences of climate change, under the policies advocated by the Australia Institute and the signatories to its petition, ordinary Australians could end up paying twice for any climate change: living standards will be permanently cut for every year that the policies are in place, and then when 2100 arrives they could pay again because of higher temperatures, which are virtually unaffected by the Kyoto Protocol.
More importantly, it is simply not true - as the Australia Institute claims - that serious alternatives to the Kyoto Protocol have not been put forward. For example, alternative proposals have been published by economists at the Brookings Institution in the United States, and high quality academic work is also available from economists at Resources for the Future in Washington D.C. Many sensible alternatives to the Kyoto Protocol have been suggested by other economists.
For all of these reasons, we, as professional economists, believe that it is erroneous to conclude that it is Australia's economic, social or environmental interests to ratify the Kyoto Protocol.