Paul Krugman’s got a pretty decent overview (albeit with some glaring inadequacies) of the economic debate over climate change (namely, as he says, “is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy?”) He introduces in a very basic way the concepts of Pigovian taxes, cap and trade, market (a la cap and trade) v. direct approaches to emissions reduction, the unique problem of coal, problems with models of the costs of action v. inaction, the international dynamics, and other issues.
He barely scratches the surface on a lot of the critiques many environmentalists (and particularly environmental justice activists) have of cap and trade, but he makes a point that could be persuasive (if I stop thinking about the scientific urgency long enough): that in comparing the existing cap and trade legislation to the ideal carbon tax (or other alternative), cap and trade is found wanting because, well, it passed. To do that it had to get crappier. The same would happen to ideal alternative policies because our Congress is ‘led’ by these guys. I’d argue that this is all the more reason the Clean Air Act (which currently has the power to directly regulate GHGs) needs to be preserved (and wielded forcefully, along with the Clean Water Act, Endangered Species Act, and National Environmental Policy Act), but still, point taken. Unfortunately, anything that can pass in this Congress is practically by definition insufficient. Comforting, right?
Anyway, here are some choice excerpts:
But while it’s unlikely that these models get everything right, it’s a good bet that they overstate rather than understate the economic costs of climate-change action…
What you hear from conservative opponents of a climate-change policy, however, is that any attempt to limit emissions would be economically devastating. The Heritage Foundation, for one, responded to Budget Office estimates on Waxman-Markey with a broadside titled, “C.B.O. Grossly Underestimates Costs of Cap and Trade.” The real effects, the foundation said, would be ruinous for families and job creation.
This reaction — this extreme pessimism about the economy’s ability to live with cap and trade — is very much at odds with typical conservative rhetoric. After all, modern conservatives express a deep, almost mystical confidence in the effectiveness of market incentives — Ronald Reagan liked to talk about the “magic of the marketplace.” They believe that the capitalist system can deal with all kinds of limitations, that technology, say, can easily overcome any constraints on growth posed by limited reserves of oil or other natural resources. And yet now they submit that this same private sector is utterly incapable of coping with a limit on overall emissions, even though such a cap would, from the private sector’s point of view, operate very much like a limited supply of a resource, like land. Why don’t they believe that the dynamism of capitalism will spur it to find ways to make do in a world of reduced carbon emissions? Why do they think the marketplace loses its magic as soon as market incentives are invoked in favor of conservation?…
At this point, the projections of climate change, assuming we continue business as usual, cluster around an estimate that average temperatures will be about 9 degrees Fahrenheit higher in 2100 than they were in 2000. That’s a lot — equivalent to the difference in average temperatures between New York and central Mississippi. Such a huge change would have to be highly disruptive. And the troubles would not stop there: temperatures would continue to rise…
We’re uncertain about the magnitude of climate change, which is inevitable, because we’re talking about reaching levels of carbon dioxide in the atmosphere not seen in millions of years…
You might think that this uncertainty weakens the case for action, but it actually strengthens it. As Harvard’s Martin Weitzman has argued in several influential papers, if there is a significant chance of utter catastrophe, that chance — rather than what is most likely to happen — should dominate cost-benefit calculations. And utter catastrophe does look like a realistic possibility, even if it is not the most likely outcome.
Weitzman argues — and I agree — that this risk of catastrophe, rather than the details of cost-benefit calculations, makes the most powerful case for strong climate policy. Current projections of global warming in the absence of action are just too close to the kinds of numbers associated with doomsday scenarios. It would be irresponsible — it’s tempting to say criminally irresponsible — not to step back from what could all too easily turn out to be the edge of a cliff.
We know how to limit greenhouse-gas emissions. We have a good sense of the costs — and they’re manageable. All we need now is the political will.
Brother, that is the anthem of the next… however long it takes for our leadership to stop making the same mistakes over and over and over again.
Joe Romm adds his commentary, with more information on key passages if you want to learn more about specific sections over at Climate Progress.
Anyway, obviously there’s a lot more that could be said, but Krugman’s I guess kinda a big deal, and this is a pretty good intro to where the economics is at. Which is to say, pretty clear that hysteria about climate action destroying the economy is ludicrous given the degree to which the studies decidedly underestimate the benefits and overestimate the cost. Enjoy.