Michael Tobis has a post in which he argues that what we are doing to the climate will persist for many generations and, consequently, that it is immoral to continue what were’e doing and that we should address this as soon as possible (at least, that is my interpretation, but MT can correct me if I’m wrong). Stoat, unsurprisingly, disagrees and seems to argue that we should treat global warming as an economic, rather than moral issue.
The problem I have with Stoat’s post is not that I necessarily disagree, it’s that I don’t even really understand what he’s actually suggesting. As this response says
posing potential solutions as economics versus ethics is profoundly misleading, mostly because they are inextricably intertwined.
I have no economic experise, nor do I claim any. However, my understanding of economics as a discipline, is that the goal is to understand aspects of the world/society, and to use that understanding to develop models/theories that allow us to potentially influence society. By itself, however, economics does not tell us if we should do something. That depends on our judgement as to whether or not there is some kind of problem to solve and the implications of the various possible options. I don’t claim that this is a complete description of the motivation behind economics, but I think it’s roughly right (feel free to disagree, if you wish). Essentially, I don’t really see how – in the real world – one can separate economic decisions from value judgements.Maybe one could argue that we can develop as objective as possible an economic framework and that the result of analyses using this framework would be the objectively optimal solutions. However, I’m not even convinced that this is really possible. Let me try and give an example.
There was a recent paper by William Nordhaus about climate change projections and uncertainties. It includes various possible scenarios, a number of which are illustrated in the figure on the right. They include a baseline scenario, a less than 2.5oC scenario, and a cost-benefit optimum scenario.
My understanding of the cost-benefit optimum scenario (which I never seem to explain properly) is essentially that you determine a social cost of carbon by estimating the future damages and discounting them to today. This is then implemented as a carbon tax. A carbon tax would be expected to reduce emissions, and therefore reduce damages due to climate change (i.e., a cost leading to a benefit). You can then project forward, but also continually adjust the carbon tax until the incremental benefit would no longer be larger than the incremental increase in carbon tax (or, the marginal benefit matches the marginal cost). Many might argue that this is, therefore, the pathway that we should aim to follow.Here’s where I have a problem, though. The optimal scenario leads to a temperature change of about 3.5oC in 2100 (mean) with a standard deviation of about 0.7oC (you need to look at Table A-2 in the appendix, since it looks like Table 4 in the paper is wrong). If you consider the figure on the left, though, this would suggest that we would almost certainly pass summer Arctic sea ice, Greenland, Alpine glaciers, and coral reef tipping points. We might also pass a tipping point for the West Antarctic Ice Sheet. Given the uncertainty, we also can’t rule out that we might also cross other tipping points (Amazon rain forest, Boreal forests, etc).
What I’m getting at is that this optimal pathway has the potential to lead to quite specific changes that are irreversible and very uncertain. Therefore, there seems nothing wrong with people objecting to this as an outcome. This would presumably mean that they value some of the things that we might lose, more highly than was assumed in this analysis. Others could well argue that these valuations are the best representations of how society actually values these systems, but that still doesn’t mean that everyone has to accept this. People are perfectly entitled to argue for a different set of societal values; there’s no guarantee that others will agree, but we certainly do change our values with time.
The above, however, doesn’t mean not using economics to resolve these issues (I’m not even sure that it’s possible to do something that doesn’t qualify as economics). However, accepting the premise of an economic analysis doesn’t mean accepting all that it implies, if the outcome would be something that some regard as morally objectionable. This doesn’t necessarily even mean that one disagrees with the underlying economic framework; it may simply mean disagreeing with some of the assumptions that were used to produce the analysis.
Anyway, I’m going to stop there. Maybe someone can try to convince me that we can indeed separate economics and values. I’m not sure they’ll succeed, but I have a suspicion that some may indeed try, and I’m open to being convinced.