Tuesday, October 29, 2013

Climate change: The Science May Be Settled, But the Economics Isn’t

Freakonomics: ... With human culpability all but certain and the potential for warming by 4.5°C in 100 years, economists can’t decide what should be done about it, or even whether any substantial effort should be undertaken to stop it. In delivering a keynote address to a large group of economists this summer, Harvard’s Marty Weitzman described climate change as a hellish problem that is pushing the bounds of economics. A year earlier, addressing an annual meeting of environmental economists, MIT professor Robert Pindyck suggested there was no strong economic argument for costly, stringent policies to halt expected warming. In contrast to the near certainty of climate science predictions, Pindyck said the economics of climate change is not well charted and that the case for aggressive climate policy relies on assumptions not supported by consensus. Pindyck and Weitzman aren’t “denialists” and they do favor some kind of policy response, as does the veteran economic advisor to Republican Presidents and aspirants, Greg Mankiw, a Harvard colleague of Weitzman who has repeatedly taken to the pages of The New York Times to advocate a carbon tax. But with a humility not common in the profession, economists acknowledge that the cost of even 5°C warming over 100 years is uncertain, and, as Pindyck says, perhaps unknowable for the foreseeable future...

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