World Warms up for Real
April 9, 2012
William D. Nordhaus
A January 27 opinion piece in The Wall Street Journal by a group of 16 scientists, “No Need to Panic About Global Warming,” contained many of the standard criticisms of climate skeptics in a succinct statement. The essay argued that the globe is not warming and delaying policies to slow climate change for 50 years will have no serious consequences.
At a time when we need to clarify public confusion about the science and economics of climate change, the 16 scientists have muddied the waters. Here, I describe some of their mistakes.Their first claim is that the planet is not warming. More precisely, “Perhaps the most inconvenient fact is the lack of global warming for well over 10 years now.”
It’s easy to get lost in the tiniest details here. Most people will benefit from stepping back and looking at the record of actual temperature measurements. Data from 1880 to 2011 on global mean temperature averaged from three sources. We don’t need complicated statistical analysis to see that temperatures are rising. Furthermore, they’re higher during the last decade than they were in earlier decades.
One of the reasons that drawing conclusions on temperature trends is tricky is that the historical temperature series is highly volatile. The presence of short-term volatility requires looking at long-term trends. A useful analogy is the stock market. Suppose an analyst says that because real stock prices have declined over the last decade, which is true, it follows that there’s no upward trend. Here again, an examination of the long-term data quickly shows this to be incorrect. The last decade of temperature and stock market data are not representative of longer-term trends. The finding that global temperatures are rising over the last century-plus is among the most robust findings of climate science and statistics.
The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than two degrees Centigrade. Major areas of concern are sea-level rise, more intense hurricanes, losses of species and ecosystems, acidification of the oceans, as well as threats to the natural and cultural heritage of the planet.
A final point concerns economic analysis. The 16 scientists argue, citing my research, that economics does not support policies to slow climate change in the next half-century:
A recent study of a wide variety of policy options by Yale economist William Nordhaus showed that nearly the highest benefit-to-cost ratio is achieved for a policy that allows 50 more years of economic growth unimpeded by greenhouse gas controls.
This would be especially beneficial to the less-developed parts of the world that would like to share some of the same advantages of material well-being, health and life expectancy that the fully developed parts of the world enjoy now.
The first problem is an elementary mistake in economic analysis. The authors cite the “benefit-to-cost ratio” to support their argument. Elementary economics teaches that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits – that is, the difference between, not the ratio of, benefits and costs.
My study is just one of many economic studies showing that economic efficiency points to the need to reduce CO2 and other greenhouse gas emissions immediately. Waiting another 50 years is not only economically costly, but will also make transition more costly when it eventually takes place.
Current economic studies also suggest that the most efficient policy is to raise the cost of CO2 emissions substantially, either through cap-and-trade or carbon taxes, to provide appropriate incentives for businesses and households to move to low-carbon activities. Yes, there are many uncertainties. That does not imply that action should be delayed.
If anything, the uncertainties would point to a more forceful policy – one starting sooner rather than later – to slow climate change.
The 16 scientists urge avoiding alarm about climate change. I’m equally concerned by those who allege that we’ll incur economic catastrophes if we take steps to slow climate change. The claim that cap-and-trade legislation or carbon taxes would be ruinous to our societies does not stand up to serious economic analysis. We need to approach the issues with a cool head and respect for sound logic and good science.
William D. Nordhaus is Sterling Professor of Economics at Yale University. He has received support for research on the economics of climate change during the last decade from the National Science Foundation, the Department of Energy and the Glaser Foundation
Courtesy: Yale Center for the Study of Globalisation
Post a Comment