## Emission pathways

Credit: Su et al. (2017)

I’m always a little concerned about writing about economics/policy, because I don’t have any specific expertise and find myself easily confused. However, I thought I would briefly discuss a figure that Glen Peters posted on Twitter (he also, kindly, clarified a few things via email). The figure (on the right) is from a paper called Emission pathways to achieve 2.0 and 1.5oC climate targets.

As I understand it (and I’m happy to have this clarified or correct if I’m wrong) the figure shows a number of different future carbon price pathways (top panel) and the corresponding percentage GDP loss (bottom panel). Green is a pathway that keeps warming below 1.5oC, blue keeps warming below 2oC, and orange is an optimal pathway, which leads to warming of about 2.5oC. The dashed and solid lines are two different forms of the model, one in which land use and non-CO2 GHGs are fixed (solid) and the other in which they are dynamically adjusted (dashed).

Here’s where I worry that I might be confused. As I understand it the GDP loss is relative to some kind of baseline in which GDP continues to grow. The GDP loss is simply the percentage reduction in GDP. In other words, if we follow a pathway that would keep warming below 1.5oC, in the middle of the century GDP would be 3-4% lower than the baseline case. Another way to think of this is that it produces a small change in GDP growth (for example, in one of the scenarios presented by the IPCC, GDP growth might drop from 2% per year, to 1.94% per year).

My first thought was, wow this seems pretty small, and I tend to think that it is. Of course, you can make it sound big if you want to; if GDP continues to grow, then a 3% reduction in GDP is a big number (a small percentage of a big number is still a big number). Also, the pathways that keep warming below 1.5oC and 2oC would (by around the middle of the century) have losses 2-3 times greater than the optimal pathway, which – again – sounds quite large.

Some additional comments. As I understand it, the baseline pathway is some idealised pathway in which GDP simply continues to grow, unaffected by climate change. It therefore, does not, and cannot, exist. The GDP losses are therefore (if I have this right) relative to a reality we can never actually occupy. The optimal pathway is (again, as I understand it) essentially the pathway over which the costs due to climate policy match the benefits of reduced damage due to climate change [Update: see end of post]. One might immediately argue that this is the pathway that we should then follow. However, I think there are some things to bear in mind.

As I understand it, the uncertainty in climate change damages is quite large. Therefore, it seems that the optimal pathway has a reasonable probability of being quite different to what is presented here. Similarly, I would expect the uncertainty in the policy costs to also be large. In some sense, it would seem unlikely that we can reliably estimate the optimal pathway decades into the future. However, what this analysis does seem to show is that we could introduce a carbon tax that could rise (over the next couple of decades) to more than a \$100/tCO2 (2005 prices) that could potentially address climate change without causing massive disruption to the global economy. The key thing, in my view, is simply to get started, rather than arguing about precisely the pathway that we should aim to follow.

I suspect this is best summed up by the quote from Otto Edenhofer, co-chair of the IPCC WGIII working group, who said:

It doesn’t cost the world to save the planet.

Update:
As James Annan points out in this comment, the optimal pathway is not the pathway over which the costs match the benefits, but over which the marginal costs match the marginal benefits. What this means (which I hope I get right this time) is essentially that if you followed a pathway with a slightly higher carbon tax, then the increased costs (relative to the optimal pathway) would be greater than the increased benefits, and if you followed a pathway with a slightly lower carbon tax, the reduction in costs would be smaller than the reduction in benefits. This site explains it quite well.

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### 159 Responses to Emission pathways

1. A quick additional comment. Although this work would seem to suggest that one could follow a carbon tax pathway that would keep warming below 1.5oC and only reduce GDP (mid-century) by a few percent, if you look at the emission pathway this would seem to require a substantial drop in emissions in the next decade. It is hard to see how this wouldn’t be very disruptive.

2. Macro economic growth is reduced to the change of the number of producers times the change of average productivity. Most of Europe and Asia have declining numbers of working age producers, so that factor implies negative growth. These places can still grow, but they have to make up for fewer producers by increasing productivity. But most improvements in productivity imply increases in efficiency which also implies increased energy efficiency. So both fewer producers and the motivation for efficiency imply continued falling rates of emissions, at least from the developed world.

Taxes would reduce growth, of course, but also reduce efficiency in that most improvements to efficiency require capital investment.

3. James Annan says:

“The optimal pathway is (again, as I understand it) essentially the pathway over which the costs due to climate policy match the benefits of reduced damage due to climate change.”

no, it’s the pathway over which the marginal cost of climate policy matches the marginal reduction in damage.

4. angech says:

“In some sense, it would seem unlikely that we can reliably estimate the optimal pathway decades into the future.
the uncertainty in climate change damages is quite large.
he uncertainty in the policy costs to also be large.”
“In some sense, it would seem unlikely that we can reliably estimate the optimal pathway decades into the future.”
The words estimate, future and reliability do not seem to go well in this projection.

JC fortuitously has a post up on uncertainty as well, just after yours.
As a random walk disciple, I expect Climate models to overshoot and undershoot the observations as they develop.
They consistently overshoot.
When we talk of costs we never talk of benefits, never.
It is overshoot all the way.
How can we have a fair, as in reasonable discussion, when half the side of the discussion is completely ignored. How can we not see that we need unders as well as overs in any reasonable discussion.

5. James,
Does the term marginal have some meaning that I’ve missed, because apart from that, I can’t quite see why what I’ve said is different to what you’ve said.

6. angech,

They consistently overshoot.

Except, they don’t.

7. verytallguy says:

“When we talk of costs we never talk of benefits, never.”

Except this is total and compete bollocks, eg

https://skepticalscience.com/global-warming-positives-negatives-intermediate.htm

Your whining reminds me of teh Donald.

8. verytallguy says:

Hmm competing bollocks. Not sure that’s a great idea, though the current UK election is maybe a great example.

9. I find it troubling that the paper makes no mention of the social discount rate being used. In the DICE-2013R model the social discount rate is a parameter to be specified by the user.

As Frances Wooley wrote: “If you want to know an economist’s views on things that matter, forget about minimum wages or free trade. The most important question of all is “what is the social discount rate”? ”

Of interest on the topic might be the recent paper by Stephan Lewandowsky, Mark C. Freeman and Michael E. Mann: Harnessing the uncertainty monster: Putting quantitative constraints on the intergenerational social discount rate

10. Joshua says:

==( When we talk of costs we never talk of benefits, never. }==

As in? : in:

–snip–

Simply put, the current focus on CO2 emissions reductions risks having a massively expensive global solution that is more damaging to societies than the problem of climate change.

-snip–

11. Andrew J Dodds says:

As an aside, the cost of austerity politics over the past 7 years is reckoned to be c. 10% of GDP (based on extrapolations of per austerity trends). See Simon wren-lewis’s blog Mainly Macro for more details. If we can afford 10% for no good reason..

(Note, I’m on a tablet, this is from memory)

12. oarobin says:

attp,
happy to see a post about climate policy! i wouldn’t worry about being confused because if you are confused on an issue then most of the public probable are even more confused and i would like to see the honest / open discussion that your site is known for.

James Annan point :

no, it’s the pathway over which the marginal cost of climate policy matches the marginal reduction in damage.

is probably that the cost for an additional unit of emission under climate policy (carbon tax say) matches damages cause by an extra unit of emissions.

that is the fact that the ratios match does not mean that the total cost and damages match. see this link for futher explanation but i am not well studied in economics so that may well b very wrong.

13. Actually, James’s comment where he says

no, it’s the pathway over which the marginal cost of climate policy matches the marginal reduction in damage.

has finally reminded me of something I was wondering/confused about. If the marginal cost of climate policy is relative to some baseline, then it would seem that it’s really relative to a reality that we can never actually occupy. Maybe I am wrong about this (and happy to be corrected if I am) but this would seem to suggest that the the optimal pathway is a cost benefit analysis in which the cost of climate policy is really relative to some kind of completely unrealistic future (in the sense that we can’t actually follow the pathway that this cost is being estimated against). Maybe this is still a reasonable way to do these analyses, but it does seem rather strange if this is actually the case (or maybe I’m still just confused about this type of estimate).

14. -1=e^iπ says:

@ ATTP –
“James,
Does the term marginal have some meaning that I’ve missed, because apart from that, I can’t quite see why what I’ve said is different to what you’ve said.”

Marginal means partial derivative.

15. -1=e^iπ says:

Better cost-benefit analysis is needed to properly take into account all the uncertainty. I propose expected social welfare maximization be done to do this. See https://curryja.files.wordpress.com/2015/11/expected-social-welfare-maximization-2.pdf

16. -1=e^iπ says:

As it is, the world’s best Integrated Assessment models suggest that it’s not optimal to limit warming to 2C. In that case, there are serious problems with the Paris agreement.

17. -1,

Marginal means partial derivative.

Thanks, but I’m still going to have to think about what this means.

I would be very surprised if your alternative deals with the uncertainties in a better way. I’ve probably said this to you before, but if you really think you have some kind of better analysis, you really should publish it. This isn’t only because it might give it a bit more credence, but also because it’s probably the easiest way to get it noticed.

In that case, there are serious problems with the Paris agreement.

Only if you assume that the optimal pathway is the one we should follow. This need not be the case. We are allowed to prioritise other factors.

18. Ahh, okay I think I’ve finally got it and, and should probably have read oarobin’s comment more closely (-1’s helped).

is probably that the cost for an additional unit of emission under climate policy (carbon tax say) matches damages cause by an extra unit of emissions.

that is the fact that the ratios match does not mean that the total cost and damages match. see this link for futher explanation but i am not well studied in economics so that may well b very wrong.

And this probably largely clarifies what I said here (although I will have to think about this a little more).

19. This site has what looks like a nice illustration of how you calculate marginal costs from total costs.

20. -1=e^iπ says:

@ ATTP –
“Thanks, but I’m still going to have to think about what this means.”

Like let’s say I have a company that has costs C which are a function of output X. The C(X) would be your costs and the partial derivative of C(X) with respect to X would be your marginal costs.

“if you really think you have some kind of better analysis, you really should publish it.”

I was making an argument for adopting an expected social welfare maximization approach, not an independent analysis. Most of the cost benefit analyses are not doing an expected approach primarily because it is a lot harder to do (though not unfeasible). I referenced some papers that did try to do such an approach to some extent, but these papers are the exception rather than the rule right now.

“Only if you assume that the optimal pathway is the one we should follow.”

If you think that they are using an incorrect social welfare function, then maybe you should argue why it is wrong and suggest a correction.

21. -1,

Like let’s say I have a company that has costs C which are a function of output X. The C(X) would be your costs and the partial derivative of C(X) with respect to X would be your marginal costs.

Thanks, I eventually got there.

I was making an argument for adopting an expected social welfare maximization approach, not an independent analysis.

Indeed, but I don’t see why – if what you’re presenting is new – you shouldn’t try to get it published. I don’t think a post on Judith Curry’s blog is going to get all that much notice.

If you think that they are using an incorrect social welfare function, then maybe you should argue why it is wrong and suggest a correction.

This isn’t what I was suggesting. Your argument (if I understand it) is that if the optimal pathway is one that leads to something like 2.5oC of warming, then there are serious problems with the Paris agreement since it’s arguing for less than 2oC of warming and, hence, would imply following a non-optimal pathway. However, there are plenty – in my view – of perfectly valid arguments as to why we can’t necessarily properly cost all the impacts. Is it okay if the Great Barrier Reef dies? Is it okay if Arctic sea ice disappears in summer? Is it okay if we lock in more than 10m of sea level rise, even if that won’t happen for centuries? You might think that you have anwers to all these questions, but there isn’t any reason why others can’t have different answers, or different views as to the costs of these impacts.

22. -1=e^iπ says:

If you don’t think various impacts are costed properly, then I suggest you try to cost them better and publish the results.

I recognize that the integrated assessment models are flawed, and I think all the people working on them do as well. However, I’d rather go with the best flawed model available to make decisions with than no model at all.

The Paris agreement, not only does it suggest a target that is not optimal according to the best available integrated assessment models, but it is inherently against the possibility of allowing more warming than 2C. So even if the Paris had a more reasonable limit like 3C (which would be more in line with integrated assessment models) I would still be against it as it is inherently against updating policy based on new information. Because based on the information we have now, we don’t know if the optimal end temperature will be 1.5 C, 2.5 C or 4 C, so we should be open to updating any such target as we get better information, rather than decide on a target in 2015 and then deny all future generations the possibility to update the target even though they will have much better information to make decisions with. Rather than focusing on some target all the way in 2200 or whenever, the focus should be on obtaining a Global Pigouvian Tax on CO2 emissions, where the level of taxation is determined using the best available information we have to day and then frequently updated as we get better information.

23. -1,

If you don’t think various impacts are costed properly, then I suggest you try to cost them better and publish the results.

Not quite what I suggested. I suggested that there are some things that you can’t really cost, not in some accurate way. I think people are entitled to argue that we should limit warming so as to not kill most of the Great Barrier Reef, even if a cost-benefit analysis suggests that the optimal pathway would be one where it was likely to die.

I recognize that the integrated assessment models are flawed, and I think all the people working on them do as well. However, I’d rather go with the best flawed model available to make decisions with than no model at all.

Well, yes, but that’s largely why I think the real solution is simply to get started, rather than really trying to determine – now – what we would expect the carbon tax to be in 2050. All of these models seem to suggest a rising carbon tax that starts at ~10s of \$s per tCO2.

My issue with all (not just yours) criticism of the Paris agreement is that at least the Paris agreement is trying to develop some kind of strategy. Is it the best strategy? Almost certainly not. However, undermining it doesn’t seem to be a particularly good way of developing some better strategy. The reality – at the moment – is that Paris will probably not keep warming below 2oC, but this doesn’t seem – to me at least – like a good argument for not having some kind of agreement.

Rather than focusing on some target all the way in 2200 or whenever, the focus should be on obtaining a Global Pigouvian Tax on CO2 emissions, where the level of taxation is determined using the best available information we have to day and then frequently updated as we get better information.

Well, yes, I largely agree with this. I don’t really think we have some kind of accurate estimate for what the level should be, but at least introducing one would be a step in the right direction and – as you say – we could then update it frequently.

24. -1=e^iπ says:

“I suggested that there are some things that you can’t really cost, not in some accurate way. I think people are entitled to argue that we should limit warming so as to not kill most of the Great Barrier Reef”

You can try. With respect to the Great Barrier Reef, try to measure how much people value it, their willingness to pay, etc. We live in a dying universe where everything is of finite value. Just a matter of trying to determine what that finite value is.

If after the costs of the great barrier reef are taken into account in a good cost benefit analysis it is found that the optimal pathway results in most of the Great Barrier Reef dying off, and you have people going ‘but the great barrier reef’, then I think those people are being completely unreasonable. Yes they are entitled to argue their position; people are entitled to be wrong. But you also have to take into account all the other impacts of mitigation policy, such as the additional people that will die of cancer due to less government spending on healthcare as governments will have less economic resources due to imposing policies that result in an increase in the price of energy. How many people would you be willing to sacrifice to cancer to preserve the great barrier reef? 10? 1000? 1 trillion? It’s a matter of balance.

It’s one thing to disagree on the details of doing a proper cost-benefit analysis. It’s another thing to reject cost benefit analysis completely.

25. BBD says:

-1

the focus should be on obtaining a Global Pigouvian Tax on CO2 emissions, where the level of taxation is determined using the best available information we have to day

What did you have in mind?

26. -1=e^iπ says:

“rather than really trying to determine – now – what we would expect the carbon tax to be in 2050.”

The externalities associated with CO2 emissions are quite complex. The net damages associated with a ton of CO2 emitted today due to damages it will cause in 2050 depend highly on what level of temperatures and thus what level of CO2 there will be in 2050. Generally, a higher future level of CO2 / temperature will result in higher marginal damages due to an additional unit of CO2, thus if we expect a higher emission pathway will occur then this will mean that the net external cost of a unit of CO2 emitted today will be higher.

So we can’t determine the optimal level of tax today without trying to predict what the optimal level of tax will be in 2050 and so on. That’s why integrated assessment models need to try to solve the optimal taxation level for all years simultaneously.

27. -1=e^iπ says:

“like a good argument for not having some kind of agreement.”

I want an agreement. I just want a better agreement. And I think that having such a horribly flawed agreement like the Paris agreement can create a sense of complacency for obtaining a better agreement and therefore will do more harm than good.

28. Eli Rabett says:

Two points. First, when you talk about marginal costs, a wise bunny asks over what period of time with what social discount rate.

Second, there are lots of papers on the costs of damages and benefits in various areas, IAMs pretty much ignore these in their damage functions except for FUND and FUND bollicks just about everything, especially ag. (http://www.economicpolicyresearch.org/images/docs/research/climate_change/IACC_DamageFunctions_FINAL_1.pdf http://sei-us.org/Publications_PDF/SEI-Ackerman-Critique-of-Damage-Estimates-2010.pdf)

29. angech says:

verytallguy says:
“When we talk of costs we never talk of benefits, never.
Your whining reminds me of teh Donald.”
Good point? Only skeptics whine, correct?
Official Climate Agenda is Always the Negative Side; Never Fair and Balanced by Tim Ball at WUWT 9 hours ago echos my comment as well.
The basic point remains.
Not a whine, a legitimate point.
Models,forecasts and projections and observations have to have a mean they work about.
When the comparison occurs there should be a spread around the real results.
When the predictions never go under the mean, when the outcomes never consider the positive factors, when only one side is ever considered to whine,you cannot expect the arguments to be fair and balanced.

30. -1,

It’s one thing to disagree on the details of doing a proper cost-benefit analysis. It’s another thing to reject cost benefit analysis completely.

I don’t really agree. I think people are entitled to argue that there are certain outcomes that we should avoid, such as not killing the Great Barrier Reef. I don’t think that there is some universal rule that the only way to inform policy is through cost benefit analyses.

31. -1,

So we can’t determine the optimal level of tax today without trying to predict what the optimal level of tax will be in 2050 and so on.

Yes, I realise that we need some form of guidance as to what it should be today. However, if we’re planning to update it frequently, it’s not clear that it needs to be all that accurate (which is probably impossible anyway). Just start somewhere and update it frequently [Edit: of course, a perfectly sensible point to start would probably be on what is estimated to be the optimal pathway.].

32. -1,

I want an agreement. I just want a better agreement. And I think that having such a horribly flawed agreement like the Paris agreement can create a sense of complacency for obtaining a better agreement and therefore will do more harm than good.

So, you do want agreement, just not the agreement that we already have? So, you are happy to agree with others, as long as they agree with what you want? You might want to think about this a tiny by longer.

33. This article seems relevant to -1’s claim that the Paris agreement is seriously flawed because it has a temperature target that is not cost effective.

34. Marco says:

“Never Fair and Balanced by Tim Ball at WUWT 9 hours ago echos my comment as well.”

If you find yourself echoed in Tim Ball’s comments, you need to do some serious introspection. As a friend once commented to me “A broken clock is correct more often than Tim Ball”.

35. If you find yourself echoed in Tim Ball’s comments, you need to do some serious introspection.

Yes, indeed. It’s certainly my view that if you ever find yourself agreeing with Tim Ball, you should probably stop and give it a great deal of thought.

36. -1=e^iπ says:

“I don’t think that there is some universal rule that the only way to inform policy is through cost benefit analyses.”

Sure, we could use the bible or quran for guidance. Or perhaps we go with ‘ecojustice’. Or maybe we could read tea leaves to determine what to do.

ATTP, I have some questions for you, which, if answered, could help shed light on your reluctance to accept cost-benefit analysis as the way to determine climate change policy (I’ll explain why after you answer them). Are you a person of faith? Were you raised in a religious (in particular Christian) household? Did you grow up in the UK?

37. -1,

Sure, we could use the bible or quran for guidance. Or perhaps we go with ‘ecojustice’. Or maybe we could read tea leaves to determine what to do.

You seem to be rather over-interpreting what I’m suggesting. I’m simply suggesting (as I think is self-evident) that a cost-benefit analysis is not the sole definer of policy. I also think that would give too much power to those who do cost benefit analyses. In the same way as the science does not, for example, tell use what we should do, I don’t think economic analyses tell us what we should do. There are many other factors that will/should influence the decisions that we make.

your reluctance to accept cost-benefit analysis as the way to determine climate change policy

I’m not reluctant. I would be more than happy to see us use the optimal pathway as a guide for climate policy. I’m not actually arguing against it (as I thought I had made clear) I’m actually mainly responding to your claims that there are serious problems with the Paris agreement because it appears to have agreed on a pathway that is apparently not optimal. You can, of course, argue against it, but I think there are also valid arguments in favour and, as I said, I think having an agreement (even if it’s not perfect) is better than having nothing. As it is, it looks like the best we can hope for anyway is something close to the optimal pathway, even though the agreement is actually aiming or more than that.

To answer your question, I’m not a person of faith, I didn’t grow up in a religious household, and I didn’t grow up in the UK. Not quite sure why that’s remotely relevant, though.

38. -1=e^iπ says:

“I’m simply suggesting (as I think is self-evident) that a cost-benefit analysis is not the sole definer of policy. I also think that would give too much power to those who do cost benefit analyses.”

I think that a distinction needs to be made between agreeing with cost-benefit analysis in principle and agreeing with all cost benefit analyses. The former does not imply the latter. In principle, cost-benefit analysis would be taking into account all the costs and benefits, adding them up and comparing it. In practice, cost-benefit analysis will be incomplete, leave out various important things (such as the value of the Great Barrier Reef) and make questionable assumptions on the value of a dollar today compared to a dollar 100 years from now or the value of a dollar to a rich person compared to a poor person. I think it’s more helpful to agree with cost-benefit analysis in principle and argue over what should go into a cost-benefit analysis rather than reject it and replace it with some arbitrary temperature line that only takes the great barrier reef into account and nothing else.

[No more inquisition, please. -W]

39. Willard says:

> You seem to be rather over-interpreting what I’m suggesting.

I’d rather say that -1 is caricaturing what you’re suggesting, AT. Another caricature would be to portray the 2C target as an immediate result of a policy optimization exercise. A worse caricature would be to suggest that a policy response to GW should follow an optimal path otherwise it would be unjustified.

Were -1 truly meaning business about optimization modulz, he might suggest that we model a damage function that follows the rate of temperature change more than temperature change itself.

40. -1,
I think you’re ignoring that people are entitled to have values which, unless I’m mistaken, are not easy to cost. Also, having values doesn’t necessarily imply religious. Additionally, maybe you could consider that what I’m suggesting isn’t necessarily what I would personally argue. I’m not arguing against a cost-benefit analysis; I’m suggesting that people are entitled to do so. I think this is a pretty simple point.

I think it’s more helpful to agree with cost-benefit analysis in principle and argue over what should go into a cost-benefit analysis rather than reject it and replace it with some arbitrary temperature line that only takes the great barrier reef into account and nothing else.

I was only using the GBR as an example of something people might want to save, not something that should be taken into account above all else.

41. BBD says:

Were -1 truly meaning business about optimization modulz, he might suggest that we model a damage function that follows the rate of temperature change more than temperature change itself.

This seems to be the view of ecologists, who typically stress that the rate of environmental change is fundamental to the level of ecosystem disruption.

42. Phil says:

I think that a distinction needs to be made between agreeing with cost-benefit analysis in principle and agreeing with all cost benefit analyses.

This reminds me of ” this story which includes:

In 1973, GM engineer Edward Ivey wrote a cost/benefit analysis memo—eerily similar to the most damning evidence against the Ford Pinto—in which he estimated GM’s cost of liability for burn deaths caused by its fuel tank design. Like his counterparts at Ford, Ivey assigned a human life the value of \$200,000; based on that, he figured burn deaths were costing GM \$2.40 for every GM vehicle on the road. Ivey’s memo, along with other internal GM documents estimating the cost of potential fixes for the C/K gas tank, indicate that GM knew it would be cheaper to risk lawsuits from burn deaths than to recall and fix its automobiles.

But presumably Ivey’s cost/benefit analysis did not include the cost to GM of the public finding out that GM had actually done a cost/benefit analysis in the first place, which necessarily put a cost on a human life, nor that they had valued it at \$200,000 (presumably the cost of compensation that GM expected to pay). That may have been an accurate cost for GM, but not to the buyer of the truck or their family …

43. Phil says:

Oops, sorry bad link in previous post. The real link is this (I hope 🙂 )

44. -1=e^iπ says:

Well Willard removed the follow up question, so I’ll briefly explain the point I was planning to get to. I think that we grow up in societies with very strong pre-existing cultural narratives, that these cultural narratives strongly influence how we view the morality of things such as climate change and that these cultural narratives might be so strong and commonplace that we might not even question these narratives even if we have no good basis for supporting them. Two cultural narratives that are particularly relevant to climate change are the fairy tale of the Garden of Eden and the fairy tale of Noah’s flood.

[Peddling. -W]

So I think that if you feel really uncomfortable with doing a Cost-Benefit Analysis to determine policy and instead feel that there is some line we shouldn’t cross no matter what, such as we shouldn’t even consider pathways that cause the Great Barrier Reef to mostly disappear, then perhaps this is the result of the pre-existing cultural narratives and not the result of reasoned argument.

45. -1=e^iπ says:

“which necessarily put a cost on a human life, nor that they had valued it at \$200,000 (presumably the cost of compensation that GM expected to pay). That may have been an accurate cost for GM, but not to the buyer of the truck or their family …”

Back in 1973, maybe the statistical value of life is around \$200,000. Today it’s closer to \$10 million.

46. -1,

So I think that if you feel really uncomfortable with doing a Cost-Benefit Analysis to determine policy and instead feel that there is some line we shouldn’t cross no matter what, such as we shouldn’t even consider pathways that cause the Great Barrier Reef to mostly disappear, then perhaps this is the result of the pre-existing cultural narratives and not the result of reasoned argument.

It almost sounds as though you think we should strive to live in societies without values. Of course our values, cultures, identities, etc influence our decision making. I think it would be very strange to suggest otherwise, and that’s really all I was pointing out. It also seems patently obvious that it does; if policy was uniquely determined by cost benefit analyses, politics would be a great deal easier.

If anything, my response to you was mostly motivated by the sense that you think that anyone who doesn’t accept the cost benefit analysis is not making a reasoned argument (as you appear to have just indicated), not because I personally was arguing against it.

47. Willard says:

> It almost sounds as though you think we should strive to live in societies without values.

It’s actually worse than that, AT – if you don’t share -1’s utilitarian crap, it’s because of your “pre-existing cultural narratives.” Because he and other Freedom Fighters own Rationality-with-a-big-R, you know.

I’m not sure where he got his 10 mil figure, but if you multiply that with the 7 mil deaths caused by air pollution each year alone, we already reach an interesting ballpark for a carbon tax.

48. -1=e^iπ says:

“I’m not sure where he got his 10 mil figure, but if you multiply that with the 7 mil deaths caused by air pollution each year alone, we already reach an interesting ballpark for a carbon tax.”

Those deaths due to air pollution are not caused by CO2. CO2 emissions are merely correlated with the causes of those deaths. Implementing a pigouvian tax to internalize the externalities of smog makes sense, but calling it a ‘carbon tax’ does not since such a tax would be internalizing externalities that are not caused by CO2 emissions. A CO2 emission tax should internalize the externalities of CO2 emissions only.

49. BBD says:

-1

I’m an atheist raised by atheist parents. While I agree that cultural narratives can shape the perception of climate change, it ain’t me babe.

Ecologists will tell you about the way rapid environmental change breaks up food webs and triggers extinctions. Glaciologists and palaeoclimatologists will tell you about the increasing probability of triggering long-term, multi-metre SLR by destabilising the WAIS.

That will do for me.

50. BBD says:

A CO2 emission tax should internalize the externalities of CO2 emissions only.

Health-damaging particulate pollution is an externality of CO2 emissions. You burn coal and…

51. Willard says:

> Implementing a pigouvian tax to internalize the externalities of smog makes sense, but calling it a ‘carbon tax’ does not since such a tax would be internalizing externalities that are not caused by CO2 emissions.

Fair point. Carbon isn’t CO2, and my point was simply to indicate a size of a related ballpark.

The concept of a “carbon tax” may deserve due diligence.

***

> A CO2 emission tax should internalize the externalities of CO2 emissions only.

Again, the rates are being omitted.

***

And to reiterate once again:

Elementary cost-benefit and business economics teach that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits (that is, the difference between, and not the ratio of, benefits and costs).

This point can be seen in a simple example, which would apply in the case of investments to slow climate change. Suppose we were thinking about two policies. Policy A has a small investment in abatement of CO2 emissions. It costs relatively little (say \$1 billion) but has substantial benefits (say \$10 billion), for a net benefit of \$9 billion. Now compare this with a very effective and larger investment, Policy B. This second investment costs more (say \$10 billion) but has substantial benefits (say \$50 billion), for a net benefit of \$40 billion. B is preferable because it has higher net benefits (\$40 billion for B as compared with \$9 for A), but A has a higher benefit-cost ratio (a ratio of 10 for A as compared with 5 for B). This example shows why we should, in designing the most effective policies, look at benefits minus costs, not benefits divided by costs.

This leads to the second point, which is that the authors summarize my results incorrectly. My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years. A look at Table 5-1 in my study A Question of Balance (2008) shows that the cost of waiting fifty years to begin reducing CO2 emissions is \$2.3 trillion in 2005 prices. If we bring that number to today’s economy and prices, the loss from waiting is \$4.1 trillion. Wars have been started over smaller sums.

http://www.nybooks.com/articles/2012/03/22/why-global-warming-skeptics-are-wrong/

Not the first time -1 is being reminded of something he should know better than us.

52. Phil says:

Back in 1973, maybe the statistical value of life is around \$200,000. Today it’s closer to \$10 million.

You’re kind of missing the point – That GM valued a life in financial terms did damage to the reputation of the company, which translated into falling auto sales. So, from GM’s perspective, Ivey’s cost/benefit analysis should have included the possibility that the public found out about the fact that a cost/benefit analysis had been done and the reputational damage included as a cost.

So was Ivey being stupid by not including such a cost – since the public did, eventually, find out ?

53. Andy Skuce says:

Cost-benefit analysis should certainly influence policy decisions, but it should not determine them. Why? Because the analyses contain embedded values about how to measure costs and benefits. Economists may well agree among themselves about what those values are, but they are not philosopher-kings and the rest of us don’t have to. Especially because many of those values are simply assumptions made to allow a numerical analysis to proceed.

Now, I’m not arguing that cost-benefit analysis is bunk. It can reveal the real prices that humans put on things in the real world. It can also guide decision-making about the most effective use of resources, which are always limited.

But not everything can be counted. For most of the important life decisions we take, cost-benefit analysis takes a back-seat, at least for most people who are not Vulcan utilitarians. Marriage, having children, the arts, end-of-life decisions. Yes, I know, economics does feature in these decisions—some people sell their children or buy their wives—but it’s not usually central. When governments decide to go to war they don’t run economics when it comes to existential decisions, even if they put the economists to work on allocating resources.

The biggest embedded value of all is the discount rate, as others here have already noted. Yes, economists can determine what discount rates are implicit in people’s investment decisions and, over a decade or two, those rates may make perfect sense in most cases. But the multigenerational time frame of climate change means that economics has essentially no special insight. We have to rely on our values for this, be they instinctive or influenced by religion or philosophy.

It’s true that everything has a cost and a benefit. For example, even an oil spill creates jobs to clean up the mess and bulid a replacement oil tanker. You can then make assumptions about the multiplying induced effects of these new jobs on the general economy. But only the most insensitive oil-transport promoter would actually do a cost-benefit analysis on it, let alone claim a spill as a net benefit. For example, the pipeline company Kinder Morgan.

http://www.macleans.ca/economy/economicanalysis/saying-oil-spills-boost-the-economy-is-even-dumber-than-it-sounds-leach/

54. Steven Mosher says:

“But the multigenerational time frame of climate change means that economics has essentially no special insight. We have to rely on our values for this, be they instinctive or influenced by religion or philosophy.”

+1

55. -1=e^iπ says:

@ BBD –
“Ecologists will tell you about the way rapid environmental change breaks up food webs and triggers extinctions. Glaciologists and palaeoclimatologists will tell you about the increasing probability of triggering long-term, multi-metre SLR by destabilising the WAIS.
That will do for me.”

If we implement policies that increase the price of energy, this will lead to less economic resources available for society, which means that society will have less resources to put into public health care to help people suffering from cancer. In addition, if we have less economic resources, then we will have less economic resources to put towards research and development of new technologies, which will slow the rate of technological progress. If you are a quadriplegic person who is hoping that one day technology will advance to heal your spine, then this means that you will have to wait longer to get healed.

If that information on foodwebs, extinctions and sea level rise is ‘enough’ to ‘do it for you’ then in your analysis the cancer patients and the poor disabled quadriplegic people have no value. To me, this is an incredibly immoral position to have. Cancer patients and disabled people should have value in addition to the environment; Cost-Benefit analyses using IAMs generally attempt to try to take everything into consideration where as your overly simplistic ‘analysis’ does not.

56. -1=e^iπ says:

“Health-damaging particulate pollution is an externality of CO2 emissions.”

No it isn’t. CO2 is not particulate pollution.

It’s important to distinguish between the two separate externalities and both should be internalized using separate taxes. One big practical different between the two externalities is that the externality due to CO2 emissions is pretty much independent of where you emit it, where as the externality due to smog is heavily dependent on where it is emitted (smog will have a larger external impact in more densely populated areas such as cities as it will affect more people).

57. -1=e^iπ says:

@ Willard – “Not the first time -1 is being reminded of something he should know better than us.”

…Yes, thank you for stating some of the basics of cost benefit analysis that I already know very well…
I’m extremely confused as what relevance your ‘reminder’ has in the context of this conversation.
Was I arguing that we use the ratio of costs to benefits to make decisions? No.
Was I arguing that there should be no action for the next 50 years? No.
Maybe this is some attempt by Willard to strawman me. I’m not really sure.

58. -1=e^iπ says:

“So was Ivey being stupid by not including such a cost – since the public did, eventually, find out ?”

There is going to be a difference in the objectives of a cost benefit analysis done by a private company and that done by a government. Generally private companies will be interested in profit maximization while governments are supposedly more concerned about the public’s best interest.

59. -1=e^iπ says:

One thing that’s really interesting about the 2 C target is that it was created by William Nordhaus back in 1975 as an ‘initial first guess’ yet he’s moved well beyond his initial first guess. The recent results of Nordhaus’ DICE model suggest that a 2 C target is undesirable relative to a 2.5 C target.

60. dikranmarsupial says:

” It can reveal the real prices that humans put on things in the real world. ”

assuming our behaviour reflected our actual values, which a lot of time they don’t, because we are not very close to rational. Fully agree with everything else!

Mike Hulme’s book is well worth reading, it doesn’t say anything radical, but I thought it set out the issues clearly.

61. -1,

There is going to be a difference in the objectives of a cost benefit analysis done by a private company and that done by a government.

It doesn’t really change that one can do a cost benefit analysis and ignore something that might have a big impact. Maybe one can include these factors (such as, what would happen if the public found out we’d done a cost benefit analysis that include the cost of a human life). However, this would probably become probabilistic (there’s a 10% chance that they’ll find out, for example). Then, it’s back to using some kind of sense/judgement of what risk is worth taking.

The recent results of Nordhaus’ DICE model suggest that a 2 C target is undesirable relative to a 2.5 C target.

Except (as I understand it) there are also many scientists who argue that 2C is the temperature beyond which there is an increasing probability of passing a tipping point. So, the 2C target is not simply based on an old cost benefit analysis.

You also seem to have largely ignored Andy Skuce’s comment, which – in my view – makes some very good points.

62. -1,

No it isn’t. CO2 is not particulate pollution.

You appear to have ignored the relevant bit of BBD’s comment.

63. dikranmarsupial says:

Regarding discount rates, it seems to me the best thing to do would be to make scenarios and projections with the economic models in a similar way in which climate models are used. In other words pick a range of discount rates and see how the range of optimal (in)-actions vary, according to uncertain cost-benefit analysis, so even if we can’t choose a single rate we all agree on, we are at least familiar with how that uncertainly shapes the ball-park.

64. Marco says:

“The recent results of Nordhaus’ DICE model suggest that a 2 C target is undesirable relative to a 2.5 C target.”

I would consider that a misrepresentation of what Nordhaus actually wrote:
http://cowles.yale.edu/sites/default/files/files/pub/d20/d2057.pdf
“A second result is that the international target for climate change with a limit of 2 °C
appears to be infeasible with reasonably accessible technologies – and this is the case even
with very stringent and unrealistically ambitious abatement strategies. This is so because
of the inertia of the climate system, of rapid projected economic growth in the near term,
and of revisions in several elements of the model. A target of 2½ °C is technically feasible
but would require extreme virtually universal global policy measures.”

He basically says that we can’t get to the 2 degrees anymore, but even 2½ degrees will be very difficult to achieve. And it isn’t the optimal cost-benefit scenario either, which would be far less ambitious. Which you’ll probably find very nice, until you find yourself one of those who lose in that scenario.

Of course, with every delay in policy measures, the new “best” target will move to higher temperatures.

65. verytallguy says:

Climate Change Policy: What Do the Models Tell Us?
Robert S. Pindyck

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models’ descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading.

My bold.

Aside from the point that the model inputs trump the model content many times over, the idea that economic growth will proceed “as normal” whilst the realisation sinks in that most large conurbations worldwide will need relocating seems rather fanciful, to say the least. And that’s before even mentioning resource depletion.

The concept of economics as a continuum rather than a rather chaotic system prone to wild swings should have been killed stone dead by the 2008 financial crash, but somehow staggers on, an unremarked emperor elephant sporting gaudy well-remunerated new clothes in the corner.

Climate change policy is really about values, risk and science, not economics. Economics not merely lacks the tools for forward looking analysis on these timescales and extrapolating beyond current conditions – these issues are fundamentally not amenable to quantitative analysis.

The values are how much we respect the natural world and understand our dependence on it.
Risk is about what value we place on the wellbeing of future generations, and to what extent we are prepared to risk that for our benefit in current consumption.
Science is whether we are prepared to put prejudice aside and listen to what the facts tell us.

For me, this seems obvious. Like previous planters of arboretums, custodians of natural parks and the like, it is evident that we as a species care deeply about our natural world and our legacy beyond our lifetimes. As someone scientifically trained, it’s clear that unless we change, by 2100 we will face either a transformed world, or one whose future transformation is inevitable.

That, together with what seems like the inevitability of a resource crunch eventually given our current economic model, means we should mitigate. Probably as strongly as political constraints allow.

66. dikran – as I noted above somewhere: “Of interest on the topic might be the recent paper by Stephan Lewandowsky, Mark C. Freeman and Michael E. Mann: Harnessing the uncertainty monster: Putting quantitative constraints on the intergenerational social discount rate.”

67. Joshua says:

“But the multigenerational time frame of climate change means that economics has essentially no special insight. We have to rely on our values for this, be they instinctive or influenced by religion or philosophy.”

I’m going to +1 that also.

However, IMO, those values are often run through an ideological filter (at least in the U.S.) So you get a situation where people who are diametrically opposed in their opinion about recommended policy are alike in seeing their preferred policy as based on a similar values, such as “saving the children” or rejecting the views of “activists” who are acting only in self-interest.

And the situation is further complicated because many people are reluctant to be accountable for the role of their ideology-influenced values on their opinion formation, and instead insist that their only consideration is an objective assessment of “the facts.”

As near as I can tell, what the economics tell us is that we don’t know with a lot of certainty what the economic outcomes will be (how could we, if we can’t effectively assess the cost of externalities, let alone the cost of internalizing those externalities).

68. Willard says:

> Was I arguing that there should be no action for the next 50 years?

Was I arguing that you were? No. You were rather arguing some kind of dichotomy between the Paris target and CBA. I and otters already argued that this was a false one.

I linked to Nordhaus because net benefits matter, and to remind you that you should stick to CBA stuff. That’s what you pretend to know. You dodge everything else, and your religulous peddling is both ad hominem and unoriginal.

***

> The recent results of Nordhaus’ DICE model suggest that a 2 C target is undesirable relative to a 2.5 C target.

You haven’t read the paper AT is discussing, have you?

It seems to be exactly about “recent results of Nordhaus’ DICE” modulz.

69. Willard says:

> Climate change policy is really about values, risk and science, not economics.

I suppose that depends upon the kind of economics we consider. Economic decisions still need to be made. In any case, costs should not top risks:

https://www.epa.gov/cira/climate-action-benefits-key-findings

Also note that economics has always been value-laden. Adam Smith never shied away from his values. It’s only when we get vulgar displays of formal power that we tend to forget that.

Policy-making is an art.

70. Hyperactive Hydrologist says:

Can anyone give a good moral argument for applying discount rates to economic models assessing the impact of climate change?

I have yet to come across one. Effectively the economist are saying live in the future are less important than lives today. I am not sure how you can defend that assumption.

71. -1=e^iπ says:

@ ATTP –
“Except (as I understand it) there are also many scientists who argue that 2C is the temperature beyond which there is an increasing probability of passing a tipping point.”

Yes, some people who are scientists do have this position (such as Michael Mann). But do they have any hard evidence or models to back up such a position? Not really. There is a lot of ad hoc justification, where people start with their conclusion (going above 2C is bad) and then they look for ways to justify it. They could have just as easily picked 2.5 C or 1.5 C and claimed that it is the temperature beyond which there is an ‘increasing probability of passing a tipping point’. If they want to quantify the probability of such tipping points being based using data and models, then that is wonderful and the results can be used in combination with an IAM to make better decisions.

Overall, most people want to simplify things to make reality easy to understand and cost-benefit analyses are hard and take effort. If we can simply pretend that there is this tipping point just above 2C, then we can argue for a temperature target without having to do all that hard work of a cost-benefit analysis.

“You appear to have ignored the relevant bit of BBD’s comment.”

I did reply. The comment has been ‘waiting moderation’ for a while though.

72. -1=e^iπ says:

@ Marco –
I was not claiming that the particular quotation you just quoted suggested that a 2.5 C target was preferable to a 2 C target.

If you want clarity, what I mean is that according to the default social welfare function in DICE, along with all of its other underlying assumptions, limiting temperatures to 2.5 C leads to a higher social welfare than limiting temperatures to 2 C. And the value of the social welfare function can be very easily interpreted to be a measure of desirability.

73. -1=e^iπ says:

@ verytallguy – “The concept of economics as a continuum rather than a rather chaotic system prone to wild swings should have been killed stone dead by the 2008 financial crash, but somehow staggers on”

Lots of economic models contain stochastic shocks.

74. HH,
I think the issue is subtler than that. A discount rate is intended to ensure that we don’t pay so much that we do more damage to ourselves than will be experienced by those in the future and not so little that those in the future experience much more damage than is reasonable. I found this Joseph Heath post very inlightening.

75. -1=e^iπ says:

@ Willard-

“You were rather arguing some kind of dichotomy between the Paris target and CBA.”

Pointing out that the Paris agreement 2 C limit doesn’t appear to agree with IAM results is not the same thing as creating a false dichotomy.

“and your religulous peddling is both ad hominem and unoriginal.”

Finding explanations for the reasons why people approach the issue of climate change the way they do is not an ad hominem fallicy.

76. -1,

Yes, some people who are scientists do have this position (such as Michael Mann). But do they have any hard evidence or models to back up such a position?

As far as I’m aware there are plenty of indications (from paleoclimatology, for example) that beyond 2C is where we might expect to start locking in irreversible changes.

If they want to quantify the probability of such tipping points being based using data and models, then that is wonderful and the results can be used in combination with an IAM to make better decisions.

Indeed, but as I understand it, IAMs are inherently linear, while tipping points are non-linear. This is one of the problems, in my view, with IAMs; they can’t easily incorporate non-linear effects. Of course, you could estimate the probably of a tipping point and the impact of it occuring, but then you still have to make a judgement about what risk, and resulting impact, is acceptable.

77. -1,

Finding explanations for the reasons why people approach the issue of climate change the way they do is not an ad hominem fallicy.

I think it is if it leads you to conclude that cultural identity is leading them to have faulty reasoning. You might want to consider taking a step back and thinking a little about the suggestion that the reason people don’t agree with your reasoning is because their cultural background predisposes them to have faulty reasoning. I does rather come across as a suggestion that somehow you have overcome your cultural shortcomings, while those who disagree with you have not.

78. Susan Anderson says:

OK, here I go, boots and all, where angels fear to tread, mixing metaphors to hell and gone.

The idea that it is healthier to get rich rather than clean up the environment is pure bull. Suggest watching TimeToChoose – http://www.timetochoose.com/ – or other materials that report from coal and fracking country to see about what is really happening with cancer, and other diseases, from the byproducts of fossil mining. (Even with decent control of putting wastes into watersheds, which are going away from these same kleptocrats.) Some people get rich, but not the victims. Meanwhile, there are plenty of health effects from climate change already. Then, if you happen to have an extreme flood, you can get sick from mold and other flood wastes. Droughts, you can starve (see the horn of Africa). Old-style things like dengue fever, chikungunya, and other disease vectors, plenty of info there. Getting rich on toxic practices is not a victimless crime.

79. -1=e^iπ says:

@ ATTP –
“that beyond 2C is where we might expect to start locking in irreversible changes.”

I see people claiming this, but not much to back it up beyond speculation. The way I see it, the 2 C target was first create by Nordhaus in the mid 70’s. It was then popularized by German Scientists in the mid 90’s, particularly by Hans Joachim Schellnhuber, as a political target for politicians because it was thought that politicians couldn’t handle more complex ideas than a simple target. The justification for the 2C target merely involved looking at the past few hundred thousand years and noticing that temperatures did not exceed Eemian temperatures. Since then, the 2 C target has been repeated and repeated by various groups and lots of ad hoc justifications for the 2 C target have been created long after the 2 C target was established.

” IAMs are inherently linear”

Where exactly do you get this idea? IAMs have non linear damage functions, non linear climate response functions, non linear productivity functions, non linear CO2 uptake functions, non linear population functions, etc.

80. IAMs have non linear damage functions, non linear climate response functions, non linear productivity functions, non linear CO2 uptake functions, non linear population functions, etc.

Okay, what I meant is that, as I understand it, they can’t really handle something like a shock. A tipping point is a rapid change to a new state. I guess one might be able to somehow incorporate this, but I’m not entirely sure how if the change is sufficiently fast and large.

81. -1=e^iπ says:

“Okay, what I meant is that, as I understand it, they can’t really handle something like a shock. A tipping point is a rapid change to a new state.”

I don’t see why not. As I understand it, both DICE and FUND allow for tipping points, and it wouldn’t be that difficult to code it stochastic shocks to the economy.

82. Jp says:

-1 says, “You can try. With respect to the Great Barrier Reef, try to measure how much people value it, their willingness to pay, etc.”
This is as useless as saying you can put a value on the Amazon by valuing the wood, or the number of tourists that visit it.

When trying to estimate anything, if you ignore things that are obviously of great importance but are maybe too complex to quantify in a monetary sense, so that any number you come up with could be so wide of the mark as to render the entire exercise completely useless, what is the point? How could you make any meaningful assessment.

Of course, what I’m talking about here is the ecological importance of those two biosystems, if that’s the right terminology (I’m only a layman with no science training, so I hope you’ll excuse me if I get a few things wrong). Both of them sustain an entire ecosystem _ can we put a value on those? How far down the ecological chain will the impacts be felt as a result of the probable loss of species that used to rely on those biosystems? When talking about the GBR, one possible impact which seems obvious to me (I’m only speculating, ‘cos I said I’ve got no expertise in anything) is the potential loss of fisheries; I assume the GBR acts as a breeding ground for many fish species, so how large an area of the Pacific would that affect? And how many people, on how many islands, as well as half of Queensland, would be affected?

83. verytallguy says:

Lots of economic models contain stochastic shocks.

[Sighs]

Not in this kind of analysis they don’t

[\sighs]

84. Willard says:

> Finding explanations for the reasons why people approach the issue of climate change the way they do is not an ad hominem fallicy.

It does when psycho-pop speculation about the reasons arguments are being put forward diverts from addressing the very arguments you’re supposed to address. A common reason why economic projections are taken with a grain of salt is because not everyone buys positivism:

Key features the “received view” were set forth by Ian Hacking:

A focus on science as a product, a linguistic or numerical set of statements;

A concern with axiomatization, that is, with demonstrating the logical structure and coherence of these statements;

An insistence on at least some of these statements being testable, that is amenable to being verified, confirmed, or falsified by the empirical observation of reality; statements that would, by their nature, be regarded as untestable included the teleological; (Thus positivism rejects much of classical metaphysics.)

The belief that science is markedly cumulative;

The belief that science is predominantly transcultural;

The belief that science rests on specific results that are dissociated from the personality and social position of the investigator;

The belief that science contains theories or research traditions that are largely commensurable;

The belief that science sometimes incorporates new ideas that are discontinuous from old ones;

The belief that science involves the idea of the unity of science, that there is, underlying the various scientific disciplines, basically one science about one real world.

By the end of the twentieth century, nearly every one of those claims or beliefs had been severely criticized or put into question, so much so that they can be regarded now as being untenable, or at least in need of many qualifications and caveats.

Another reason is that economics have little explanatory power.

And right now you are playing the ref, dear -1, which is against blog rules.

From now on, please keep to CBA and the stoopid DICE modulz.

If you could also address the points made against you instead of rope-a-doping from one comment to the next, that would be great.

***

> Pointing out that the Paris agreement 2 C limit doesn’t appear to agree with IAM results

You still haven’t read the paper that is the object of AT’s discussion, haven’t you?

85. David B. Benson says:

The future will be like the past: currently carbon dioxide levels remain at or above 400 ppm. If this continues without going much higher the conditions for the mid-Pliocene are repeated; at equilibrium the temperature will be 2–3 °C warmer than now, as a global temperature average, and sea levels will be about 25 meters higher than now.

I have thoroughly checked this by several means but you can simply look at the Wikipedia page on Pliocene climate.

Keeping carbon dioxide levels down to a mere 400 ppm appears daunting so I suppose one might care to check as far back as the middle Eocene.

86. Steven Mosher says:

“Finding explanations for the reasons why people approach the issue of climate change the way they do is not an ad hominem fallicy.”

I usually call it the genetic fallacy.
but what’s in a name.
Given your childhood, you’ll object.
see what I did?

87. Steven Mosher says:
88. -1=e^iπ says:

@ Mosher- “I usually call it the genetic fallacy.
but what’s in a name.”

It would be a fallacy if I were using it as an argument against the 2 C target, which I’m not doing. My objection to the 2C target is primarily rooted in the results of IAMs.

89. -1=e^iπ says:

@ David –
“The future will be like the past: currently carbon dioxide levels remain at or above 400 ppm. If this continues without going much higher the conditions for the mid-Pliocene are repeated; at equilibrium the temperature will be 2–3 °C warmer than now, as a global temperature average, and sea levels will be about 25 meters higher than now.”

This is a flawed argument. There is a positive feedback between temperature of the planet and CO2 concentrations. The main difference between temperature changes from the Pliocene to the Holocene compared to temperature changes over the past 50 years, is that the recent temperature changes are primarily initially caused by human activity such as CO2 emissions where as the temperature change from the Pliocene to the Holocene is primarily initially caused by albedo changes due to different continental positions (which also causes sea level rise due to less glaciers) and then this gets amplified by the temperature-CO2 feedback.

The ratio of changes in ln(CO2) to temperature changes or to sea level changes are going to be different under both regimes due to different initial causes. 270 ppm to 400 ppm represents half a doubling of CO2 and the best estimates of ECS tend to be in the 2-3 C range. So you are overestimating temperature changes by a factor of ~2. For sea level rise, looking at the Eemian gives you a better idea because the continents were in more or less the same position and it was an interglacial. Eemian was 1-2 C warmer and had sea levels 6-9 m higher. Which suggests quite a bit less long term sea level rise than 25 m due to todays 400 ppm of atmospheric CO2.

90. Marco says:

-1, note (again) that a cost-benefit analysis depends on your reference time. The longer we wait with considerable action, the more costly it will be to limit warming to 2 degrees, to the extent that the measures to be taken are so economically disruptive that it looks really poor in certain cost-benefit analyses. Wait another 10-15 years, and 3 degrees may become economically so disruptive…etc.

91. -1,

270 ppm to 400 ppm represents half a doubling of CO2 and the best estimates of ECS tend to be in the 2-3 C range. So you are overestimating temperature changes by a factor of ~2.

Except the ESS is bigger than the ECS by maybe a factor of 2 (although that might be too high). I think what David has said is broadly correct. The timescale, however, would be centuries, so maybe not relevant to decision making today, but that doesn’t make what he said wrong.

92. Griff says:

We don’t need a tipping point to promote a catastrophic result .

Black swans.
Events Human history has no record of .
The Syrian drought was a factor in the troubles there.
It was something like a one in a one in1500year event that climate change contributed to.
The California drought was also partly attributed to climate change. Tropical cyclones Pam Haiyan and Patricia were probably magnified by climate change.

Such events in isolation result in localized disruption to economic output

Drought,Precipitation, Heatwave ,Storm energy are all indicating an increasing trend. Each of them as isolated events are not as much of a threat as all of the increasing potential risk coinciding in a perfect storm. We are loading the dice for a flock of black swans.
We risk compromising our supply chains in a multiplied effect far greater than the impact of the individual events.
“It has been said that civilization is twenty-four hours and two meals away from barbarism.”
― Neil Gaiman, Good Omens: The Nice and Accurate Prophecies of Agnes Nutter, Witch

I may be suffering from personal incredulity at the dismal science.
I do not see how an economic model based on what must be value judgments can be usefully used to examine what is a issue of risk rather than a cost /benefit equation.

It is Nordhaus who says the potential cost is infinite. .
The uncertainty monster has a big fat tail with a smeging wicked spike at the end
One in a hundred odds of civilization collapse would dictate that a sane humanity would not risk it. Our present course? The odds of a flock of black swans overwhelming human civilization in the next century would be smaller.

Jp
Often humans are arrogant enough to think we are not part of the ecology.
Many species of commercial fish use the reefs for sustenance or breeding habitat .
We lose the reefs we lose the food they provide as well as the physical protection they give from storms . For the millions who live subsidence lifestyles in coastal tropical regions the loss will be catastrophic.

93. Marco says:

“For the millions who live subsidence lifestyles in coastal tropical regions the loss will be catastrophic”.

Fortunately, economically their losses will mean very little, and in the cost/benefit analysis their demise may even be a benefit…

94. Willard says:

> It would be a fallacy if I were using it as an argument against the 2 C target, which I’m not doing. My objection to the 2C target is primarily rooted in the results of IAMs.

It actually was offered as an “explanation” of AT’s reluctance to treat CBA as the Most Important Thing in ClimateBall. This “explanation” shifted your burden to address AT’s (and otters’) points. Hence its irrelevance. Thus the fallacy.

Drop this.

You did not exactly “object” to the Paris agreement, you simply “pointed out” that Paris’ target “doesn’t appear to agree with IAM results”. A claim that, besides conflating the agreement with its target, shows you still haven’t read the paper AT was discussing. Have you at the very least noticed that a version of the DICE modulz features in AT’s shiny picture?

Instead of addressing anything, now you’re rope-a-doping to DavidB’s argument.

I mean, come on.

95. BBD says:

-1

If we implement policies that increase the price of energy, this will lead to less economic resources available for society, which means that society will have less resources to put into public health care to help people suffering from cancer.

Or just rather less profligate pissing away of energy than goes on at the moment and about the same level of care for cancer patients. False dichotomy & nonsense. Which leaves what I said about SLR and mass extinctions on the table.

To me, this is an incredibly immoral position to have.

Lucky that it’s just a bit of contrarian rhetoric then.

96. I think Marco’s point is very important. The cost-benefit analysis today is, I think, influenced by us not having done very much in the past. So, we’re now in a position where the CBA might be suggesting that the optimal pathway is one that leads to about 2.5 – 3C of warming. Imagine, we continue to do nothing. Future CBAs might then say that the optimal pathway is one leading to 3.5 – 4C of warming. I guess, technically, there could be a point where the CBA could suggest that it is now worth trashing the global economy in order to avoid climate change impacts, but we’d probably rather avoid that if we can (which, I think, we can if we actually start trying to do something).

97. Steven Mosher says:

“I have yet to come across one. Effectively the economist are saying live in the future are less important than lives today. I am not sure how you can defend that assumption.”

It not an assumption. It’s a moral intuition. We of course can have different moral intuitions. Some people choose to value ancestors more than than descendants. Others seize the day.
Some think the unborn ,otherwise known as people living in the future ,have some moral claim on us. Weird.

As noted above…The issue is one of morality., religion and philosophy.

Science is pretty clear. We are going to benefit ourselves and harm the future by emitting co2. So what.?

When you science types answer the so what questions please avoid using any of the softer sciences…

98. BBD says:

Steven

I’m struggling to see the functional distinction between assumptions and moral intuitions. Both (to me) appear semantically equivalent.

99. Chubbs says:

To build on Marco’s and ATTP’s point, our choices in the past were not optimal, which makes our current options more limited and higher cost. We are slowly painting ourselves into a corner.

100. Joshua says:

Steven –

=={ Science is pretty clear. We are going to benefit ourselves and harm the future by emitting co2. So what.? }==

Depends on the definition of “ourselves,” and depends on how you compute the cost of externalities.

101. Joshua says:

-1

=={ If we implement policies that increase the price of energy, this will lead to less economic resources available for society, which means that society will have less resources to put into public health care to help people suffering from cancer. }==

Yes, you say “if,” but it seems that buried in your comment is an assumption that you know the cost/benefit ratio of positive/negative externalities. Could you detail what that ratio is?

102. Joshua says:

-1

Also, let’s say that you’re right and about implementing policies that increase the “cost” of energy, rather than just the price of energy, (i.e., you’ve worked out how to compute the positive/negative externalities), how do you compare the resulting decrease in access to cancer care to the opportunity cost of implementing other policy options to increase access to care – such as taxing extremely wealthy people to implement universal care, or taxing stock market action to fund cancer research, or increasing the strength of civil society, educational access for women in the developing world?

Suppose the resulting decrease in care would be well more than compensated for by any variety of means to subsidize energy access and strengthen a wide variety of factors associated with life expectancy due to suffering from cancer. In such a circumstance, do you think it is exploitative to hold access to cancer care hostage to an ideological agenda of limiting ACO2 emissions?

103. While I understand the desire to somehow “price out” measures for climate mitigation and I understand it is complicated enough as it is, when economics is raised as an issue, there are major things being left out. Set aside the very real risks of rising temperatures, sea level rise, big storms, droughts, supply chain disruptions, food shortages, and downtime of airports when tarmacs are too hot for planes to land. Much sooner than most of that, triggered by some relatively minor climate surprise that’s undeniably tied to man-made climate change, is the near certain risk that markets and valuation of companies and real estate will suddenly and abruptly price-in these risks resulting in a dramatic adjustment and redistribution, ergo, a climate Minsky moment. This would affect primary industries, and it would affect them indirectly, when insurance companies are seen to be bearing more risk than widely perceived. Mark Carney of the Bank of England is the clearest speaker on this point. (There’s a better discussion of this in Canada, but you have to suffer some advertisements first.) Carney refers to this as a “tragedy of the horizons.”

Add to this a periodic of adjustment, when markets are struggling to figure out what the uncertainty in risks are, and the consequent volatility, these things can impact GDP much more than the steady hedge of cost for mitigation. It’s like paying insurance premiums.

Carney talks about how industrial, agricultural, financial, and even insurance companies are not reflecting to their shareholders the risks implicitly borne on the books.

Now, I know, I know: The deniers will say these are make-believe risks, and will insist “It’s okay, it’s okay, these risks are so far ahead we can discount them to negligibility. Move along home.” The trouble is, if there were a relatively benign climate event, like an unprecedented and enormous destabilization of some ice sheet due to unforeseen nonlinearity, and, say, one day, Atlantic Avenue in Boston is found to begin to be underwater at high tide twice a day, sunshine and all, thereafter. What are the effects upon coastal real estate prices there and elsewhere? From one perspective, deniers are betting against the house that this won’t happen. And, sure, from a strictly long term efficient market perspective, it’ll be okay, the market will equilibrate. But meanwhile …

The city of New Bedford, Massachusetts, was once one of the richest cities in the world, due to oil from whaling and clipper ships. It’s not now. The transition was very fast.

GDP impact?

104. “When you science types answer the so what questions please avoid using any of the softer sciences…”

The golden rule is a pretty good starting point. Science isn’t the (full) answer to every problem, even the full spectrum.

105. -1=e^iπ says:

@ Mosher-
“Science is pretty clear. We are going to benefit ourselves and harm the future by emitting co2. So what.? ”

It’s a bit more complicated than that. Emitting CO2 could benefit future people in some countries such as Russia or Mongolia. Also, if you limit CO2 emissions too much then it’s possible to harm future generations more than you help them by slowing down the rate of economic growth.

106. -1,
I think we all realise that there will probably be winners and losers. However, it’s my understanding that most analyses suggest that the net effect of continuing to emit CO2 into the atmosphere is likely to bne negative.

107. BBD says:

-1

Also, if you limit CO2 emissions too much then it’s possible to harm future generations more than you help them by slowing down the rate of economic growth.

You seem to be assuming that it is only possible to produce energy by burning fossil fuels, but of course this is not the case.

108. Joshua says:

-1

=={ If we implement policies that increase the price of energy, this will lead to less economic resources available for society, which means that society will have less resources to put into public health care to help people suffering from cancer. }==

The more I think about that argument, the more it bugs me.

Right now, there are millions of Americans who lack access to a full range of health care options. Around the world, there are no doubt billions. And yet, on both a national or world-wide scale, we have done relatively little to mitigate ACO2 emissions. So clearly, there is not necessarily a causal relationship between ACO2 mitigation and access to healthcare. If those who own a disproportionate amount of resources decided to devote just a fraction of what they own to address the lack of access to healthcare that currently exists, huge number of people’s lives would improve.

Your counterfactual assertion that a causal relationship would play out in the future, despite one existing now, made with the language of total certainty, is highly flawed., IMO There may be any number of policies that could be enacted to increase access to healthcare concurrent with an increase in ACO2 mitigation. Even assuming that ACO2 mitigation would put a downward pressure on access to energy (or healthcare), there is no reason to believe (that I can see) why such pressure would be more explanatory for lack of access to healthcare in the future than many, many other factors.

If you want to make an argument that ACO2 mitigation would have greater costs than benefits, more power to you. I don’t see why anyone would make that argument absent the ability to accurately measure the relative magnitude of positive and negative externalities, but to each his/her own.

But I have to say, sanctimonious arguments that exploit the plight of people who lack access to healthcare (or food, or education, a higher standard of living), for the purpose of advancing a partisan agenda w/r/t ACO2 mitigation, gnaw at me.

109. Andy Skuce says:

I can recommend the book “Reason in a Dark Time: Why the Struggle Against Climate Change Failed — and What It Means for Our Future” by Dale Jamieson.

Jamieson is a philosopher and resents the high-handed way some economists assume philosophical hegemony, as this quote reveals:

“One way of reading Nordhaus is as proposing to rename philosophy, calling it instead “economics.” If this were all there were to it, then we would simply change the signs on the office door and reduce the salaries of the economists accordingly.”

110. Andy Skuce says:

For a discussion on who benefits and who loses from climatte change, see this discussion of a paper by Burke, Hsiang and Miguel. It’s unfortunate that they use only the RCP8.5 model, which is, in my opinion, extreme and unlikely. Nevertheless, there are some real insights in that paper. A few rich, temperate countries will benefit a little from warming, whereas currently poor, hot countries will see their economic growth reversed over the latter half of the century. Globally, the effects are negative. Inequality will increase—or, in the case of poor-country rapid growth with income convergence shrink then reverse—so that provides a counterpoint for those who say “but whatabout the poor?”

Their figure 3 is excellent, but takes some effort to understand.

https://www.skepticalscience.com/Burke.html

111. I think this discussion is highlighting something that came up in my brief discussion with Glen Peters. Apparently, many of the economic models assume that our current situation is somehow optimal. Therefore, any change (such as policy to encourage us away from fossil fuels) will, by definition, be a cost. However, our current situation is not necessarily optimal and therefore it is not necessarily the case that policy that encourages some kind of change will incur a cost; it could well – by itself – be a net benefit (i.e., on top of the benefits due to reduce emissions).

112. Joshua says:

Meanwhile, Trump’s budget proposal includes a \$6 billion cut to the NIH and a 17% cut to the CDC…
I wonder if that might have an impact on public health to help people suffering from cancer?

113. Joshua says:

Not to mention a 20% cut over the next two fiscal years to the Children’s Health Insurance Program (CHIP), oh yeah, and an 11% cut to the National Science Foundation.

114. Willard says:

> Effectively the economist are saying live in the future are less important than lives today. I am not sure how you can defend that assumption.

It’s actually the other way around:

Finally, there is the most controversial question, which is whether it is permissible for us to show some degree of partiality for people alive today over those who will live sometime in the future. I just wrote a long article arguing that we can and should (gated here, early MS here). The idea that we can’t is, I think, the sort of view that people are attracted to because it seems like the moral high ground, but that when you think about it, has totally crazy consequences. The big problem with giving future people equal moral standing to actual, living people, is that they vastly outnumber us. So refusing to show any partiality toward existing people (or toward people in the present) can generate all kinds of absurd scenarios, in which you wind upon constantly having to favour non-existent people over existing people (because there are so many of them!), and so as a result, no actual person ever gets any actual benefit from the policies adopted.

Derek Parfit expressed a similar argument.

That doesn’t mean there haven’t been arguments against (positive) discounting. O’Neill can recall some.

115. Griff says:

AFAIK,We have.
About 1.2C more than when humanity started modifying our environment.
Allowing inertia of about thirty years +0.3C.
We are committed to 1.7C at today’s CO2 Equivalent.

The trend in the keeling curve is still going up.
As are the trends in ice melt ,snow extent and permafrost thaw.

2C would take extreme measures well beyond a carbon tax.
To build that much new infrastructure would take huge amounts of effort from other forms of economic activity….A war footing.

Emission pathways to achieve 2.0 and 1.5oC climate targets…..
“Green is a pathway that keeps warming below 1.5oC, blue keeps warming below 2oC, and orange is an optimal pathway, which leads to warming of about 2.5oC”

I support the idea of an increasing carbon tax .
However I would lean more towards Kevin Anderson and ask for a realistic projection of what we are facing .
At a un educated guess you should add as much as 1C to their scenarios.
The effects of that much warming are not linear……………….3C will be catastrophic by even the gremlin’s friends reckoning.

The difficulty on getting a CO2tax regime agreed too and enforced around the globe.
How would such a tax allow for the economic imperative to burn hydrocarbons for developing nations like India and Latin America . The USA and AU are presently ideologically opposed to action.

The best we can hope for is enough Nations get behind such a agreement and use their economic power to persuade laggards . Until then the growth in renewable’s and electric transport is encouraging but not enough. Sea freight ,cement, steel,air travel.electrical generation.manufacturing agriculture also need transformation if we are to avoid serious problems well beyond a few points of GDP.

116. @Andy Skuce Burke, Hsiang, and Miguel is indeed a fine methodological paper, calibrating by looking at local thermal excursions upon production, supply, and yields and forecasting out to RCP8.5. Notably, however, they do not assess impacts of loss of ecosystem services. Sure, that’s harder but, as well, there’s a rich literature about it:
* http://www.sciencedirect.com/science/article/pii/S2212041612000071
* http://www.fgcsic.es/lychnos/en_EN/articles/socioeconomic_costs_of_biodiversity_loss
* http://onlinelibrary.wiley.com/doi/10.1890/07-1537.1/epdf
The Ecological Society of America (ESA; disclosure: I’m a member) has position statements on some of these matters at: https://www.esa.org/esa/category/esa-position-statement/

Probably most pertinent is the 2010 World Bank review by Perrings (see http://siteresources.worldbank.org/EXTEEI/Resources/BiodiversityEcosystemsServices_CC.pdf) where he addresses couplings of changing in ecosystem services to economic engines and impacts of climate change. For example, Perrings cites the Stern assessment as at least admitted a component tracking services loss in contrast with Tol, Nordhaus, and Mendelsohn, and I’m afraid Burke, Hsiang, and Miguel fall into the latter camp. It kind of matters.

For example, planetary albedo modification by aerosols would be presumably calibrated to some balance point between cost and maintaining GWP, yet, if that were done, loss of protein due to fisheries collapse from acidification would not be captured in the cost. To say that would be an oversight is engaging in dark, understated humor.

117. John Hartz says:

“Hot-off-the-press” as they say is this OECD press release…

Taking action on climate change will boost economic growth

23/05/2017 – Integrating measures to tackle climate change into regular economic policy will have a positive impact on economic growth over the medium and long term, according to a new OECD report prepared in the context of the German Presidency of the G20.

Investing in Climate, Investing in Growth shows that bringing together the growth and climate agendas, rather than treating climate as a separate issue, could add 1% to average economic output in G20 countries by 2021 and lift 2050 output by up to 2.8%. If the economic benefits of avoiding climate change impacts such as coastal flooding or storm damage are factored in, the net increase to 2050 GDP would be nearly 5%.

The report says G20 countries – which account for 85% of global GDP and 80% of CO2 emissions – should adopt a combination of pro-growth and pro-environment policies in developing their overall growth and development strategies. This means combining climate policies such as carbon pricing with supportive economic policies to drive growth centred on investment in low-emission, climate-resilient infrastructure.

“Far from being a dampener on growth, integrating climate action into growth policies can have a positive economic impact,” said OECD Secretary-General Angel Gurría, presenting the report at the Petersberg Climate Dialogue in Berlin. “There is no economic excuse for not acting on climate change, and the urgency to act is high.”

Infrastructure investments made over the next 10-15 years will determine whether the 2015 Paris Agreement’s objective to stabilise the global climate can be achieved, and delaying action will end up being more costly. The report shows that taking action only after 2025 would lead to an average output loss for G20 economies of 2% after ten years relative to taking action now. The delay would mean that, eventually, even more stringent climate policies would have to be introduced more urgently, risking greater environmental and economic disruption and leaving more fossil fuel assets as economically unviable.

Click here to access the entire press release.

118. Willard – I really didn’t make it past the abstract and first set of footnotes:

[3]Prior to the debate over climate change, Murray Krahn and Amiram Gafni observed that “most analysts, including thosewho take great care to measure costs and consequences, pull their discount rates either out of the air or off the shelf, andthe lucky number is most often 5%,” “Discounting in the Economic Evaluation of Health Care Interventions,” Medical Care, 31 (1993): 408-418 at 451.

Note the date for his source; 25 years ago. Gee, I wonder why? Perhaps Heath is unfamiliar with more recent work on the subject; Weitzman, Martin L. 1998. (“Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate.” Journal of Environmental Economics and Management 36 (3): 201–8) surveyed 2100 economists and arrived at 4%. And more recently Drupp, Moritz, Mark Freeman, Ben Groom, and Frikk Nesje. 2015. (“Discounting Disentangled.”
Working Paper No. 172, Grantham Research Institute on Climate Change and the Environment, London) wherein we find:

, … we report the results of a survey of over 200 experts that disentangles
the long-term SDR into its component parts: the pure rate of time preference, the
wealth effect, and the real risk-free interest rate. The mean recommended SDR is
2.27 percent, with a range from 0 to 10 percent. Despite disagreement on point
values, more than three-quarters of experts are comfortable with the median SDR of
2 percent, and over 90 percent find an SDR in the range of 1 to 3 percent acceptable.

A 5% SDR suggestion in this day and age is ludicrous and really only deserves to be quoted so that it can be laughed at. Even Trump’s magic asterisk GRROWWTH budget only fantasizes over 4%.

119. David B. Benson says:

-1=, I fear that we have blown past the Eemian with its carbon footprint level of 300 ppm maximum.

Repeating the same experiment gives the same results. By Emmy Noether’s theorems this is Conservation of Energy. The exact path to equilibrium conditions does not matter, only the fact of equilibrium.

So one only has to check that the world was almost the same during the Pliocene as it is now. I did so check and it was; the position of the continents has not changed enough to matter nor the heights of mountain ranges, etc. Therefore the ocean circulation was almost the same as now. A GCM run for the mid-Pliocene with carbon dioxide levels of 400 ppm resulted at equilibrium in a global temperature of 3°C warmer than now. This agrees with the proxies for the mid-Pliocene, resulting in a sea stand about 25 meters higher than now.

Maintaining carbon dioxide levels at just about 400 ppm looks too hard; it requires “immediately” cutting fossil fuel consumption in half and then stopping the rest as natural processes removing carbon dioxide lessen in efficacy. So we well may go past the 25 meter sea level rise which is the 400 ppm equilibrium value.

aTTP mention the time to equilibrium. Yes, about a mellennium for various reasons. However, the first bit of a 2 meter rise by 2100 is not out of the question.

120. Dr Stephen Chu points out that actually we are at 490 ppm, or nearly 500, because there are non-CO2 species in atmosphere who will, shortly, decompose to CO2, and these will provide the additional 80 ppm from the present 410.

121. Marco says:

“Emitting CO2 could benefit future people in some countries such as Russia or Mongolia”

“Could” being the operative word that requires some more quantitation from your side.

Mongolia is reportedly turning into a desert. Not quite sure how that will benefit future people living there…I also wonder how happy people in particular in Siberia will be when the permafrost starts to melt.

122. Willard says:

The manuscript has no abstract, O’Neill. It goes straight to the intro. Here’s the relevant bit:

My goal in this paper is to show that most philosophers who have tried to make a contribution to this discussion (including Derek Parfit, Henry Shue, Simon Caney, and Axel Gosseries) have moved too quickly from the idea that the goodness or badness of a beneficial or harmful event is independent of when it occurs, to the conclusion that temporal discounting of benefits and harms in the present is impermissible. As a result, instead of treating the zero-discount rate as a reductio of whatever normative theory it is derived from, they have tended to treat it as one of the attractions. John Broome has tried to drive a wedge between the two positions, arguing that while discounting of welfare is impermissible, discounting of commodities may not be.

I would like to show several avenues of argument that could be adopted, in order to show that even discounting of welfare may be permissible. My goal in doing so is not to resolve the issue of what that rate ultimately should be, but simply to help philosophers get out of the corner that they have painted themselves into, in order to facilitate a more productive engagement with the real-world policy discussion on the question of global climate change (and in particular, on appropriate rates of carbon taxation).

My own reason to explain why Heath picked 5% would be to increase the contrast between two positions that are prima facie absurd.

Dismissing economists on discount rates because they beg a moral question, and then dismissing the arguments of moral philosophers because of numbers that are of little relevance to their argument has some elegance to it.

Parfit’s argument deserves due diligence. This may have to wait. Chief from Judy’s fame made me look back at Hayek. It seems there’s a bigger difference between the arguments he put forward against socialism and the ideological crap he peddled as an intellectual entrepreneur than usually portrayed. My current hypothesis is that his arguments have no bite against social liberalism. If correct, Freedom Fighters may not have the philosophical ground they oftentimes pretend to have.

Thanks for the paper.

123. Joshua says:

-1

=={ If we implement policies that increase the price of energy, this will lead to less economic resources available for society, which means that society will have less resources to put into public health care to help people suffering from cancer. }==

–snip–

Cancer research, public health and worker safety would all see steep cuts under Trump budget

[…]

National Cancer Institute

The institute’s budget would be cut by \$1 billion, to just under \$4.5 billion. It was \$5.5 billion in 2017.

[…]

Centers for Disease Control and Prevention

The 2018 budget proposal includes \$952 million for health promotion activities and preventing chronic diseases, \$222 million less than for 2017. Cancer prevention and control would decline by \$18 million, to \$337 million.

[…]

–snip–

124. Ariana says:

Hello! I’m getting my MA in Applied Economics but almost everything I do is ecological economics and naturally policy follows. This was a very interesting blog post despite some shakey understandings of economics. Just remember that optimal and equilibrium is always when marginal cost = marginal benefit, and in this case I believe it’s social marginal cost = social marginal benefit.

I highly suggest reading some Boyce (UMass Amherst) articles on carbon pricing and his suggestion for carbon tax structures, if you’re interested. This one he ties in intergenerational equality, which is another important dimension.
https://pdfs.semanticscholar.org/77fa/921dd090a98fb1680146f07c08b963d581a0.pdf
This one is “As if the Present Generation Matters”

Thanks for a great post! Also, if you have any advice on running a largely informational and professional blog, please do let me know. I’m just a grad student right now but I enjoy writing and would like to blog about important economic and environmental issues without making it political. That’s my biggest fear!

125. Ariana,
Thanks for the comment. I’ll have a look at those links.

This was a very interesting blog post despite some shakey understandings of economics.

Indeed, but I did at least acknowledge this up front 🙂

I’m just a grad student right now but I enjoy writing and would like to blog about important economic and environmental issues without making it political.

I don’t know if I have any great insights; I’ve mostly made it up as I go along and I think it works for me, but maybe it wouldn’t work for others. If, however, you do want to talk about this offline, feel free to get in touch.

126. -1=e^iπ says:

@ ATTP – “However, it’s my understanding that most analyses suggest that the net effect of continuing to emit CO2 into the atmosphere is likely to bne negative.”

Sure, but they don’t support a 2 C target. So internalize externalities with a pigouvian tax, but it might be optimal to go slightly above 2C.

@ BBD – “You seem to be assuming that it is only possible to produce energy by burning fossil fuels, but of course this is not the case.”

No, I’m just acknowledging the results of the empirical literature which suggests that there is an economic cost to reducing emissions beyond a certain point.

127. -1=e^iπ says:

@ Joshua –

“The more I think about that argument, the more it bugs me.”

Yes, the acknowledgement of the existence of tradeoffs tends to annoy people. Much easier to pretend them away than confront them. 🙂

“So clearly, there is not necessarily a causal relationship between ACO2 mitigation and access to healthcare.”

I wasn’t making such a claim. If you have more economic resources, you can do stuff with those extra economic resources. Be it better health care, better education, lower taxes, or build a giant gold statue of Donald Trump’s hair.

“If you want to make an argument that ACO2 mitigation would have greater costs than benefits, more power to you.”

It’s not that costs exceed benefits or benefits exceed costs. But rather, benefits exceed costs up to a certain point beyond which costs exceed benefits. There is an optimal level of mitigation.

“I don’t see why anyone would make that argument absent the ability to accurately measure the relative magnitude of positive and negative externalities, but to each his/her own.”

You don’t need accuracy. You just need empirically justified probability distributions and a level of risk aversion. You can then find the level of mitigation that maximizes the expected value of social welfare and go with that.

128. -1=e^iπ says:

@ Andy Skuce – another major issue with Burke et al. is that they assume that the immediate economic impacts of sudden climate change are the same as the long run economic impacts. However, this is ridiculous because people adapt to new climate over time. If Kenya started snowing tomorrow, Kenya’s economy would take a big hit because Kenyans aren’t used to dealing with snow. However, if after 50 years there was frequent snow in Kenya, the Kenyas would have time to adapt. As a result, Burke et al. likely exaggerates the net negative economic impacts of climate change.

129. -1,

Sure, but they don’t support a 2 C target. So internalize externalities with a pigouvian tax, but it might be optimal to go slightly above 2C.

As far as I can tell, there is little chance of us not going above 2C. Slightly might be about the best we can do.

130. -1=e^iπ says:

Yes, but the main issue is that the agreement claims that the 2C target is desirable when it’s not. It inherently rejects cost benefit analysis and therefore inherently rejects doing what is in the best interest of humanity according to the best available evidence.

Recently, in Merkel’s response to Trump has finally admitted that she views this issue as God commanding her to ‘preserve creation’ and ‘save mother earth’.

Well now we know where her support of the 2C target (which she has been pushing since like ’95 when she was environment minister) comes from. Because the 2C target is certainly not justified by cost benefit analysis. It’s justified by her belief in a 2000 year old book of fairy tales. This was sort of the point I was making earlier (which Willard partially deleted).

As an atheist utilitarian, I cannot agree with the moral underpinnings of the 2 C target.

Also, it’s pretty messed up that Germany is run by an inherently non-secular party. No other major developed country does this.

131. -1,
As far as I can tell, your comment highlights your main issues, not the main issues.

As an atheist utilitarian, I cannot agree with the moral underpinnings of the 2 C target.

Maybe you shouldn’t tar everyone with the same brush? Also, you seem to be suggesting that your preferred pathway is somehow not based on some kind of moral underpinning, which is clearly nonsense.

Here, for example, is Michael Oppenheimer

We don’t have much time to avoid the two degrees of warming that would destabilize ice sheets, entail extreme heatwaves, and potentially undermine food security.

There are many who regard going much beyond 2C as potentially leading to changes that will be irreversible. Maybe not; maybe we can get to 3C and discover that we can deal with all the changes, but if not then these changes will probably be irreversible on human timescales.

Here’s the issue I have. It looks unlikely that we will be able to stay within 2C; most of the current plans look like they’ll lead to about 3.5C. So, all this discussion about CBA seems to miss the point that we’re not even following some kind of an optimal CBA pathway, let alone one that will potentially allow us to stay below 2C. And, unless I’m mistaken, as time progresses with us doing little, the CBA analysis will suggest ever increasing targets, and so you’ll be able to come back and argue for 3C, and then 3.5C, and then 4C, etc. I’d be quiet keen to see what a CBA would have suggested in 1988, when Hansen first presented evidence to the US senate.

132. -1=e^iπ says:

Has Oppenheimer done a cost benefit analysis? No? How about reference a cost benefit analysis in his support for it?

The 2C target is something people cling to when they want any easy answer to what should be done about climate change. Much easier to just go along with than dive into the mess of weighting costs and benefits.

“It looks unlikely that we will be able to stay within 2C; most of the current plans look like they’ll lead to about 3.5C.”

Plans change. It’s unrealistic that this issue won’t gain more traction. The deniers in the USA and Australia are slowly getting outnumbered, so eventually those countries will get more serious. Eventually, China will come to terms with the fact that it’s in their best interest to cooperate. Chile has implemented a CO2 emission tax, and this will spread throughout the Americas. etc.

133. -1,

Has Oppenheimer done a cost benefit analysis? No? How about reference a cost benefit analysis in his support for it?

My point, which I thought was obvious, is that other people can have other arguments for staying within 2C; it’s not simply some kind of Christian morality, as you seemed to be suggesting. Furthermore, there isn’t some kind of rule that says that the only valid one is one that involves a cost benefit analysis.

134. -1=e^iπ says:

Yeah, the 2C target was first created by Nordhaus as an ‘initial first guess’ in the mid 70s, then popularized by Merkel and the German Scientists under her in the mid 90s using the exact same reasoning as Nordhaus. Since then, some people have started with the conclusion (2 C target) and tried to creatively find ways to dogmatically justify it. So yes, there are many arguments for the 2 C target, you would expect that given how many people try so desperately to find arguments for it. Though you would think it would make sense to first start with your evidence and then try to determine the best path forward rather than start with a conclusion and then look for evidence.

135. -1,

Though you would think it would make sense to first start with your evidence and then try to determine the best path forward rather than start with a conclusion and then look for evidence.

You’d think that you might avoid generalising wildly……..

136. There are a lot of things to reply to here. I’m here replying to this comment.

To the degree everything projected goes nicely linear, these kinds of discussions make eminent sense. However, if the climate system starts exhibiting nonlinearities, especially if these are demonstrated on the short term, much of this kind of discussion no longer makes any sense.

I just wanted to point out that, quite aside from the assumptions being made for purposes of understanding and analysis, there are also these kinds of assumptions being made. And, if things do go nonlinearly wrong, the policy wonks and advisors who based their recommendations upon their not going wrong that way will have a new, big credibility crisis.

137. -1, this comment refers to here.

Y’might argue human suffering at the expense of ecology, but, facts are, we do not understand enough of how much our human societies rely upon ecosystem services for basic needs to be able to make that assessment. We are acting, collectively, as if we don’t care, and, therefore, are setting ourselves up to be surprised.

Indeed, much of the behavior you seem to endorse or at least give a pass to involves an argument that (1) here’s what we know now and nothing else, and (2), based upon that, here’s what we should do to take care of ourselves collectively. There’s little or no acknowledgement of imperfect knowledge and what that might do to such policy, and there is no responsibility if we did not understand well what might happen if nonlinearities or couplings ended up determining responses. Of course there is responsibility! That we merely suspect something eggregiously bad might happen from our actions without deep inspection suffices and justiifies investigation. That it is not done because there’s no profit in it underscores the extreme short-termism this society indulges.

138. Willard says:

> There is an optimal level of mitigation.

The idea that economic modulz used for CBA can optimize anything looks a bit farfetched. They give at best a very big ballpark. Tuning up these estimates (it’s not a “solution” in the mundane sense) requires some heuristic.

Having a target in mind usually helps heuristics. Otherwise one gets lost in the state space. First a rough target, than some pathfinding.

One does not simply pledge for “a little bit above” 2C in Mordor.

139. -1=e^iπ says:

“To the degree everything projected goes nicely linear, these kinds of discussions make eminent sense.”

This nonlinearity myth is really annoying because it doesn’t die. It involves:
1. Claim that IAMs are treating things linearly, which is completely false. IAMs have non-linear damage functions, non-linear abatement cost functions, non-linear temperature response functions, non-linear ocean uptake functions, etc. Everything about them is non-linear.

2. Throw around the word non-linearity a lot, as though it’s some coherently argument and that non-linearity some how implies scary. Non-linearity doesn’t imply scary, dangerous or that we should have more mitigation. For example, one very important non-linearity is the fact that radiative forcing due to CO2 is a roughly logarithmic function of CO2 concentrations, which acts in the exact opposite of alarmism.

“There’s little or no acknowledgement of imperfect knowledge”

Wrong. One can perform expected social welfare maximization using the entire probability distribution.

140. -1=e^iπ says:

“Having a target in mind usually helps heuristics.”

If you want to argue over a number, argue over the optimal level of a global pigouvian tax. Because if we aren’t reducing emissions via a global pigouvian tax then we aren’t doing things pareto-efficiently.

“One does not simply pledge for “a little bit above” 2C in Mordor.”

Well we aren’t in Mordor and Mordor does not exist.

141. -1,

This nonlinearity myth is really annoying because it doesn’t die.

What people are suggesting – I think – is that these are not really solving fully-coupled, non-linear equations. There are non-linear inputs, but that’s not quite the same thing.

Wrong. One can perform expected social welfare maximization using the entire probability distribution.

You still cannot, as far as I’m aware, include all knowledge. These are, at best, approximations of reality.

If you want to argue over a number, argue over the optimal level of a global pigouvian tax.

I agree with a carbon tax, but the idea that you get to decide what people should argue over is a little bizarre.

142. Your post provided an example, that being the logarithmic dependence of sensitivity upon CO2 concentration. Sensitivity is state dependent (see also), and that the calculation cited uses a relationship which depends upon the local behavior, even if that behavior is a nonlinear rule, does not mean it is emulating the full range of possible structural change to those rules.

Regarding optimizing “using the entire probability distribution,” what’s the ensemble variability across a bunch of initializations for that distribution using, say, a Kullback-Leibler measure? Are you claiming such variation across the ensemble is negligibly small?

143. -1=e^iπ says:

@hypergeometric –
Your first question is not sufficiently defined to give an answer.
As for the second question, the answer is no.

144. The first point is that if the pricing model does not have such structural nonlinearities, another example being ice sheet evolution, it is excluding the worst costs from consideration.

The second point is that an estimate of optimality or costs needs to be taken across the full ensemble and not simply a single “representative” path.

145. Willard says:

> If you want to argue over a number,

I’d rather argue over the idea that a number needs to be argued over. The thing your overall argument relies on. I’m not that interested in arguing over counterfactuals that put things on my mind to dodge my point, which is that one doesn’t simply replace a *pledge* on a target with stoopid modulz, even more so when sold as “optimizations”.

Alternatively I could argue against the claim that these economic projections are empirical – they’re at best semi-empirical simulations.

146. Willard says:

> Well we aren’t in Mordor and Mordor does not exist.

It’s called a figure of speech:

http://knowyourmeme.com/memes/one-does-not-simply-walk-into-mordor

Does playing dumb indicate you have nothing against my argument?

147. (belated comment on the discussion regarding the $+2\textdegree{}C$ threshold)

Undoubtedly a target was picked for a goal to work, but the concern about exceeding $+2\textdegree{}C$ is that knock-on emissions are believed to be triggered as $+3\textdegree{}C$ are approached, such as tundra (but not yet clathrates), and if we collectively wander there, we begin to lose control of mitigation or, as the control theory people like to call it, of “the plant.” The more knock-on is incorporated, the more expensive mitigation becomes to achieve a long term reduction in forcing.

Yes, some of these are not well understood. A recommendation should be to find out a good deal more about these. And about the ice sheets. Can’t do cost-benefit on stuff that’s not understood. Ignoring it is valuing it at zero, which is clearly wrong.

148. Nordhaus got some things wrong, and, as far as I know, still does, judging by what he wrote in his book. In particular, he still advocates managing emissions intensity, which is not what the game is about. Sure, short term, that needs to be the focus, but long term we need a means to get close to zero, and that understanding should be the cornerstone of any climate mitigation policy. Agriculture’s going to be the big problem there, and, to the degree we need it, that leaves nothing for energy.

149. -1=e^iπ says:

“The first point is that if the pricing model does not have such structural nonlinearities, another example being ice sheet evolution, it is excluding the worst costs from consideration.”

Yes, such non-linearities are generally taken into account.

“The second point is that an estimate of optimality or costs needs to be taken across the full ensemble and not simply a single “representative” path.”

Yes, this is exactly what I argued on Judith Curry’s blog: https://curryja.files.wordpress.com/2015/11/expected-social-welfare-maximization-2.pdf
And it seems that Nordhaus has moved in that direction in his latest 2016 update.

150. Since there’s a lot of discussion about risk and costs, there is recent publication by Battiston, Mandel, Monasterolo, Schütze, and Visentin which confirmed a good deal of exposure to climate and fossil fuel risk in the financial sector, as Mark Carney has loudly worried about. (See also Monasterolo’s summary from Boston University.)

151. Fortuitously, RealClimate offers a post today which recaps a longer report on the risks of +2C and above.

152. Marco says:

“It inherently rejects cost benefit analysis”

So does a significant part of healthcare, -1. Or think about all those retired people…just take the money they saved and let them die, much better cost-benefit ratio!

153. -1=e^iπ says:

@ Marco – when it comes to things like health care, for CBA often a statistical value of life will help guide decision making. Your claim that healthcare never passes CBA is wrong.

154. -1,

Your claim that healthcare never passes CBA is wrong.

I don’t think he made any such claim.

155. Marco says:

-1, I didn’t claim it never passes CBA. A lot of healthcare *does* reject CBA, however. If I understand it correctly, the Affordable Care Act even explicitly rejects cost-effectiveness analyses (not quite the same as CBA, but in the end similar end-result).

156. -1=e^iπ says:

Oh sorry, I misunderstood you.
So you are claiming that a lot of bad health care policies in different countries reject cost benefit analyses? I agree, but I’m not sure how this is related to the discussion.
Would be nice if health economists ran the health care systems of the world.

157. -1,
I think the point being made is that we regularly make decisions that either do not rely on CBA, or go against what you might do if you simply did what a CBA suggested was optimal.

Would be nice if health economists ran the health care systems of the world.

No, I think this would be utterly dreadful. I think evidence (of whatever sort) is a key part of making decisions. However, it should not define the decisions. Cost benefit analyses should not define the decisions we make, even if they are an important part of the decision making process.

158. verytallguy says:

Would it be possible to stop having discussions which involve allusions to the killing of innocent people entirely unrelated to the topic at hand?

Obviously preferably by not bringing these up in the first place, but failing that by removing such posts, or even by removing the offenders, should they continue in many posts across multiple threads?

(minus guy, note that I’m just asking a question here. Nothing more.)

159. Would it be possible to stop having discussions which involve allusions to the killing of innocent people entirely unrelated to the topic at hand?

Yes, this would be good.

Obviously preferably by not bringing these up in the first place, but failing that by removing such posts, or even by removing the offenders, should they continue in many posts across multiple threads?

Well, the subtle (even not so subtle) approach certainly hasn’t worked.