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Thursday, March 15, 2012

"What's Wrong with Climate Change Economics?"

John Whitehead defends environmental economists:

What's wrong with climate change economics?, Environmental Economics: Er, nothing? Joe Romm:

Last week economist William Nordhaus slammed global warming deniers and explained that the cost of delaying action is $4 Trillion. As I wrote, Nordhaus’s blunt piece — “Why the Global Warming Skeptics Are Wrong” – is worth reading because, like most mainstream climate economists, he is no climate hawk.

A key reason for that, I believe, is a chronic low-balling of future temperature rise and hence future climate impacts and hence future climate damages by the mainstream economic profession. Nordhaus’s piece proves that point.  In his argument on why CO2 is a pollutant and negative externality—”a byproduct of economic activity that causes damages to innocent bystanders”– he writes:

The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade. ...

That highlighted sentence may strike some of you as a bit strange. After all, the chances that warming would be less than 2°C have been pretty small for quite some time even with aggressive action and essentially nonexistent without it. ...

[delete rant about economists ignoring more recent climate science]

The mainstream economics community has a long way to go to catch up to the reality of emissions trends and climate science.

According to the USEPA, the 2007 IPCC says:

The average surface temperature of the Earth is likely to increase by 2 to 11.5°F (1.1-6.4°C) by the end of the 21st century, relative to 1980-1990, with a best estimate of 3.2 to 7.2°F (1.8-4.0°C) ...

So, in the excerpt, Nordhaus seems to be saying that, even in a best-case scenario (2 degrees C), climate change will be bad. That seems like a reasonable thing to say to me. But in fact, Nordhaus later says this:

Restrictions on CO2 emissions large enough to bend downward the temperature curve from its current trajectory to a maximum of 2 or 3 degrees Centigrade would have large economic effects on many businesses.

Nordhaus says that only with climate policy will the temperature trend fall to what Joe Romm accuses climate economists of claiming is the business-as-usual trend.

Me thinks Joe Romm hates economists too much.

    Posted by on Thursday, March 15, 2012 at 01:55 AM in Economics, Environment | Permalink  Comments (42)


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