Friday, February 18, 2011

Letter to Science Friday on Climate Change Economics

I just wanted to respond to your question about why no one is talking about the cost of doing nothing to stop climate change. In fact that is the central question of the entire field of environmental economics these days, a subject that I teach here at Cornell. While large uncertainties remain (due in part to the large uncertainties in climate science), one best estimate reported by William Nordhaus (widely respected as perhaps the leader in this field) at the National Academies of Science was that the net effect of doing nothing is 0 plus or minus 2% of World GDP. While substantial uncertainty is acknowledged, the takeaway is that while 2% of GDP is big, it may not be catastrophic, and that there may be substantial benefits to climate change that should not be forgotten.

I find it troubling that no one on your panel seemed aware of what is the central finding of our field. These results fill up a good fraction of the Nobel Prize winning UN IPCC report, and to me, unawareness of our central findings by people advocating for climate policy would be akin to a policy advocate who was not aware that climate scientists have found that the earth is warming.

We economists are not climate deniers. Most of us believe in climate science, and believe cap and trade or better yet a carbon tax should be implemented. But it frustrates me when even experts and policy advocates seem blithely or willfully ignorant of the major findings in our profession. It has become fashionable to rail against the ignorance of those who deny climate science, but those same people that complain about the ignorance of others often seem ignorant of climate economics themselves.
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