Has Nordhaus Demonstrated We Better Do Nothing About CO2 emissions?
Kudos to the climate-change-believers at the New York Review of Books for providing almost 3 full pages to climate-heretic Freeman Dyson’s review of William Nordhaus’ “A Question of Balance: Weighing the Options on Global Warming Policies” (Yale University Press) (and of Ernesto Zedillo (ed)’s “Global Warming: Looking Beyond Kyoto”).
Dyson (whose article has been rebuked on RealClimate with way too quick a contempt) doesn’t actually deal with the reasons for his skepticism on the dangers of global warming. After a long preamble on how efficient vegetation is at capturing atmospheric carbon dioxide, the NYRB article deals (among other things) with Nordhaus’s conclusions about costs and benefits of various possible climate-related policies, in a 100- and 200-year timeframe.
First of all, Nordhaus is very convinced about the need to put a “price” to carbon, to avoid “economic inefficiencies”.
It doesn’t sound such a bad idea, if the majority of people are truly convinced CO2 is a harmful emission. My main concern is, how does anybody find out what that “carbon price” should be, if not an arbitrary value?
As Dyson reports, Nordhaus follows “the conventional wisdom of economists” and does all computations for a 4% discount rate.
For mysterious reasons, this has become a point of contention, with the Stern Report using a discount rate close to 0%, and the RealClimate guys rather naively trying to argue for an equivalence between people actually living today and people possibly living in the future. Luckily, an AGW-believer with a solid experience in economics has torn such equivalence to pieces. It simply makes no sense, morally-economically speaking.
What is the point of stealing from the people of the present thereby removing plenty of resources from the very people of the future one is trying to provide resources to?
And what is the moral case, outside of economics? Well, let’s say you have a sick child and a single dose of medicine…would you really withold it just in case you would have another child, five or ten years in the future?
My criticism of Nordhaus is different. I would have rather preferred computations based on a progressively fuzzier discount rate, since the future gets harder and harder to predict (obviously) the further we try to look into the…future!
Leaving the rate at 4%, Nordhaus’ 1-century results are the following, compared to a “do nothing/business-as-usual” (BAU) situation:
(a) with a continuously-adjusted carbon tax, a $3 trillion net gain
(b) with an updated Kyoto protocol, a $1 trillion net gain (with the US), and zero (without the US)
(c) with draconian, Stern-like limits on emissions, a $15 trillion net loss
(d) with drastic-but-gradual, Gore-like limits on emissions, a $21 trillion net loss
(e) if a cheap way to capture and store CO2 (“low-cost backstop”) is discovered, a $17 trillion net gain
Dyson reports the conclusions as:
(1) Avoid the ambitious proposals
(2) Develop the science and technology for a low-cost backstop
(3) Negotiate an international treaty coming as close as possible to the optimal policy, in case the low-cost backstop fails
(4) Avoid an international treaty making the Kyoto Protocol policy permanent.
These objectives, according to Dyson, are valid for economic reasons, independent of the scientific details of global warming.
I am not sure I can agree with the above.
What I see is a strong case for doing absolutely nothing.
In scenario (a), in fact, the total loss for BAU is about $15 billion per year. Not much to cry about, really.
Just the complex mechanism that needs to be setup and run for a continuously-adjusted carbon tax, with its load of intrinsic inefficiencies, should be more than enough to bring such a loss to zero.
Kyoto-like interventions (scenario (b)) look absolutely irrelevant, and of course both Stern and Gore (scenarios (c) and (d)) have the single-minded goal to make us all miserable (starting with the Chinese).
The one “hope” is in carbon capture and storing, something presented by Dyson in his preferred terms of genetically-modified trees that could reduce the atmospheric CO2 content “by half in fifty years”.
But…if you believe in CO2 as a greenhouse gas, reducing its atmospheric concentration by half will surely sound like absolute madness…a one-way trip to a worldwide refrigerator?
All in all, then, it looks like the work of a convinced AGWer such as William Nordhaus has been useful in identifying what to do regarding CO2 emissions: nothing, zero, zilch, nada.
Will that accelerate the end of the AGW madness? I don’t think so. Perhaps the above is why Lord Stern, well aware of the overall situation, went through all the pains of trying to argue for a quasi-zero discount rate.
If logical arguments show the best course of action is to do nothing, that concept by itself will simply convince AGWer to become gloomier prophets of doom than ever.
You see…there simply is no AGW worry without catastrophism.