I really like Crooked Timber, the left-wing group blog, because most of the authors are academics who sometimes write in their various areas of expertise.
Recently, John Quiggin wrote a blog post there about climate change, entitled “derp to denial.” As is presumably obvious from the title, he was psychologizing conservative resistance to the liberal program of emissions mitigation. Here is how he opens it:
Over the last couple of weeks, I’ve seen four major reports (details over the fold) from very different sources, all making the same point: decarbonizing the world economy will involve economic costs that are
(a) small; and
(b) far outweighed by the benefits
And, the empirical evidence so far is strong. The EU and US have both reduced CO2 emissions significantly, at negligible or even negative economic cost. The measures announced by Obama, including vehicle emissions standards and restrictions on coal-fired power stations appear set to achieve further substantial reductions, again while yielding net economic benefits.
The problem with Quiggin’s argument is that the evidence that the expected economic benefits of decarbonization are greater than the expected costs is not nearly as strong as he asserts it is. There are solid, non-derp and non-denial reasons to oppose his preferred policy.
According to the United Nations Intergovernmental Panel on Climate Change (UN IPCC), the total expected damages to be avoided are on the order of 3 percent of global GDP, something like a century from now, in a vastly wealthier world. While a lot of money, that is not exactly what you would expect based on the casual rhetoric of advocates.
It should not, therefore, be surprising that formal efforts to weigh the economic costs of emissions abatement, in the form of avoided consumption, against the long-term benefits from avoided global warming show few net benefits, even in theory. According to the modeling group led by William Nordhaus, a Yale professor widely considered to be the world’s leading expert on this kind of assessment, an optimally designed and implemented global carbon tax would provide an expected net benefit of about 0.2 percent of the present value of global GDP over the next several centuries.
And that’s in theory. This assumes a carbon tax at the optimal price would be globally enacted, and then effectively enforced everywhere in the world for literally centuries. In the real world of domestic politics and geostrategic competition, it is not realistic to expect that we would ever have an optimally designed, implemented, and enforced global system, and the side deals made to put in place even an imperfect system would likely have costs that would dwarf 0.2 percent of global economic consumption. Look at the difference between theory and real-world legislation in the case of U.S cap-and-trade proposals or the EU emissions trading system. The realistic case is that the expected global costs of emissions mitigation are greater than the expected benefits.
There are various more complex arguments that have been presented to rebut this straightforward comparison of costs and benefits. One is to argue that the discount rates that are used to compare a dollar today to a dollar decades from now are too high, and that once this is corrected, the benefits of mitigation are much greater than the costs (the “Stern” critique). For reasons I’ve gone into elsewhere, this doesn’t hold much water. Another is to argue that while the costs of mitigation are greater than the benefits in the most likely case, that there are realistic downside cases that are so severe that they rationally justify mitigation as a metaphorical insurance policy. The simplistic version of this is the so-called Precautionary Principle, which is basically an obviously bad way to make decisions. The sophisticated restatement of this idea is the “Weitzman” critique. This is the strongest argument for rapid, aggressive emissions mitigation, but for reasons I’ve gone through in more summary and more detailed form, this also doesn’t hold water. At the most abstract level, both the Weitzman critique and the simpler Precautionary Principle suffer from the basic problem of risk myopia.
And all of this gets a lot worse when you consider, not theoretical arguments, but the kind of real-world policy proposals that Quiggin references. Cost-benefit analysis I did at the time of the U.S. cap-and-trade proposal in 2009 indicated that it would have created expected global costs clearly in excess of global expected benefits. And from the perspective of a U.S. voter, would have created expected costs to American citizens on the order of ten times greater than expected benefits. The power-plant regulations put forward by the Obama administration this year would have costs per unit benefit for Americans about 75 percent worse than even that. These proposals fail normal cost / benefit tests spectacularly.
No derp, no denial, just a simple question: “What do we pay, and what do we get?”