Wednesday, June 02, 2010

Risk, Climate Change and Alien Doomsdays

It is pretty much the consensus amongst climate economists that the expected economic impact of climate change is a loss of only a couple percent (see Tol 2009 and IPCC). Mean IPCC forecasts of a few degrees of warming, a few inches of sea level rise, etc. harm some economies but help others. The net effect is small.

However, a number of prominent economists, like Krugman and Weitzman have argued that though the mean estimates are small, it is the black swans in the tails that we should be wary of. The small but non-negligible unquantifiable risk of catastrophe (antarctic melting, irreversible tipping points, reversal of ocean currents, etc.) means that we should essentially buy insurance, implementing cap and trade and other measures to curtail emissions.

My problem with this argument is that there are lots of small but real unquantifiable risks of catastrophe:
  • A flu/TB pandemic that decimates the human population.
  • Terrorist sparked nuclear armageddon
  • Persistent global Depression due to financial system collapse
  • Asteroid impact extinction level event
  • Computers become sentient and try to exterminate humanity
  • Alien Invasion

Outbreak (Snap Case)The TerminatorDeep Impact (Special Collector's Edition)
    Bring in a few hollywood screenwriters and I'm sure they can come up with 100 more. If we spend 1% of GDP on each, that's pretty much everything. What makes climate change deserve so much attention? The science that climate change will have some effect is quite strong, but the science of climate change induced catastrophe is not so well established.

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