Climate economics challenges left and right

There are four key questions about the climate system I’d love for God to just answer for us. Unfortunately, he has chosen to let us figure them out. Not exactly on our own, though: we have his gifts of reason, and he does appear to have made an intelligible universe. Ignorance and sin afflict us as we try to apply these gifts, but the situation isn’t hopeless. We’ve figured out tough problems before (what caused the Black Death? how can we determine our longitude at sea?).

My questions distill down to these four.

  1. Is the climate changing in ways that (do, or will) threaten human flourishing?
  2. If it is, are we causing any (substantial) part of that climate change?
  3. If we are, could we do anything (substantial) about it?
  4. If we could, should we do anything about it? (What would it cost to act? What would it cost to not act?)

As you might expect, a lot of furious debate occurs around Question 4, which is really about economics. Curiously, few people seem to consult economics to get answers. To listen to environmentalists (who are often but not always liberals), you get the idea that it’s just sheer stupidity and greed that has kept us from already implementing ALL their desired policy reforms and environmental regulations, and that we would live in a veritable utopia of economic and social bliss if we undertook climate action now. For many enviros, there’s NO downside to climate action.

To listen to climate action opponents (who are often but not always conservatives), ANY climate action is likely to completely destroy the economy, abolish our cherished freedoms, enshrine a one-world government, and (worst of all) take away our cars. For many of these folks, climate action is very costly with zero benefits.

As with climate science, the likely truth about climate economics is somewhere in the middle.

If you believe (a) the climate is changing, (b) we’re at least partly responsible, and (c) we could do something about it (and those are big IFs for some people), then you’ll find Paul Krugman’s essay in the New York Times Sunday magazine a helpful primer about the economics question (d): “should we do something about climate?”

Krugman provides some very clear background to the field of environmental economics, information that is useful regardless of climate issues. He also shows that climate action would NOT be costless, would NOT be catastrophic. He also reviews some pretty complicated terrain: how should we value immediate costs versus long-term costs?, if we should act, should we do it in a big-bang or ramp up over time?, what should we do if future costs of climate change are uncertain?

In explaining that material, he delivers a not-so-subtle rebuke to the mindless optimists and the fretful pessimists.

Highly recommended.

Note: Krugman is NOT a climate skeptic, but in this piece he isn’t really arguing about climate science (except for some asides). He is describing what economists tend to agree on and disagree on about climate policy if the science were credible. That’s what makes it useful.