I begin with a proposition. There are a great many pressing problems in the world. There is population growth and economic development, with attending pressures on resources - including food and that other essential, water. There is a continuing global security crisis, augmented by the rise in terrorism. There is the chronically inequitable distribution in resources between the rich nations of the North and the poor nations of the South. And there is the steadily growing body of evidence for a major reorganization of the global climate regime.

My proposition is that the last of these is the most serious threat - not only because it will profoundly affect the lives of our children and our grandchildren in a direct way, but also because it will interact powerfully with every single one of the other problems I have listed.

Let me begin with the science underlying climate change. Last week I helped organize a symposium and briefing session on climate science for press, policy-makers, and the public, supported by the Hewlett Foundation and with co-sponsorship from the Conference Board. We had ten of the most distinguished climate scientists in the United States, led off by Sherry Rowland, the Nobel Laureate in Chemistry. The purpose was to make a careful assessment of the science - what we know for sure, what we think likely, and what are interesting but unproven possibilities.

So here is a short summary of what we know. General Circulation Models - climate models that take into account variations in the sun's energy, volcanic activity, and other natural phenomena - explained fluctuations in average global temperature very well over most of the past thousand years. But for the past hundred years, these same models faithfully reproduce global temperature history ONLY if they include the greenhouse gases - carbon dioxide, methane, and chlorofluorocarbons - that are by-products of human economic activity. That is why the average temperature of the globe has risen by about one degree F, and the sea level has risen by between 10 and 20 cm., in the last century. The primary causative agent is carbon dioxide, which in preindustrial times was about 280 ppm/v and has now reached 380ppm/v. It is rising continually as the activities that produce it are proceeding on a business as usual basis. That is because the failure of the Kyoto protocol - a failure both because its targets were inadequate, and also because they were unattainable by many of the participating nations - has left us without any basis for meeting the goals of the 1992 Framework Convention on Climate Change. Just to remind us, the US is a signatory and a party to that agreement, under which we are committed to limit atmospheric concentrations of greenhouse gases to avoid "dangerous anthropogenic interference with the climate system."

Why, a dozen years later, is there some doubt about the dangers of this interference? The C02 we add to the atmosphere will stay there; its average residence time is a century. There is no disagreement about whether average global temperature will rise; it will. The scientific debate is about how much. For the future we depend again on the General Circulation Models. It's reassuring that when applied to past climates in "back-casting" efforts, like the example I gave a moment ago, these actually predict climate history so accurately. Perhaps more interesting, they regularly somewhat underestimate the magnitude of the real climate changes - that is, Nature regularly turns out to be harsher than the models suggest. Projecting the models into the future, the Intergovernmental Panel on Climate Change, and an evaluation by the National Academies prepared at President Bush's request, estimate that by the end of this century, the increase in average global temperature will be between 1.4 and 5.8 degrees Centigrade.

Why such a range? These models, like most, contain some uncertainties. Some of these are scientific: how increased cloud cover might affect the outcome, since clouds can either cool the climate by reflecting sunlight from above, or warm it by trapping heat that is leaving from below; how changes in the earth's albedo due to melting ice might accelerate heating, and so on. Aerosols produced by volcanic eruptions have a cooling effect, as the eruption of Mt. Pinatubo did in giving us two unusually cool years in the early 90's. Other uncertainties are economic and social: we don't know how national policies and international agreements will serve to restrain the amount of greenhouse gases we are adding.

These uncertainties - about half due to the models themselves, and the rest to social and economic unknowns -- have provided arguments for those who prefer to postpone economically difficult approaches for controlling greenhouse gas emissions. But it is important that even at the very lowest estimates, there will be substantial changes in the nature of human life on the only planet we currently occupy. The rather modest impacts of the past century have already produced profound changes in regional climate dynamics. Substantial ice-sheet melting and retreat is taking place both in the Arctic and in the West Antarctic ice sheet. In the Arctic, where climate warming has been extreme, sea ice is sharply diminished and rivers become ice-free much earlier. Low latitude mountain glaciers are shrinking; the famous snow-capped summit of Kilimanjaro will be bare within fifteen years, converting hundreds of old African safari shots into historic treasures.

Biological cycles are experiencing the effects of warming, with upward extensions of the range of Alpine flora and advances in the time of flowering or breeding by an average of 5 days per decade. The models have all also predicted more frequent and severe weather events, and we have had heat waves in the upper Midwest and Paris, accelerated beach erosion on coasts all over the world, and disastrous floods and landslides in Central America.

That is now, but of course we are more interested in the future. What the models tell us unambiguously is that the climate system is headed for further disruption. The standard scenario foresees a steady, ramp-like increase in average global temperature, with a concomitant rise in sea level, but records of past climate tell us that it is riddled with abrupt changes - something that the models fail to predict well. A possible alternative involves a change in major ocean circulation patterns - especially in the North Atlantic, where a clockwise gyre brings warm equatorial water up via the Gulf Stream. As it flows Northward and then crosses Eastward, it is cooled by the atmosphere, becomes more saline through evaporation, and then sinks to return as a cold deep current. If large discharges of fresh meltwater or rain made this water less dense, it could fail to sink and thus disrupt the entire cycle.

A fictionalized version of such a scenario appears in the disaster film "The Day After Tomorrow," which you should see only for amusement. Beyond that silliness lies a real prospect that a gradual change in average global temperature could intercept the threshold for some non-linear, dynamic process, triggering abrupt changes in either direction. Of course there is uncertainty: we are engaged in a large-scale, uncontrolled experiment on the only planet we have.

Let's consider some collateral impacts. A group of us at Stanford was asked by the Carnegie Commission on Preventing Deadly Conflict to look - among other things -- at ways in which environmental change might alter the circumstances under which human populations might be placed. Climate change was an important variable. One example we looked at was the impact of sea level rise, along with storm surges from extreme weather events, on the Ganges-Brahmaputra delta. Flood disasters already occur there regularly. 15 million people live within 2 meter above sea level, and are vulnerable to abrupt displacement. We know they will have to go somewhere; in the past they have fled in much smaller numbers to Bengal. The security problems arising from a massive influx of a traditionally hostile population, combined with an almost certain high level of cholera infection, are not difficult to imagine.

Water is a desperately important resource in most parts of the world, and drought is often followed by famine or emigration. Here in the US, warmer winters threaten mountain snowpacks and will soon demand the revision of interstate and international water allocation agreements. Maritime rivers are already undertaking management steps to deal with saline intrusions due to sea level rise or storm surges. In Great Britain, the barrier that protects London from occasional flooding of the Thames estuary is now being used six times a year compared to less than once a year in the 1980's.

Agriculture, of course, is the most essential of human activities. The regional distribution of global warming impacts may be at least temporarily kind to temperate-zone food production. But the models all predict an increased incidence of mid-continent droughts as climate change progresses, and we know that the American Midwest has in the past experienced droughts both deeper and longer than the one in the 30's that led to the Dust Bowl migrations. Irrigation is an answer to drought, but in the six High Plains states, dryland wheat production depends upon the Ogallala Aquifer, a buried ice-age storage well that is being so rapidly depleted that it is already unusable in its southern portion. And in the tropics, where people are poorest and capacity to adapt is minimal, the consequences of even modest warming will be far more serious.

Infectious diseases are spread by vectors, like the Anopheles malaria mosquito, that have their own patterns of reproduction, movement, and climate sensitivity. In parts of Africa where vertical topography dominates, warmer and rainier seasons cause malaria incidence to rise in higher-altitude locations. In a warmer and wetter world, more of the same can be expected.

So climate change is not an isolated problem. Instead, it is likely to interact with most of the other problems humans face all over the world. Thus I hope that this meeting will help encourage us to prepare a sound portfolio of risk-reducing measures. These will not, I must tell you, bring us out of the woods. Our destiny is partly built in -- to the heat that is already locked into our oceans, to the greenhouse gases that are already in our atmosphere and will increase by another 50% or more no matter what we do, and to the justified economic appetites of the developing world. What we will be talking about, it should be clear, are ways of limiting the damage to manageable levels, NOT preserving the status quo. We lost that years ago.

So the contemporary policy challenge amounts to a bet about risk: are the consequences of business as usual likely to entail costs greater than those of beginning to mitigate those consequences now? Other nations - the UK, several EU countries, and Japan - are making substantial commitments. Some industries - British Petroleum, Royal Dutch Shell, and Swiss Re, for example - have undertaken steps of their own. The insurance burden from the exploding rates of coastal erosion and storm damage has pushed the insurance industry to lead. If companies fail to participate in emissions reduction and join with others to resist such measures, questions are already being raised. If you believe so strongly that climate change is a myth, Swiss Re might say, then surely you won't mind a climate-related events exclusion from your Directors and Officers insurance policy.

But we can't count on voluntary actions, and the United States so far has only announced a long-range research program that, although it looks reasonable, makes NO current commitments to mitigate our contribution, about a quarter of the world's, to the global warming problem. We must have a more aggressive national policy to purchase insurance against this risk.

It will not be cheap. We have old, coal-fired power plants in this country; it may take subsidies to replace them with modern, less carbon-intensive facilities that run on natural gas. States like mine are already driving the transportation sector to ultra-low emission, and that may move the domestic industry in a positive direction. Some of us will have to give up our reflex opposition to nuclear power and begin comparing its risks realistically against those of global climate change. Although the room for alternative energy sources (photovoltaic, wind, geothermal) is limited, these options need encouragement. Energy conservation measures have, at several times in the past, turned economic predictions on their head by their success, and the right incentives could yield real benefits there.

The portfolio I have just described is needed, but will not be enough. We know that market-based mechanisms for emissions control can work, because they did in the 1990 Clean Air Act Amendments that limited SO2 emissions. The bill proposed by Senators McCain and Lieberman would mandate a cap-and-trade program for controlling carbon dioxide emissions. Similar systems are being considered by regional assemblages of states in the Northwest and the Northeast, and that may encourage the development of a national system - which could then build trading relationships with other nations that are moving toward similar regimes. A case for this approach is elegantly made in the Council on Foreign Relations Policy Initiative on Climate Change, by my colleague David Victor.

The United States is in a position of natural leadership here. It is the most powerful nation - and the world's leading producer of greenhouse gases. Plainly it is in its own national interest, in multiple ways, to reduce its consumption of fossil fuels. To see it failing in this most vital, globally sensitive matter is a national embarrassment.

Although keeping score is difficult, the State Department's annual report on international terrorism, released last month, provides the best government data to answer this question. The short answer is "No," but that's not the spin the administration is putting on it.

"You will find in these pages clear evidence that we are prevailing in the fight," said Deputy Secretary of State Richard Armitage. As evidence, the "Patterns of Global Terrorism" report says that worldwide terrorism dropped by 45 percent between 2001 and 2003. The report even boasts that the number of terrorist acts committed last year "represents the lowest annual total of international terrorist attacks since 1969."

Yet, a careful review of the report and underlying data supports the opposite conclusion: The number of significant terrorist acts increased from 124 in 2001 to 169 in 2003 -- 36 percent -- even using the State Department's official standards. The data that the report highlights are ill-defined and subject to manipulation -- and give disproportionate weight to the least important terrorist acts. The only verifiable information in the annual reports indicates that the number of terrorist events has risen each year since 2001, and in 2003 reached its highest level in more than 20 years.

To be sure, counting terrorist acts is not as straightforward as counting the number of SARS victims. Specialists have not agreed to any test that would unambiguously qualify an act as one of international terrorism. But in the words of the Congressional Research Service, the State Department's annual report is "the most authoritative unclassified U.S. government document that assesses terrorist attacks."

So how did the report conclude that international terrorism is declining?

It accomplishes this sleight of hand by combining significant and nonsignificant acts of terrorism. Significant acts are clearly defined and each event is listed in an appendix, so readers can verify the data. By contrast, no explanation is given for how nonsignificant acts are identified or whether a consistent process is used over time -- and no list is provided describing each event. The data cannot be verified.

International terrorism is defined in the report as "premeditated, politically motivated violence perpetrated against noncombatant targets" involving citizens or property from multiple countries, "usually intended to influence an audience." An event "is judged significant if it results in loss of life or serious injury to persons" or "major property damage."

A panel determines whether an event meets this definition, but the State Department refused to tell us the members of the panel or the practices used to count nonsignificant terrorist acts.

We do know that the definition leaves much room for discretion. Because "significant events" include such things as destroying an ATM in Greece or throwing a molotov cocktail at a McDonald's in Norway without causing much damage, it is easy to imagine that nonsignificant events are counted with a squishy definition that can be manipulated to alter the trend.

The alleged decline in terrorism in 2003 was entirely a result of a decline in nonsignificant events.

Another curious feature of the latest report is that its catalogue of events does not list a single significant terrorist act occurring after Nov. 11, 2003, despite averaging 16 such acts a month in the rest of the year.

The representation that no terrorist events occurred after Nov. 11 is patently false. The bombings of the HSBC Bank, British Consulate, and Beth Israel and Neve Shalom synagogues in Istanbul by individuals associated with al Qaeda occurred on Nov. 20 and Nov. 15, respectively. Additionally, the report mentions the bombing of the Catholic Relief Services in Nasiriyah, Iraq, on Nov. 12 but somehow omits it from the official list of significant events.

So the record number of 169 significant international terrorist events for 2003 is undoubtedly an understatement. It is impossible to know if these and other terrorist events were left out of the State Department's total of events.

Despite the lack of transparency and the rose-colored graphs, the department's data reveal that administration policies in the past year have not turned the terrorist tide. Of course, it is impossible to know how many terrorist acts would have occurred absent the war on terrorism, but it is unambiguous that the number of significant international terrorist acts is on the rise.

The fact that the number of nonsignificant terrorist acts has headed down -- even if true -- is, well, nonsignificant. What matters for security is the number of significant acts. It is regrettable that one casualty in the war against terrorism has been the accurate reporting of statistics. This seems to be another fight we are losing.

In Silicon Valley 200,000 workers have lost their jobs since 2001, albeit only 6,000 of those jobs headed overseas, Stanford University researcher Rafiq Dossani estimates. But that number will grow, he says, as the offshoring pace accelerates for jobs in software programming and product development. Already 150,000 engineers hack away in Bangalore--20,000 more than in Silicon Valley, the Times of India reports. Cisco used only a few Infosys workers in Bangalore six years ago; now it uses almost 300 contract staff, plus 550 full-fledged employees in its own Bangalore office. In two years PeopleSoft's Bangalore offshore force has grown to 200 freelancers and 350 full-timers.

In one and a half days of academic workshops, scholars from multiple disciplines and across the country and Europe discussed the issue of information incompleteness, and the role in this of the media, and possible media bias. Corporate performance and the media were also discussed.

Ulrike Malmendier of Stanford and a collaborator presented results indicating that media attention on CEOs may be detrimental to the CEOs' future performance. And Lisa George of Hunter College attempted to demonstrate a significant liberal bias in a study comparing the leanings of The New York Times, USA Today, Fox News and others, with the average member of Congress.

Other presentations focused on how media coverage might influence asset prices. Luigi Zingales of the University of Chicago, for instance, attempted to demonstrate that stock prices are most reactive to the category of earnings emphasized by the press. Finally, Andrea Prat of the London School of Economics and David Stromberg of Stockholm University focused on the breakup of government-controlled media and the impact on politics. They examined voter turnout when people have more media outlets to chose among. They attempted to show that Swedish viewers who switched to commercial television become more active voters, and better informed.

The topic of the second-day panels was the corporate scandals that have shaken Wall Street, and the economic crises and bubbles that have troubled international financial markets. The main question examined was the degree to which the media was culpable in hyping or failing adequately to report in the lead-up to these events, or whether as a whole it handled them well. Other questions were whether the media is capable of reducing market failures, increasing accountability and improving transparency, and the degree to which people ought to rely on the media to play these roles.

Among other speakers were Andrei Shleifer of Harvard University, Sendhil Mulainathan of MIT and James Hamilton of Duke University. The journalists included the authors of two books on the Enron scandal: The Wall Street Journal's John Emshwiller, co-author of 24 Days, and Fortune magazine's Bethany McLean, co-author of The Smartest Guys in the Room. Also discussing corporate scandals was the Financial Times' Richard Waters. Discussing Russia and economic crises was Fortune magazine's Bill Powell and the Economist magazine's Edward Lucas.