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even get into today. But when we talk about risk, I think it is worth looking to those whose entire business is based on putting a price on risk, translating environmental risk into economic terms, and obviously that is the insurance industry. Insurance companies are motivated to seek the clearest risk information available on the subject of anything, and certainly climate change, as well. This motivation is not clouded by politics or agendas, but focused squarely on the bottom line.

I have had my share of disagreements with insurance companies on some of these issues, but accuracy in this kind of work is not a luxury. It's a necessity. If they don't estimate risks accurately, then somebody is going to go bankrupt—they will.

I would like to reference a document that's found on the website of one of the largest reinsurance companies in the world. It's called "Swiss Re." I would ask unanimous consent that this document be made a part of the record, Mr. Chairman.

Senator JEFFORDS. Without objection.

Senator SMITH. The document has a very interesting title, "Climate Research Does Not Remove the Uncertainty: Coping with the Risks of Climate Change." The title I think sums up our hearing today. The primary point of the paper is that climate change is happening and it poses financial risks. We're still unclear on how much of the change is natural and how much of it is human induced.

I have been to Woods Hole, MA. We've talked about these issues with a number of scientists. That's what I hear over and over again-is the change natural? How much of it is natural? How much of it is human induced? But there is change taking place. If you go back to the insurance industry and their customers, causes are of secondary importance in the face of weather-related losses.

So as we examine the risk question-and that's why I bring the insurance analogy up here as we consider the entirety of the climate change debate, we should focus more attention on economic risk posed by any climate change, natural or human induced.

The study points out that our vulnerability to extreme weather conditions is increasing. This is because in a global economy, local weather can have international consequences. As an example, Swiss Re points to the flooding of the Far East Computer Chip Factory, causing supply bottlenecks through the entire technology sector. The paper points out that climate change is not needed for that example to occur.

But evidence does show, though, that human interference in the climate system exacerbates the problem caused by natural climate change, so the difference between natural variation in the climate and natural variation coupled with human influences may be small. We don't know yet. The scientists will continue to try to answer that question.

There are differences between forces that can cause either negligible damage or catastrophic loss. These are the intelligent thoughts of experienced businessmen and woman and people not driven by any political agenda. Their jobs are to accurately assess the economic risks posed by climate conditions, and they provide an excellent perspective for us to consider.

Let me just share one quote from the paper. "The climate problem cannot be ignored, nor will it be solved merely by calls for optimum climate protection. We need to find ways of implementing the necessary climate protection measures in a manner which is both socially and economically acceptable." That's reasonable counsel. Although I might doubt the authors ever intended it for this committee, I would urge that we listen to their advice.

Given the potential risk, we have to begin to explore reasonable ways of mitigating the potential economic damage, regardless of the cause of climate change.

I've strongly advocated a system based on incentives for innovative measures to reduce greenhouse gas. That's what Senator Voinovich was just talking about. We are working with the chairman on this. We have some differences. Hopefully they will be differences that we can bridge, but we do have differences. But I believe that capitalizing on innovation in the free market will meet whatever challenges are presented. We need to think out of the box.

Maybe technology will move a lot quicker in this area than the regulation that we propose. Maybe we won't need to worry about Kyoto because the technology that we are producing will export to the Third World countries and as they develop, they won't be making the same mistakes that we made. Just maybe that might work. It doesn't seem to me to make a lot of sense to try to get people involved in a treaty who won't abide by the treaty or can't abide by the treaty and don't have the means to abide by a treaty.

I don't think it is necessary to regulate through command and control carbon, for example, at powerplants to cut atmospheric levels of greenhouse gases. Let's get the technology working out there so people can make money and reduce carbon while we're doing it. We don't have to create economic damage as a means to avoid economic and environmental risk. There are other ways. We shouldn't be in the business of choosing winners and losers.

Regardless of whatever the policy answer is, one thing is for certain: absent a bipartisan approach to the resolution of this issue, we will achieve nothing, nothing at all. I've learned that as the chairman of this committee the hard way, frankly. We had two major issues when I was chairman of the committee. One was the Everglades and one was brownfields, and they have been lollygagging around here in the Senate for years. I had some strong views on both and couldn't get them passed, and we were able to work together, come up with a bipartisan solution, and found myself voting against amendments that I supported in order to stick with that solution as we move forward, and both of those pieces of legislation are now law. It is tough to deal with this. It is frustrating when you have people who differ with you on issues but you know in your heart you're going to have to compromise before you can get it done.

So, regardless of whatever the policy is, we will need to be bipartisan. We can't allow politics to trump reason and success. You know, good politics isn't always necessarily the right thing for the environment. I think we ought to let the chips fall where they may. But we do have a long tradition of bipartisanship in this committee, Mr. Chairman, as you well know, and I think it will con

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tinue. There's a tremendous diversity of opinion in this room on how to address these issues, but I'm confident that that diversity is both valuable and a challenge, and I look forward to meeting that challenge.

Thank you, Mr. Chairman.

Senator JEFFORDS. Thank you.

[The prepared statement of Senator Smith follows:]

STATEMENT OF HON. BOB SMITH, U.S. SENATOR FROM THE
STATE OF NEW HAMPSHIRE

Good morning. Today we are here to talk about the economic and environmental risks associated with climate change.

I want to welcome all of our witnesses, and a special welcome to Adam Markham who has come down from New Hampshire. Mr. Markham will be discussing a recent report coordinated by the University of New Hampshire that describes much of the potential environmental and economic impact of climate change in New England— impact on industries such as skiing and sugar maple.

This study underscores concerns I have shared with members of this committee. Small, family-owned businesses are at risk. These are just a few of risks that New Hampshire would face-associated with the potential change in climate.

There are many more aspects to the question of risks posed by climate change than we could list today. When we talk about risk, I think it is worth looking to those whose entire business is based on putting a price on risk-translating environmental risk into economic terms the insurance industry. Insurance companies are motivated to seek the clearest risk information available on subject of climate change.

This motivation is not clouded by politics or agendas, but focused squarely on the bottom line where accuracy is not a luxury. It is a necessity. If they do not estimate risks accurately, they will soon go bankrupt.

I would like reference a document that can be found on the web site of one of largest reinsurance companies in the world-Swiss Re. I would ask unanimous consent that this document be part of the record. The document bears the title "Climate Research Does Not Remove the Uncertainty: Coping With The Risks of Climate Change." The title pretty well sums up our hearing topic today.

The primary point of this paper is that climate change is happening and it poses financial risks. We still are unclear on how much of that change is natural and how much is human-induced. But for the insurance industry and their customers, CAUSES are of secondary importance in the face of weather-related losses.

As we examine the risk question, and as we consider the entirety of the climate change debate, we should focus more attention on economic risk posed by any climate change-natural or human induced. The study points out that our “vulnerability to extreme weather conditions is increasing." This is because in a global economy, local weather can have international consequences.

An example Swiss Re points to is the flooding of a Far East computer chip factory, causing supply bottlenecks for the entire technology sector.

The paper points out that climate change is not needed for that example to occur. But, evidence shows that human interference in the climate system exacerbates the problem already caused by natural climate change. The difference between natural variation in the climate, and natural variation coupled with human influences may be small. We don't know yet-the scientists will continue to try to answer that question.

There are small differences between forces that can cause either negligible damage or catastrophic loss. These are the intelligent thoughts of experienced businessmen and women-people not driven by any political agenda. Their jobs are to ACCURATELY assess the economic risks posed by climate conditions-and they provide an excellent perspective for us to consider. I would like to share one last quote from the paper,

"The climate problem cannot be ignored, nor will it be solved merely by calls for optimum climate protection. We need to find ways of implementing the necessary climate protection measures in a manner which is both socially and economically acceptable."

I believe that is reasonable counsel and even though I doubt the authors ever intended it for this committee, I would urge that we heed their advice.

Given the potential risks, we must begin to explore reasonable ways of mitigating the potential economic damages-regardless of the causes of the climate change. I have strongly advocated a system based on incentives for innovative measures to reduce greenhouse gases.

I believe that capitalizing on innovation and the free market will meet whatever challenges are presented-we should think "out of the box."

I don't believe that it is necessary to regulate-through command-and-controlcarbon at power plants to cut atmospheric levels of greenhouse gases. We don't have to create economic damage as means to avoid economic and environmental risks. There are other ways.

And we shouldn't be in the business of choosing winners and losers.

Regardless of whatever the policy answer is one thing is for certain: absent a bipartisan approach, we will achieve nothing. We cannot allow politics to trump reason and success.

Fortunately, this committee has a long tradition of bipartisanship. I can assure you this-if a partisan approach is followed on this committee with this, or any other issue, the only thing that will be achieved is failure-what a terrible legacy that would be. There is tremendous diversity of opinion in this room on how to address these issues. That diversity is both valuable and a challenge.

But, this isn't the first time this committee has been faced with such a challenge. When people put political agendas aside and are willing to work toward a constructive solution, we ultimately find common ground. I have done my best to work on all environmental legislation applying the principles of cooperation, partnership, and bipartisanship.

It is my hope, Mr. Chairman, that we will continue to work together and find a good solution.

Thank you.

Senator JEFFORDS. Our first witness is Dr. F. Sherwood Rowland, the Donald Bren Research professor of chemistry and earth system science, the University of California.

Please proceed.

STATEMENT OF F. SHERWOOD ROWLAND, DONALD BREN RESEARCH PROFESSOR OF CHEMISTRY AND EARTH SCIENCE, UNIVERSITY OF CALIFORNIA IRVINE, IRVINE, CA

Mr. ROWLAND. I'm pleased to be here to testify to your committee, Senator Jeffords.

To Senator Voinovich, I will just say that I grew up in Ohio and my undergraduate education was at Ohio Wesleyan University.

I am here really as a member of a committee that was appointed by the National Academy of Sciences and made a report to the White House last June. I am an atmospheric scientist, and I will tell you something about that report.

A natural greenhouse effect has existed in Earth's atmosphere for thousands of years, warming the Earth's surface by a global average of 57 °F. During the 20th century, the atmospheric concentrations of a number of greenhouse gases have increased, mostly because of the actions of mankind.

Our current concern is not whether there is a greenhouse effect, because there is one, but rather how large will be the enhanced greenhouse effect from the additional accumulation in the atmosphere of these greenhouse gases.

Daily, the Earth intercepts energy from the sun, much of it in the visible wavelengths corresponding to the spectrum of colors from red to violet and the rest in ultraviolet and nearby infrared wavelengths. An equal amount of energy must escape from the Earth daily to maintain a balance, but this energy emission is controlled by the much cooler average surface temperature of the

Earth and occurs in wavelengths in what is called the "far infrared."

If all of this terrestrially emitted infrared radiation were able to escape directly to space, then the required average temperature of the Earth would be 0°F. However, the greenhouse gases-carbon dioxide, CO2, methane, nitrous oxide, and others-selectively intercept some of this far infrared radiation, preventing its escape. A warmer Earth emits more infrared radiation and Earth with an average surface temperature of 57 °F was able to make up the shortfall from greenhouse gas absorption. However, at first slowly during the 19th century and then more rapidly during the 20th century, the atmospheric concentrations of these greenhouse gases increased, often because of the activities of mankind.

Other greenhouse gases have also been added, such as the chlorofluorocarbons, or CFCs, and tropospheric ozone. With more of these gases present in the atmosphere, more infrared will be intercepted and a further temperature increase will be required to maintain the energy balance.

Carbon dioxide is released by the combustion of fossil fuels-coal, oil, and natural gas-and its atmospheric concentration has increased from about 280 ppm as the 19th century began to 315 ppm in 1958 and 370 ppm now.

Water is actually the most significant greenhouse gas in absorbing infrared radiation, but the amount of gaseous water is controlled by the temperature of the world's oceans and lakes.

Methane has a natural source from swamps, but is also released during agricultural activities—for example, from rice paddies while flooded and from cows and other ruminant animals and by other processes and has increased from about 0.7 ppm in the early 1800's to 1.5 ppm around 1978 and 1.77 ppm currently.

Nitrous oxide concentrations grew from 0.27 to 0.31 ppm during the 20th century, formed by microbial action in soils and waters on nitrogen-containing compounds, including nitrogen-containing fer

tilizers.

The chlorofluorocarbons or CFCs were not a natural part of the atmosphere but were first synthesized in 1928 and were then applied to a variety of uses-propellant gases for aerosol sprays, refrigerants in home refrigerators and automobile air conditioners, industrial solvents, manufacture of plastic foams, etc.

The CFC concentrations started from zero concentration in the 1920's and rose rapidly during the latter part of the 20th century until the early 1990's. They are no longer increasing because of the Montreal Protocol, an international ban on their further manufacture.

Tropospheric ozone is a globally important compound formed by photochemical reactions as a part of urban smog in hundreds of cities. Other potential influences on temperature changes for which the global average data are still very sparse include the concentrations of particulate matter, such as sulfate and black carbon aerosols.

Measurements of surface temperatures only became sufficiently broad in geographical coverage about 1860 to permit global averaging, with improved coverage as the years passed. The globally averaged surface temperature increased about 1.1°F during the