Asymmetrical Information

I also think we should fairly value all future catastrophic events. A 10-mile diameter asteroid impact should only strike the Earth every couple of hundred million years, but the costs of such an impact are infinite, so the expected cost is infinte. We should therefore be happy to spend anything less than the net present value of global economic output to prevent major asteroid impacts.

The Stern report has a number of problems, such as taking the some of the most alarmist forecasts from the IPCC, but I think the key problem with it is that it seems to ignore the possibility of simply creating ad hoc fixes as and when necessary. This - the Lomborg concept if you like - is likely to be far far cheaper than attempting to stop climate change.

I do however think that pigouvian tax rates for fossil fuel use make sense - the problem is determining the right level. A Pigouvian tax rate would give people an incentive to take the costs of global warming into account.

I still don't understand why you think that (1) there is global warming, and (2) why you think it is man-made. As I understand the science to date, the jury is still out on the underlying issue of global warming itself--there are too many contradictory indicators out there to be able to say one way or the other. The contradictions might be the result of the climate changing over to a global warming cycle, or they might be the result of some as yet undetermined variation in one or more of the variables involved in the climate. The whole climate thing is one huge feedback loop with a lot of sub-loops in it, and the scale (in both time and physical size) is rather daunting.

One of the professors at Cornell thinks that we should have already entered a cooling cycle, but that increased solar activity has postponed that for another five years.

So, even if global warming is not yet proven, the question is can we ignore the possibility that global warming is indeed happening? To answer this, we have to look at what might be causing the possible global warming.

When we do so, we discover that solar radiation is the number one cause of increased warming of the Earth. Recall that the original UN report on warming included a chart showing historical temperatures (the chart has since been removed to placate the global warming religionists), and on this chart, we are currently at about two thirds the average global temperature that existed when the Sahara Desert was formed. As I recall, there was not too much industrial pollution back then.

The number two influence on global warming is water vapor. We don't hear much about this, but any climatologist will tell you that the effect of water vapor on the climate is far greater than the effect of carbon dioxide.

Speaking of carbon dioxide, closed environment experiments show that plants exposed to increased CO2 levels develop a darker green in their leaves. Remember that feedback loop I mentioned? We can call the entire feedback loop Gaia. The percentage of CO2 in the atmosphere has been a pretty steady 0.6% (IIRC) no matter how many volcanos erupt. That indicates that Gaia (the feedback loop) can tolerate a lot of variance in the input cycle, with the loop steadying down to a "normal" state.

What about the other possible changes, ranging from freeing the methane trapped under the polar ice with who knows what consequences to the possible reduction in the Gulf Stream due to the eradication of the water "elevators" near Greenland & Iceland that help promote the warm water / cold water flow, with the consequence that Europe would become much colder? (Long Island points East towards Portugal; the contrast in temperatures between LI and Portugal is due to the Gulf Stream.)

With so much unknown, my personal feeling is that we ought to be pouring time and money into (1) direct measurements in a whole host of places (land, sea, atmosphere) and (2) closed environment experiments to get a better handle on the intimate parts of Gaia. Surely that is something we (believers and non-believers alike) can agree on?

This is not support for the "do nothing" crowd; like Megan, I think we should do rather a lot, starting with (in America) really whopping gas and carbon taxes.

That preference strikes me as a cheap luxury good, too (in a country where 'progressive' lefty politicians can't resist demagoguery when the price of gasoline rises above $2.50/gal).

My own problem with Stern is...what's the point? That is, everybody seems to be trying to adjust the discount rate in order to produce the 'right' answer where the 'right' answer is the one that corresponds to the intuition they had before they started playing with the mathematics. But what's the point of adjusting parameters until the results correspond with our common sense intuitions?

The uneven distribution of the benefits presents another pricing problem, particularly since there are wide income disparities between the affected countries. I'm not entirely clear which way this cuts, since Britain and Ireland get hosed along with Bangladesh, but it's hard to dodge the moral injustice that the United States, which produces more carbon per capita than these countries, may end up a net beneficiary of global warming.

If the US is going to benefit from global warming, that seems to me a big incentive for the US to do nothing.

Yes, yes, I know: I'm not a real libertarian. You may have my card and my secret decoder ring back.

Jane, I think they burned your card and smashed your decoder ring when you said that you thought the government should pay for all health care costs above 15% of adjusted gross income. ;)

In all seriousness, I think that global climate change is one of the grayer issues (much like abortion, immigration policy, foreign policy, and civil marriage) as far as libertarianism is concerned. There are legitimate questions raised as far as (a) to what extent if any is global climate change being affected by human activity, (b) to what extent if any is this a good thing rather than a bad thing (this morning as scraped my windshield to drive an hour into the Twin Cities for a meeting on MPR they were claiming that 2006 was the warmest year in the United States on record as a result heating costs went down something like 14%), (c) to what extent if any can the problems be prevented and to what extent if any can they be mitigated and (d) what are the various costs and benefits of each of these proposals.

The problem is that as we study climate change (which is what many of the “skeptics” said we should do before committing ourselves to any costly policy changes), we keep learning new things which IMO makes it appear more and more that (a) global climate change to the extent it is happening is probably more natural than manmade in origin and (b) is likely to produce as many or perhaps more benefits than costs at least in the United States and (c) it’s cheaper now to try to mitigate those costs in the future than to try and prevent them.

If the US is going to benefit from global warming, that seems to me a big incentive for the US to do nothing.

Good point, has anyone ever done a study which breaks down the various costs and benefits of global climate change by nation? It seems to me that if it were to be credibly shown that the United States would stand to have a net benefit from an aggregate increase in the Earth’s temperature (and I’m sure that would depend on what level of temperature increase we’re talking about), then that could seriously erode public support for “doing something.”

"Obviously, there are huge problems with status quo bias, most notably that none of us would like it at all if our ancestors had been at all successful in applying it."

But, isn't that statement the result of status quo bias? If our ancestors had been at all successful in maintaining the status quo, we wouldn't have anything to be (comparably) upset about.

-kd

The thing about global warming is that most of useful policy perscriptions are good on their own merits, totally apart from the effect on the climate 100 years from now.

Just from the national security point of view, we should burn less oil, much of which comes from the middle east or Venuezula. More efficient cars reduce air pollution. Nuclear energy is cheaper and cleaner than coal.

The nice things about these policies is that they can be justified without resort to voodoo like Stern's.

And all of these policies can be justified

Nice post.

The problem with carbon taxes is fungability; sure, it'll help some. But it'll also reduce demand for fossil fuels, decreasing price, increasing demand elsewhere... and it'll move energy-intensive industry overseas (eg, to China), where even more CO2 will be produced to the exact same end, but we'll get to feel noble about that fact that it didn't happen here.

Also, wasn't the latest research indicating that the problem was less SUVs than cow farts?

Jane,

Supposing for a moment that we should rush to cripple our economy based on very uncertain predictions (let's also ignore that the predictors have never actually proven their predictive ability by making predictions and waiting around to see if they're validated).

Why should we tax all carbon use equally? If we're going to be this invasive, why don't we start by banning the big, unnecessary uses of carbon. For example, air travel. Shutting down all of the commercial airlines (and using our air force to enforce this all throughout the world) would drastically cut the amount of carbon consumed, and wouldn't hurt all of the poor people who commute to work.

If you're getting this far into government meddling, why not do it with a little more care for who you're going to hurt?

Also, why not things like outright banning public opposition to nuclear power plants (this is a crisis, isn't it?), exempting them from environmental impact studies, etc?

And what about spending money to grow hundreds of square miles of fast-growing plants and bury them every year? You can dispose of millions of tons of carbon by burying millions of tons of plants.

If you really think that we're facing a crisis, Jane, why aren't you acting like it? I'm a regular reader of yours, and I still can't figure this out. You say that it's a crisis, but the sum total of creativity that you apply to the crisis is (more or less) the kyoto protocol. Why aren't you acting like this really is a crisis, if that's what you really believe.

I am not much of a global warming skeptic, but I find it terribly convenient that much of 'stop global warming' advice seems to be "Don't do the things that environmentalists don't like you doing."
Nevertheless, some things are true even if Al Gore believes them.

P.S. you and the other Megan can't keep referencing each other like this. I have "economics is neat, libertarians are interesting" New York Megan and I have "don't you miss the progressive left" NoCal Megan. I need to keep you two separate in my head. ;)

Re "it's hard to dodge the moral injustice that the United States, which produces more carbon per capita than these countries": it appears that the US is actually a net carbon sink, so that the carbon dioxide produced in the US is taken up on this continent. Europe is currently a small net plus as well. So the problem with excess CO2 is from outside the US and Europe. This could change in the future, but it is hard to see how the US is immoral given that its current net usage is as a carbon sink -- we are actually helping the world wrt CO2 net increases.

See Projecting the future of the U.S. carbon sink by G. C. Hurtt, S. W. Pacala, P. R. Moorcroft, J. Caspersen‡, E. Shevliakova‡, R. A. Houghton, and B. Moore III:

"Atmospheric and ground-based methods agree on the presence of a carbon sink in the coterminous United States (the United States minus Alaska and Hawaii), and the primary causes for the sink recently have been identified."

http://www.esm.harvard.edu/files/publications/Hurtt_etal_02.pdf

I am not much of a global warming skeptic, but I find it terribly convenient that much of 'stop global warming' advice seems to be "Don't do the things that environmentalists don't like you doing."

Almost as convenient as how many of the “things we need to do to stop global warming” turn out to be things that environmentalists told us we should do before they started complaining about “global warming.”

Nevertheless, some things are true even if Al Gore believes them.

You’ll have to forgive us for wanting a little more certainty than “Al Gore believes [it]” before we commit to trillions of dollars a year in higher energy costs and a reduced standard of living for a “problem” that will probably turn out to be largely natural and offset by many of the benefits and/or cheaper to mitigate than prevent.

Al Gore apparently still believes that expanding nuclear power is bad, even in countries such as the US and China and India which can already produce nuclear weapons and therefore do not present a proliferation risk. I could be wrong on this, but he raised opposition to such power in his book "Earth in the Balance", and it's incumbant on him to reverse publicly if he has done so at all in an issue this central to global warming.

I consider this issue to be a distinguisher between the hypotheses "X wants this kind of change because he's scared of global warming" and "X wants this kind of change because he's anticorporate or has another gloppy liberal statist agenda, and uses global warming as an excuse."

-dk

So you want to impose a huge statist regime on me, regardless of my tastes, to partially deal with global warming, but you won't even live with compact flourescent lamps yourself to do your share?

-dk, who has been biking to work for over 30 years, varying distances from 5.3 miles to 14.2 miles

A quick response - I'll try to write more later. The only point where I really disagree is in relation to uncertainty. As Tyler Cowen and others have argued here, uncertainty is not the friend of inaction - the more uncertainty we have, the more weight there is on the worst case scenarios. I agree, though that discounting far into the future is problematic as a way to handle this.

As regards eta=1, I do favour a higher value, but the implications of eta=1 for current redistribution are radical enough to suggest that a greatly higher value is unlikely to command broad assent. For example, a policy that took $1000 from people on $100 000 a year, and consumed most of it in deadweight losses, giving the net proceeds to people on $7 000 a year, passes the benefit-cost test as long as the benefit to the poor exceeds $70 (1 per cent of income).

For example, a policy that took $1000 from people on $100 000 a year, and consumed most of it in deadweight losses, giving the net proceeds to people on $7 000 a year, passes the benefit-cost test as long as the benefit to the poor exceeds $70 (1 per cent of income).

And as long as the transaction could be costless, the optimal solution would be to equalize all wealth and income forever.

Wait...

i still do not understand why this doesn't fall into the category of speculative skyisfalling worries that may or (more likely) may not come to pass that we really shouldn't worry too much about without greater certainty. that is, every other doomsday scenario has been wrong (global cooling, overpopulation, famine, etc.). and the earth's temperature changes all the time, so temperature change isn't inherently bad. meaning the only issue is how it will affect us, meaning either humans or americans, and whether it's worth taking prophalactic measures in the face of uncertainty. and here's the thing -- you can tell the predictions of doom aren't really taken seriously where it counts, because no one's bailing out of nyc or london real estate, nor are ski areas selling at a discount, etc. until the market cares (for reasons other than fashion), it's hard to see why anyone else should (and those of an economic bent should see this as obvious).

Tim,
when you say "it appears that the US is actually a net carbon sink", I think you're misreading the article; they do not claim net carbon sink at all. In fact they claim a carbon sink (not involving emissions at all) of up to than "0.71 Pg C/yr", i.e. petagrams of carbon per year in the 1980s -- or maybe only a little more than half that, but 0.71 Pg is their upper end. From
http://www.eia.doe.gov/oiaf/1605/gg02rpt/carbon.html we get a 2001 "U.S. Anthropogenic Carbon Dioxide Emissions" figure of 1,578.7 million metric tons of carbon. So we ask Google to search for "0.71 petagram/1,578.7 million metric ton" and get

(0.71 petagram) / (1 578.7 million metric ton) = 0.449737125

in other words, even at the most optimistic model of the carbon sink, it's absorbing less than half of our emissions.

Am I missing something here?

Rex there's not any debate over whether global climate change is happening. We know it's occuring. The debate is rather over whether humans play a role in this change.

You clearly don't understand "the science to date." BTW the "water elevators" you speak of is actually called thermohaline circulation.

I myself am of the opinion that we have already reached a tipping in regards to climate where a series of feedback loops continue to warm the climate to a new warmer earth. We will lose some islands in the Pacific and low lying cities. Sure. But I am pretty sure it's too late to do anything about it.

AT,

Including infinity in expected value calculations leads to all sorts of trouble as the literature on Pascal's wager amply demonstrates.

e.g. http://mason.gmu.edu/~atabarro/Pascal'sWager.pdf

"For example, a policy that took $1000 from people on $100 000 a year, and consumed most of it in deadweight losses, giving the net proceeds to people on $7 000 a year, passes the benefit-cost test as long as the benefit to the poor exceeds $70 (1 per cent of income)."

Maybe I'm misunderstanding the terminology, but doesn't that suffer from the supposition that the $1000 per year wasn't doing anything useful (or at least wasn't doing anything as useful as $70).

If I'm misunderstanding I suspect it may be in the phrase "people on $100 000 a year". Does that mean people making/earning/getting $100,000 a year?

Gabriel:

Isn't that just the rigourous explanation of what I said? You'd think global warming has infinitely negative utility from some of the things I hear. But as dk and dj point out, they sure don't act like it. They don't even act like it's particularly high by finite.

Tom,

I stand corrected -- on closer reading, the article is about the sink itself, not the net source/sink, as is clear from one of the footnotes.

I was curious as to whether this sink effect changes the relative standing of the US in terms of per-capita net emmissions (e.g., re our moral standing), but couldn't find this easily. Looking at per-capita usage (say per http://www.manicore.com/anglais/documentation_a/greenhouse/evolution.html), even if US per-capita emissions are net 1/2 of what is shown, and other countries are not reduced by sinks at all, the US is still at the high end of per-capita greenhouse emissions, but not by as wide a margin.

Sebastian,

No, it's a simple income (wealth, really) transfer. If eta=1 then utility is logarithmic. Making the standard (classical) utiliterian assumption that everyone gets an equal weight, social welfare is just sum of individuals' utilities. If we take dx from a rich person and give the amount dz to a poor person then total social utility is unchanged if
dx=y(rich)*dz/(y(poor)+dz)

where y(rich) is rich person's income and y(poor) is poor person's income. Plugging in the number John gives above you get the answer - social welfare is unchanged when you take 1000$ from the rich and give 70$ to the poor. So any benefit to the poor greater than 70$ is worth it according to this utiliterian view.

With eta=2 ( u(y)=-1/y where y is income) you're allowed to take about 12,400$ from the rich to give 70$ to the poor.

Of course the 'radical implications' are really the result of adopting the utiliterian framework in the first place, rather than just eta=1. Utiliterianism was/is a fairly radical philosophy which folks tend to forget.

And what about spending money to grow hundreds of square miles of fast-growing plants and bury them every year? You can dispose of millions of tons of carbon by burying millions of tons of plants.

Unless you're planning to bury them real deap, i.e. where they will suffer enought heat and/or pressure to coalify, expect much of the carbon to find its way back into the ecosystem through gas release during decomposition.

Also, how much carbon will be released from fuel consumption required to farm and bury lots of plants? We don't yet have hydrogen-powered tractors burning fuel produced by electrolysis of seawater via electricity generated by means of nuclear power.

Re "it's hard to dodge the moral injustice that the United States, which produces more carbon per capita than these countries": it appears that the US is actually a net carbon sink, so that the carbon dioxide produced in the US is taken up on this continent. Europe is currently a small net plus as well. So the problem with excess CO2 is from outside the US and Europe.

Even assuming all of the math for the sake of the argument, you may have noticed that a majority of all non-textile consumer goods, and no small fraction of textile goods, available in the US bear a Made In China stamp. This merely amounts to the exporting of carbon intensity someone already referred to, so unless the US and China together have enough tree cover to account for all emissions consumed in the US, the argument is extraordinarily weak.

radek, the problem isn't that this is one of those "crazy" results you get from a utilitarian premise. As I tried to succinctly show in my previous post, you can't defend such transfers even if you accept utilitarianism and the transfers are costless. The reason is that the calculations neglect the much larger problem that if wealth and income are permanently constant, there is no reason to do anything productive because it would not have an impact on what you can consume -- since everyone has the same income/wealth regardless. (Communism problem and all.) That is, this calculation looks at the transfer in a vacuum and ignores the long term effects of doing it. A more reasoned utilitarian would endorese "rule utilitarianism" whereby they pick the rule, not the one-time course of action, that maximized utility.

And you can pick a much more utilitarian rule than pure communism -- trust me on that one.

Person, the fallacy in your argument is here:

transfers are costless and
there is no reason to do anything productive

If transfers kill all incentive to do anything productive then they're not really costless are they?

You can redo the whole calculation with labor effort and leisure as a good and income taxes which are distortionary and you'll still get a very strong rationale for redistribution.

BTW, I'm neither a utiliterian (though I let it inform my thinking sometimes) nor am I in favor of the kind of distribution that a consistent utiliterian perspective would require.

Oversimplifying, there are two broad paths for dealing with global warming. We can begger ourselves to prevent it and leave our descendants poor on a temperate Earth or we can ignore global warming, get ourselves rich and then leave solving global warming to our rich descendants. Stern's methodology is a way to force us onto the former path.

"Unless you're planning to bury them real deap, i.e. where they will suffer enought heat and/or pressure to coalify, expect much of the carbon to find its way back into the ecosystem through gas release during decomposition."

This is one of the few things that still bugs me about global warming. Seems to me that the Al Gores of the world say that current climate catastrophes are caused by past CO2 emissions, we're putting out more CO2 than ever. It also seems to me that they say "If we stop what we're doing RIGHT NOW, maybe things aren't going to be so bad."

On top of banning SUVs and packing all of America into the square footage of Jacksonville, FL, shouldn't we also be trying to sequester CO2 out of the atmosphere and bury it deep in the ocean or something? Or is this such an engineering challenge that the only viable response is destroying every diesel engine on the planet.

I'm not trying to be facetious, but the lack of active measures to combat too much CO2 tends to make me nervous about the all-too-convenient ulterior motives of global warming types.

I'll start listening when Al Gore stops flying.

radek -
The other missed assumption is that the $1000 in the hands of the rich *might* have provided more than $70 in utility to the poor *without* being taken from the rich, or without any government-imposed redistribution. If you cannot account for what the $1000 would have done in the hands of the rich, you really have no argument at all about what the government could do better.

For example, a bunch of rich people get together and make a movie that a bunch of poor people then get to see... etc.

David,

Sorry, no way can you claim mere oversimplification when you try to get this bit of hand-waving past the audience:

We can begger ourselves to prevent it and leave our descendants poor on a temperate Earth

So my big complaint with all the doomsayers is that they says things like the passage I quoted from you, when to be accurate they really should say:

We can begger ourselves to prevent it and leave our descendants poor on a perhaps maybe-temperate Earth

Twill00

Yeah but that's just nit picking. Replace "income" or "wealth" with "consumption" and everything else is a go. You could be even more precise than that. I mean, there's caveats and all but they're not really central to the main idea. The point of using dollar amounts and "income" is that they're readily understood terms and most people like money.

Mr Stern? That would be Sir Nicholas to you (as a British magazine, perrages and knighthoods are pretty well the only exception to describing everyone in the world as Mr/Mrs/Ms/Miss.

Just out of curiosity, how big is "whopping," and to what extent is your advocacy modified by what the government does with the revenues?

Megan, also very important, greater wealth both increases your tolerance for risk and your ability to manage it. The solutions in the future will likely not increase in cost a whole lot and will be a smaller relative portion of the income of future generations. The costs also will not be perpetual (other than the few instances where we would set systems like in Holland). And the costs will diminsh with time and as GHG levels peak and dimish. Historical studies have also shown that doubling of CO2 concentrations would cause solar heat forcing resulting in at most a 1.5C temp increase(assuming solar radiation remains at recent levels, which I believe have been higher than usual).

In response JQ's comment, there is much more uncertainty on the side of negative climate change (decreasing temps) and negative climate change would also be more costly. The costs associated with lower temps probably are more likely to be perpetual rather than the likely one-time cost associated with warming (Living is colder climates is more costly and colder temps would also mean less humanly and agriculturally suitable geography while warming would likely result in more).

Why whopping gas taxes? Nordhaus estimated that the marginal external cost of a gallon of gas in damage from global warming was only 4 cents.

Kirk, the "green" in Greenland was put there for industrialization. It was given a pleasant name to attract a workforce to exloit the resources and promote colonization for geo-strategic reasons.

I own a couple houses in San diego each about 12 miles inland and a few hundred feet in elevation. Could become beachfront, no? And all those poor rich people in Manhattan;)

Kirk Parker: What difference does it make if we're causing it if it's happening, if it will be disastrous and if we can prevent it. I understand that you disagree with all of those "ifs" but that's just fighting the hypothetical.

As it happens, I come down on the other side. We should mostly ignore global warming, other than for those things that give us the biggest bang for the buck, and concentrate on developing a solid secure middle class in India, China, Bangladesh and as much of the rest of the developing world as we can manage. Then we can let our richer, wiser and more technologically advanced descendants solve global warming in their spare time -- if it has proven to be a problem.

It is this alternative that Stern's assumptions rule out entirely. It's as if a group of doctors called Stern in to help them decide between treating a patient with surgery or with medicine and the first thing out of Stern's mouth is "Let's assume that surgery will kill him."

I'll start listening when Al Gore stops flying.

Al Gore buys carbon credits to cover his flights. He consciously leads a carbon neutral lifestyle.

It was given a pleasant name to attract a workforce to exloit the resources and promote colonization for geo-strategic reasons.

I blame Bush.

Jane

I can't see where you come to the conclusion that the US will benefit from global warming, to any meaningful extent (net of costs).

Did the USA benefit from hurricane Katrina? Does the US benefit as Florida hurricanes get stronger and stronger (because the average sea temperature is higher)?

If the world's ice sheets destabilise, then much of Manhattan, for example, is under water. Beyond doubt Manhattan is not ready for a really serious storm-- there are credible projections showing severe flooding in the New York area (including Lower Manhattan) by the 2040s.

Rather than the Minnesota Rainforest, what is far more likely is the Great Desert (previously known as the Great Plains).

In fact one group of Western USA water planners was shown a prediction for rain and snowfall in the Western US for 2050, based on Hadley Centre modelling, under Business As Usual conditions.

There reaction was there was no point worrying about it, because there was no way the US could cope with that level of shortfall.

A look at what is happening with the Murray River System in Australia, which supplies the water needs of 2 States, is perhaps a precursor. Rainfall is over 90% below historic levels. The vineyards and other farming activities are on the point of being shut down and active water rationing is being considered (read: you get your household water from a truck).

Estimates are half the world's species might die in the 21st century-- do Americans not place some value on that biodiversity, for their own children?

There are of course the geopolitical implications of the world's hot climate dwellers moving northwards-- or is the US not concerned about Latin American, Carribean and Mexican immigrants?

The IPCC gives a 20% chance of a 5 degree centigrade average temperature rise or warmer. That would make agriculture in the lower half of the USA almost impossible, and would of course flood many of the US's major coastal cities.

Did your parents never tell you about Hurricane Hazel? Its effects were most devasating in the NE US and Canada.

Stern explicitly states that the cost of a world 5 degrees centigrade or warmer is so high that he doesn't model it.

The analysis also ignores the danger of positive feedback loops. At some level of CO2 the rainforest die due to heating, and we lose that CO2 sink, and the permafrost begins to catastrophically release methane.

At some other level, the oceans become too acidic to support much of the life that currently supports them.

The Permian extinction is instructive: at 1000ppm CO2 (a level we will reach in the 22nd century, if we do nothing), 90% of the animal species on the planet died.

Once the positive feedback loops kick in then becomes impossible for human beings to arrest the process. Eventually, the planet could get too hot to live on.

It's interesting also you think Stern will never be implemented. Rather, if something Stern-like is not done, we might as well write off this civilisation. James Lovelock reckons 200 million of us might survive living around the Arctic Ocean.

Whilst we don't know what the impact of global warming will be, we do know that if we don't arrest CO2 accumulation in the planetary atmosphere, eventually we will trigger catastrophic climate change.

Oversimplifying, there are two broad paths for dealing with global warming. We can begger ourselves to prevent it and leave our descendants poor on a temperate Earth or we can ignore global warming, get ourselves rich and then leave solving global warming to our rich descendants. Stern's methodology is a way to force us onto the former path.
Posted by David Cohen at January 9, 2007 9:01 PM

David

You really are oversimplifying.

What is at issue is whether we *take the risk* of making the planet uninhabitable, because we think we have the time to wait until we are richer to deal with the problem.

What Stern is saying is bug*er the science, it's economically impossible now to stop at 450ppm CO2, let's go for 550ppm, if we spend 1% of GDP (so the economy in 2050 is where it would have been in June 2049 if we had done nothing) then we can hold the increase in CO2 to that level, and the temperature rise to c. 2.5 degrees centigrade.

He also says if we don't start soon, given the costs of capital assets and their useful lives (a coal plant can last 50 years), that the costs of doing anything start to multiply.

What the scientists are saying is there is at least a 20% chance that things will be much worse than 2.5 degrees centigrad increase in 2050. ie that 550ppm is taking a big risk that things will be much, much worse than we project.

Adaptation is inevitable: we've bought the temperature rise in prospect (the first 2.0 degrees or so, of which the first 0.6 degrees have taken place).

Isn't atmospheric CO2 at historically low levels, (speaking in geological timeframes), and at the same time-scale unrelated to temperature in any important way?

That's what the geologists evidently keep saying.

Which leads me to, regardless of the views of Mr. Bailey, have immense doubt of the anthropogenic nature of global climate change, and consequently the ability of any amount of expenditure to meaningfully affect it.

(And even if we could so affect it, by immense expenditure, the risks - by the same logic of the Greens - would be so great as to make the attempt morally unsupportable outside of the direst need.

Covering the poles with soot to increase heat to stop an "impending" ice age, for instance, sounds like a good idea ... but only if we're not wrong about the coming ice age, and if the effect of that isn't greater than we project.

Given the ineffectiveness of our climate models to predict even over the short term, any call for action or claim of crisis based on them must be disregarded as science and their confluence both in (unsupported) goal and in proponents with the Green movement gives one justified reason to believe them less-than-unbiased.)

OK you might reasonably expect Kling to understand discount rates better than Bertram, and I'm not defending Betram's childish post about Kling, but by the same token Kling's attacks on Stern are equally reprehensible - he did not credit Stern with having sensible reasons for his chosen discount rate (calling him a fool or a knave) - so I don't know why you seem to be taking sides on the personal slights aspect of this spat. On the non-personal aspect, it's very good to see you and Quiggan inching towards some sort of agreement - or at least towards defining the areas of disagreement.

Valuethinker,

Please answer this important question that has been raised here and elsewhere.

If the US cuts back on its emissions and somehow taxes its way to reducing c02 out how does that help the world if China and India and the other developing countries plug away and take our place?

You do understand that a significant amount of the production will just shift overseas so not only will that c02 output be transferred elsewhere, but as they produce more for us their own economies will grow and their consumtion will meet or exceed ours.

It never ceases to amaze me how much society can demand "action" and revolutionary changes based on unproven science, and yet we are so quick to overturn several thousand years of established tradition to meet the social agenda of the day. I put some numbers down and a graph on a piece of paper and you have to be a complete fool to disagree with me. But if I point to, oh, the entire history of our civilization, that's just a silly religious or moral belief that I have no right to impose.

Stern gave his political boss (Gordon Brown) the answer that Brown wanted. This was simply to facilitate the acceptability raising of taxes by Brown, a deeply cynical move.

The reality is that we cannot be sure what the climate will be in 50 or 100 years time, or whether there is anything significant that we can do about it. Climate has always been a-changing.

I think that David Cohen has it nailed. In 50 years time at 3% growth rate our descendants will have 4 times our wealth per capita. Let them spend 1/4th of that on whatever remedial measures may possibly then be necessary, leaving them with only(!) 3/4ths of our income.

Until we can control the sun, it doesn't matter.

If we were stable, we'd be living in caves. If I were stable, I'd pick my 19 y.o. weight.

If the earth were stable, it'd still be an ice ball.

Man is better suited to adapt to warming than cooling, wasting a lot of money trying to stop something you can't.

I've just begun reading "Unstoppable Global Warming Every 1500 Years."

When you're getting the same readings/information from all over the world thousands of years ago, go with the flow.

In 250 million years, the continents will once again be 1 great land mass, we need to get off this rock.

Good thing Mars is warming.

Besides, didn't a GW screecher just admit a monster has been created and they're being quite dire to get peoples' attention to "do something?"

BTW, Jane, how do you intend to stop the earth from wobbling? That's a cause, too.

i find valuethinker kind of funny. you do realize you're citing pre-warming hurricanes? and that the worst hurricanes lately were early 1900s? you might say it's gonna get worse, but there's really little to back that up (if it's getting warmer now, where are the super hurricanes?).

and the great plains were called the great desert, because that's what they were (we just happened to settle much of the western US during a fairly wet century, relatively speaking).

and i've gotta ask again -- why aren't the markets reflecting all this incredible risk? everyone just ignorant? i doubt that, where there's billions (likely trillions) to be won or lost.

as for collapse of all civilization, a couple hundred million just living around poles, that's just silly. there's a lot of high ground around, and there's a lot of water around in currently cold places that would suddenly become balmy (canada, siberia).

the predictions all sound like scifi novels, and likely are little more credible.

Ian: I think you meant 3 times our income.

Valuethinker: If you think that CO2 will have that much influence, you must be in the camp that thinks a slight rise in temperature due to CO2 will cause a positive feedback by evaporating more water (which is a much more powerful greenhouse gas than CO2, except when it forms clouds and snow that reflects more sunlight) - but apparently, you also think that deserts will expand in spite of the increased water vapor.

Isn't the Sahara getting greener in spots?

I swore I saw a map, it was a discussion because the UN didn't even notice.

Markm

It depends where and when the water vapour is.

As I understand it, a rise in global temperature should increase the amount of rainfall *but* reduce it in places which already tend towards dryness.

The exact pattern in the UK is that we are having longer, hotter, dryer summers. We have just passed through the dryest 18 months in nearly 100 years.

*however* we are also having more violent storms with more rain in them-- highest precipitations per hour ever recorded.

My understanding in places like the western US is the models show pronounced drying. Similarly the Sahara belt will expand, and the Amazon will shrink.

Jane

You mention 'we are due an ice age'.

To be exact, because of the Milunkovich cycles (solar peturbation due to the earth's non-circular orbit), we are due an ice age about every 20,000 years, or in another 8,000 years.

No one serious thinks we are due an ice age in the next 2000 years at least.(1)

In any case, it is the height of hubris to think that we can somehow plan to offset an ice age, by mucking up the atmospheric system beforehand.

It's not as if an uncontrolled addition of an environmental pollutant to the atmosphere has no other consequences than offsetting a potential cooling. They are not perfect offsets.

(1) except in the case of the interruption of the Thermo Haline Circulation (THC) aka the Gulf Stream. In which case, Europe could get very cold, for a while-- not clear it would be an Ice Age, but it would give all of Western Europe, potentially, the winter climate of European Russia.

"Basically, Stern's approach is to set the pure time discount rate, which discounts future utility relative to current utility, to zero. No matter what its supporters say, this is a controversial decision, and Mr Kling was perfectly within reason to controverse. That is not to say that it is wrong, only that extraordinary discount rates require extraordinary justification, and I am not comfortable with the seemingly arbitrary choice of an ultralow rate of time preference as the instrument of pricing."

Jane, I believe you've made a mistake here, and I don't see that any other commenters addressed this, and I'm rather surprised that John Quiggin didn't, since he has previously done so elseweb.

The rate of pure time preference (which stern set to a very low number) is not the same as the discount rate. He used that assumption, plus an assumption about the social rate of return (I think 4%/year), to come up with a discount rate, which turned out to be roughly equivalent to the trend rate of global economic growth.

So he's not using a zero discount rate at all. The rate of pure time preference essentially was used to *further* discount due to the prospect of future generations not existing at all.

So all this about how too low a discount rate makes everything trend to infinity is not a real criticism of Stern. The discount rate he's using is between 3 and 4%, not zero or even close to zero.

You can still quibble with Stern's choices, including the choice of eta. Maybe the social rate should be 5%, or eta should be 1.5 or .5, or whatever. And pure time preference could certainly be greater than 0.1% as well. I absolutely agree with Partha Dasgupta, that Stern should have chosen to look at the sensitivity of his analysis to a broad range of such reasonable parameter choices.

But he did *not* make the obviously ridiculous choice of a near zero discount rate, and I'm getting a little tired of reading criticism predicated on that false assessment.

1930s US drought conditions, IIRC, valuethinker.

So, what's that going to do to England's wine industry?

Mr Sullivan, I'm not confused. The Stern report refers to the discount rate I am discussing as the pure time discount rate, and estimates it as something on the order of 0.1%.

There are basically three components to a discount rate: time preference, opportunity cost, and inflation. Since we're dealing with real growth, inflation drops out. Stern also kills time preference, leaving us basically with growth (AFAICT, he never reveals what the discount rate actually is), which means that we value X today the same as 2X tomorrow. That raises all sorts of thorny problems about marginal value, distributive justice, uncertainty, and so forth, which disappear under more normal discounting regimes because they drop the value of far distant income streams to effectively zero. Any choice of discount rate which does not drop the value of such far distant income streams has to resolve those problems in some other way; Stern doesn't.

discount viagra

Jane wrote: ...when Ron Bailey has switched sides, I think it's safe to say that this particular debate is over.

This seems like a strange metric to me. Freeman Dyson, for instance, is still sceptical. I'm not sure why Ron Bailey's opinion should be weighted more heavily than Dyson's, particularly as his arguments have seemed, to me, unconvincing both as sceptic and as convert. Dyson's reservations seem much more persuasive.

Part of the problem is defining what "the debate" is over. I would count myself a sceptic, but, at least in the broadest sense, I am a believer in AGW, as are most respectable sceptics. That is, there is little doubt that human activity has caused an increase in the levels of certain greenhouse gases, that this is very likely to have an effect on global temperatures, and that the default assumption should be that the sign of this change will be positive. I'd be leery of anyone who argued otherwise.

In that sense the debate is over, though I'm not sure that there ever has been much debate over that, except at the fringes- that is basically what Richard Lindzen, a noted sceptic, had to say in his congressional testimony way back in the 90s.

The debate that matters is different- it is over whether or not we can find the human signal in the noise, and over how precisely we can quantify it (there are other questions as well- it would be unfortunate to cut emissions drastically only to find that AGW was indeed significant, but that it was staving off the end of the current interglacial period- "not in fire, but in ice" and all that).

The debate over this is not over, and anyone who claims that it is should be looked at as warily- as much so as the fringe elements who declare that humans could not possibly have a significant impact on climate.

I'd suggest reading an essay titled "Glaciers That Speak in Tongues", by Wallace Broecker, a well respected climate scientist. Broecker is not a sceptic- he is in favor of acting to reduce emissions. But he is honest enough to admit that, according to his understanding of the science (at the time of writing- a little more than 5 years ago), the human signal cannot be unambiguously detected at all, let alone quantified. (Broecker also includes a revealing quasi-disclaimer- he worries that his essay will be seized on by sceptics; of course he worries that this will be the case because his essay does in fact support the position that I would call the "weak sceptical position").

Broecker has said in the past that he sees the atmosphere as a sleeping dragon, and our meddling with it the equivalent of poking it with a stick. I'd agree that, all other things equal, we would do far better not to change the composition of the atmosphere. The problem is that all other things are not equal, and we really are not in a position to say what the effects of our actions will be (and noting that there don't seem to be any realistic ways of avoiding a significant increase in emissions over the next couple decades- China and India, etc.).

Talking about discount rates in this situation, while interesting on a purely hypothetical level, strikes me as very similar to ignoring significant digits.

Err- forgot to add a link to the Broecker piece: http://www.findarticles.com/p/articles/mi_m1134/is_8_110/ai_79051532.

Also, my last sentence was a bit too strong- of course the discount should be factored into whatever calculation is made, no matter the uncertainty. But I think you are being overly precise (to put it mildly) when you speak of "losing Bangladesh", and that others are when they talk about "Manhattan real estate".

"First, some regions will benefit: Siberia and Canada will probably blossom under global warming."

There's a large set of flora and fauna and entire, very complex ecosytems and ways of life that will simply cease to exist in these places once global warming kicks into high gear. I don't understand what your point is, but you seem to be saying that when these places get warmer, that will be good. I guess if what you care about is soybean yield, you might be right. If you care about our common heritage of biological diversity, you're not.

udegumi's post put it very nicely. For my part, to not be a skeptic of one form or another means you have to accept all the following propositions:

1. GW is happening.
2. It's chiefly human-caused, by CO2 (CO2 forced)
3. This CO2 increase is due to "discretionary" human activity.
4. Reducing or substituting this "discretionary" human activity will predictably and reliably affect GW rates.
5. This reduction can be driven by policies at the national and/or transnational level.
6. It is more moral to do this than any other activity. (Lomborg's issue)

I actually agree with 1 and can be convinced about 2 and 3. Point 4, for me, is the weak point, and without a "Yes" on Point 4, Points 5 and 6 are irrelevant.

Ms. Galt:

Did you read this postscript?

http://www.hm-treasury.gov.uk/media/3DD/43/Technical_annex_to_postscript.pdf

It was linked by Arnold Kling in response to you. I hadn't seen this before, and it illuminates the sensitivity issues. It turns out that increasing eta argues *more* persuasively for climate change abatement under his model.

It's very clear in this description of the expected utility model that the pure rate of time preference is just one component of the discount rate. The primary component is the growth rate of consumption. he doesn't give a specific figure, because the estimate changes based on climate change abatement.

IOW, in these models, the less we do about climate change, the more the effects of climate change get discounted. This is a pretty conservative method if you are arguing for abatement.

The sensitivity analysis also notes that a pure rate of time preference of 1.5% doesn't change the position of the risk assessment. What it does do is discount the welfare of those.

also, even a discount rate as low as .1% gets rid of issues about forever worrying about indefinitely many future generations. It makes the horizon very long, but it is nowhere close to infinite. If I model an income stream of $1/year with a 0.1% discount rate, the present value of a 100 year stream is $95. Of a 1000 year stream is $631. A 10,000 year stream is $999.50, and the limit as years --> inf is only $1000. A .1% discount rate essentially says we can ignore everything after somewhere between 5000 and 10,000 years. A reasonable person may suggest that is too long to worry about, but you certainly can't argue that it introduces problems of never-ending accumulation.

And again, that is only pure time preference. Growth of consumption dominates the discounting, as the sensitivity analysis using higher pure time preference rates showed.

markm, I think Ian was making a joke. (Regarding the 3/4th vs 3X).

vt, the UK isn't exactly a dry-spot.

Climate-wise.... 100 years is about 3 data points.

(i'm not sure of the at all, but...IIRC) Stern's effective discount rate was ~1.5%, not eta, the discount rate. Again, IIRC.

David,

Fair enough, it sounds like we're mostly in agreement, actually. I primarily meant to object to the confidence expressed that what we did would "cure" the situation, and I guess you were more quoting that asserting that yourself.

Aaron,

You're joking, right? The fact that the settlers there actually pastured livestock wasn't just a marketing gimmick; it really happened.

Stabilization at ~500 ppm would require a reduction of ~75% in worldwide CO2 emissions, including ~95% in US CO2 emissions by about 2050.

If that is what MUST be accomplished, then let's stop talking about Kyoto and "7% below 1990 levels by 2012" and start talking about 95% below 1990 levels by 2050. It is important to do so because much of what is being discussed for the short term is not on the path to achieving the long term solution.

Once we acknowledge that we are talking about the functional equivalent of living in caves again, but without fire this time, we can begin to seriously address the challenges we face.

If that is what MUST be accomplished, then let's stop talking about Kyoto and "7% below 1990 levels by 2012" and start talking about 95% below 1990 levels by 2050.

Great idea! Also, everyone gets a pony.

Maybe you really need to start taking geoengineering ideas more seriously. Frankly, are gigantic shades in space any less plausible than reductions of that sort on that time scale?

It seems to me as a moral philosopher, ignorant of economics, that we have special moral obligations to existing people who are actually suffering. If someone is drowning before my eyes, I ought save them. Of course, if I have responsibility for a swimming facility, I ought provide a lifeguard, even though no one is actually drowning. But the obligation to those who are statistically likely to drown weighs less than my obligation to the actual drowning person. On the other hand, my obligations to those who might drown in the next year and those who might drown a hundred years from now might well be the same (setting aside any special contract with those who swim at my facility). In other words, the existence of the person who might drown may not matter--just whether they're drowning now. This provides some support for the Lomborg view that resources that might prevent global warming would be better used saving the lives of those who are currently dying preventable deaths.

Paul,

A space shade isn't that far fetched at all.

Under a proposal by University of Arizona astronomer Roger Angel the launching of an armada of mini-satellites to the L-1 point would suffice to reduce sunlight by about 2 percent or the equivalent of a doubling of CO2 levels in the atmosphere. Using electromagnetic launch a cost of around $20 per pound could be achieved.

One of the reasons I don't buy into all the doomday scenarios of a diminished human race clusted around the extreme northern latitudes is that as a species we're clever little fucks.

Zena and others touch on the conundrum about what to do. The hard truth is that the lives of almost 7 billion humans is dependent on the present level of energy consumption, and that energy is mostly supplied by fossil fuels, and there are no alternatives that can replace these fuels in the next 25 years to the extent that CO2 levels start falling or even stabilize.

So, what are the options? A century long plan to switch from fossil fuels to nuclear fission seems, to me, to be the optimal route that serves the interests of both the present population and all those who will follow after. None of the other alternatives have the capacity or the generation profile to replace even the energy used today, much less the increases that are sure to follow in the future-they will be supplements only. The way to do this is to institute taxes on fossil fuel use, and streamline the building of nuclear plants. However, as I wrote above- this process will take more than a century to work. I favor such a process because, (1) I think it unwise to dump CO2 into the atmosphere indefinitely, and (2) I think the ability of fossil fuels to continue to supply our energy is limited physically and we will have to make the change over at some point in any case- I see no valid reason not to get started today.

The only other option is to reduce the present population of the planet by a significant amount. I will take this option seriously when the environmentalists step to the front of the line to take their fair share of the burden.

I still can't get past the ice age problem. Barring GW, it is quite probably that in the not-too-distant future, Chicago, London, and Moscow will be covered in hundreds of feet of ice. That possibility seems to me to be much more devastating to life as we know it than the more speculative results of GW.

We may be begging for GW in 100 or 500 years. Let's address that issue first before all this other stuff.

Paul,

I am not an AGW religionist, or even a believer. I am, rather, trying to assure that we don't start down the "slippery slope" without knowing how far downslope the valley floor really is; and, that, if we do start down the slope, we do so in a way which does not result in the investment of hundreds of billions of dollars in facilities which are not on the path to the ultimate reductions required. I don't believe that 0.01% of the US population understands where the AGW religionists want to take us. That is ridiculous, when the changes required are so vast.

I don't believe in beginning vast programs with half-vast ideas.

"Discounting takes care of this problem, because even with a low discount rate, the present value of constant income streams quickly declines to nothing."

No, the present value rapidly asymptotes to a finite (non-zero) value, i.e. the rate of change of the PV goes to zero. It is trivial to calculate that the PV of a time-unbounded income stream of x in a given period with a discount rate of r over that period is x/r. $100 a year for ever at a discount rate of 5% has a PV of $2000.

Why is it that the state worshippers only believe we are doing something when it is done
by individuals in government, i.e government central planners?

Self-interested people are constantly looking for ways to improve the quality of all our tools
(at least in countries where some freedom of discovery still exists). Whether or not our emissions are changing climate (I believe they are not), some, perhaps many of theses improvements made by individuals in the private sector, will reduce emissions. The likelihood that someone is going to produce a means of transportation that turns oil back into black gooey stuff is very high. At all levels, wanna- be entrepreneurs are looking to make all tools work better and to make our use of all resources more efficient and complete (pollution is a waste or incomplete use of resources).

Are we doing nothing? Not hardly.

Stern with his heavy hand of government central planning is the "do nothing" approach.

Travis

PS: If Paul Krugman is indicative, having a PhD in economics doesn't necessarily mean that one understands anything about human nature and Human Action.

Comments are Closed.