rjzimmerman:

Excerpt from this story from Rolling Stone:

The latest report from the United Nations’ Intergovernmental Panel on Climate Change is stark. U.N. Secretary-General António Guterres describes it as “an atlas of human suffering and a damning indictment of failed climate leadership.” If the world can’t solve this problem, there will be a lot of blame to go around, but one group in particular shouldn’t be able to skirt it: economists who have relentlessly downplayed the seriousness of climate change and overstated the costs of solving it.

Most mainstream economists believe government action, such as a carbon tax, is a necessary step to taking on the climate crisis. But what if you’re an economist who doesn’t want the government to do anything? Perhaps you work for a libertarian think tank or a fossil fuel producer. Your job is literally to use the tools of economics to conclude that we don’t need any government intervention to address climate change. Luckily for you, economics offers a handy tool to reach the required conclusion: the cost-benefit analysis.

The idea behind a cost-benefit analysis seems simple enough: Evaluate a policy by comparing the costs of enacting the policy to the policy’s benefits. If costs exceed benefits, then the policy is not a good idea; if benefits exceed costs, then it is.  

Cost-benefit analyses certainly make sense for some problems, but the climate crisis is not one of them. Climate change is a global, multi-generational threat featuring impacts that lie entirely outside anything that modern humanity has ever experienced. Solving it, to the extent that it can be solved, involves balancing the welfare of the rich world versus the poor, and today’s population versus that of future generations.

Cost-benefit analyses require economists to make judgements about what a “good” outcome looks like. For example, do we want to maximize wealth, or do we care about how the wealth is distributed? By carefully making these judgments, a motivated economist can reach any conclusion they want. During the Obama administration, the social cost of carbon (the damage from emitting a ton of carbon dioxide to the atmosphere) was estimated to be $35.  The Trump administration altered some of the assumptions that led to his estimate, particularly how much they valued future generations versus ours, and how much they valued people outside the U.S. versus those who live in America. They estimated the social cost of carbon to be as low as $1.

To be clear: economists have no idea how bad five degrees Fahrenheit of global average warming in 2100 will be (that’s about where we’re headed now) or what that will do to our economy.

Any estimate of economic damage due to five degrees Fahrenheit of warming requires drawing from our experience with the present climate into a realm where we have no experience. As a result, impact estimates must be based on a large number of assumptions, many of which are arbitrary. Most economic estimates do not include reliable estimates of the costs of impacts to things for which good markets do not exist, such as ocean acidification or melting permafrost. They also do not account for catastrophic changes, tipping points, or many other factors. Faced with this reality, the new IPCC report concurs that we simply don’t know how expensive climate change will be.