Andrew Dessler had an article in Rolling Stone suggesting that [t]he first step to saving the planet is ignoring the economists. Stoat has already written about it and, as you might imagine, doesn’t seem to like it. Even if suggesting that we ignore economists is a bit hyperbolic, I think Andrew makes some good points. Or, maybe, points I happen to agree with.
Andrew’s specific focus is economists who assess climate policy on the basis of cost-benefit analyses. The problem with this in the climate context is that we have the potential to substantially change the climate and to do so on geologically fast timescales. It’s extremely difficult to estimate the impact of such changes, and hence cost-benefit analyses are going to be extremely uncertain. They’re also quite simple calculations that don’t even come close, as far as I’m aware, to self-consistently modelling the evolution of the world’s economy in the presence of climate change. They also require many judgements that are clearly not value free.
Also, some of these analyses produce rather strange results. For example, suggesting that the damage will be relatively modest even for very large amounts of global warming, or suggesting that the optimal pathway would be one that leads to about 3.5oC of warming. This is another issue with some of these analyses. A lot of recent work has suggested that we’re currently heading along a pathway that will probably lead to between 2oC and 3oC of warming. How can a recent CBA suggest that the optimal pathway is one that would probably lead to about 3.5oC of warming, when we’re already probably heading for less than 3oC of warming*? The answer is probably that they haven’t properly assessed their no-policy baseline, but it still illustrates a potential issue with these analyses.
So, what could we do instead of a cost-benefit analysis? Well, we could determine what it would it take to achieve a normatively determined warming target. Not only does this also have deep economic roots, it’s essentially what the world’s governments have already agreed to try and do. So, it’s not as if this alternative to a simple cost-benefit approach is somehow an outrageously extreme suggestion, or one that would somehow be wildly at odds with the fundamentals of mainstream economics.
Of course, there also isn’t an objectively correct way to assess the ideal target. However, it seems clear that the more we warm, the greater the impact, and that the changes will probably be irreversible on human timescales. Rather than trying to work out some optimal pathway, why not do our best to limit how much we will eventually warm, with some goal of at least trying to meet some warming target, such as < 2oC? We might not meet the target, but just missing it will probably be a lot better than heading along some kind of optimal pathway and then discovering that the impact is far greater than estimated by these rather simple cost-benefit analyses.
* I realise that there are uncertainties that mean that even though our current trajectory is probably taking us towards somewhere between 2oC and 3oC, we can’t really rule out that it might end up being well above 3oC. However, the same uncertainty applies to the cost-benefit optimal pathway.
The first step towards saving the planet is ignoring the economists – Rolling Stone article by Andrew Dessler.
The flower of poor thinking is to lack influence – Stoat’s post.
The impact of climate change, and the cost of climate policies – one of my earlier posts.
Economics and Values – another of my posts.
Moving beyond benefit-cost analysis of climate change – paper by Jonathan Koomey.