LAST week a media frenzy greeted the arrival of the preliminary summary of the policy proposals relating to the results from the UN International Panel on Climate Change (IPCC).

While the actual findings will not be released until May, hosts of environmental commentators around the world unleashed a tsunami of warnings, dire predictions and doomsday scenarios on their readers.

Given that no one really knows what the full report will contain - or indeed exactly by whom and how it was compiled - the agitated state of public responses says precious little about the actual state of the environment. However, it does reveal much more about the deep-rooted anxiety of our intellectual elites surrounding the uncertainty of what climate change means in economic and social terms.

The general public, media pundits and political leaders do not do uncertainty. They are simply not equipped to deal with complex probability models and a mixture of mundane and catastrophic risks. The real debate about global warming requires more than a set of yes/no answers. It requires a deep understanding of complex geophysical, environmental and climatic systems, and infinitely more intractable market and social interactions.

The entire body of our environmental science knowledge can be viewed as a sum of two main known facts.

The first one is that the level of CO2 in atmosphere has been increasing at an exponential rate since at least the mid1800s. The second is that although the rate of CO2 emissions growth per unit of output has declined almost tenfold in the past 50 years, the average global temperature has increased by only 0.5�C to 1�C since the mid-1970s.

These figures are hardly alarming. If the average annual rate of growth in global temperatures to date was less than 0.03�C, the threat of global warming rests not with the actions taken in the past, but with future climate trends.

And here lies the problem that economists are all too familiar with. Throughout the 1970s, macroeconomists used complex models based on relatively high-quality aggregate historical data to forecast macroeconomic variables, such as inflation and levels of GDP. Needless to say, it all ended in tears.

Take one classic example.

Macroeconometricians spent the whole of the 1970s predicting levels of GDP using money supply. Since both variables tend to rise in the long run, to reduce the effects of the long-term trend, economists used sophisticated de-trending techniques. They hoped to arrive at a causal relationship that would link short-term changes in money supply to fluctuations in economic output.

It took years for macroeconomists to realise that, when the data you use to predict the future is largely meaningless, de-trending does not work. Instead, as Nobel Laureates Clive Granger and Robert Lucas have pointed out, both the methods for forecasting and the theoretical models behind them were the source of the extremely high degree of inaccuracy of macroeconometric predictions.

Environmental sciences have yet to discover this simple truth.

Climatologists, including those engaged by the UN's IPCC, routinely attempt to predict the future rate of change in global temperatures using models based on historical aggregates of CO2 emissions and past temperature records. Both sets of data contain vast gaps covering the years, decades and centuries for which we know virtually nothing about either one of the variables used in forecasting. Nor do we have a solid understanding of the underlying theory of climate change.

Needless to say, none of this is reported in the IPCC or other 'panel' documents.

Yet, outside the halls of the UN, there is a real debate about the environment. Just as with macroeconomists of the 1970s, today's environmental policy heads are being outflanked by businesses that are far more accurate in predicting the future than all academics and panellists combined.

More accurate environmental models predict nothing more than a gradual and relatively modest climate warming throughout this century. If these models were to be proved correct, longer-term business opportunities aimed at addressing the need for manipulating climate would be more profitable than those aimed at drastic cutbacks and alleviation of the long-term forecasts. In other words, the real business opportunities in addressing the environmental problems in the foreseeable future may be the opposite of what we perceive them to be today.

Instead of the daft renewable energy schemes and CO2 reduction technologies, the world might find more use for climate engineering services that would allow us directly to manipulate weather. Rain seeding and cloud dispersal, solar energy targeting, hurricane diversion and flood prevention systems may all be in far greater demand than wind energy and bio-gas recovery.

The former technologies also offer far more promise for our ability to compensate for the potentially more rapid global warming.

When it comes to developing alternatives to fossil fuels, there are real business opportunities that lead well into the future.

These include helium fusion technologies, biotech research into new fermentation and distillery techniques, and genetic engineering.

Incidentally, none of these market-driven initiatives is being pursued or encouraged in Ireland at this time.

And herein lies the real risk of climate change - unless Irish policy-makers get out of the stalemate game of cutemissions-now-or-doomsday-isupon-us policies promoted by the IPCC, the challenge of global warming may turn into a loss of future opportunities for Ireland.

Here is one comment on UN's IPCC from Czech president Vaclav Klaus: "Global warming is a false myth and every serious person and scientist says so. It is not fair to refer to the UN panel. IPCC is not a scientific institution: it's a political body, a sort of non-government organisation of green flavour.

It's neither a forum of neutral scientists nor a balanced group of scientists. These people are politicised scientists who arrive there with a one-sided opinion and a one-sided assignment.

Also, it's an undignified slapstick that people don't wait for the full report in May 2007 but instead respond, in such a serious way, to the summary for policy-makers where all the 'buts' are scratched, removed, and replaced by oversimplified theses. This is clearly such an incredible failure of so many people, from journalists to politicians."

Dr Constantin Gurdgiev is an economist and editor of Business & Finance magazine constantin@tribune. ie