What's Florida Worth?
An inter-agency work group headed by the White House Office of Management and Budget is trying to find the real cost of a ton of carbon emitted. It turns out to be a hard number to agree on.
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Would our grandchildren really miss Florida if it was under water? How about no more fruit or nuts from California? What about the loss of our breadbasket? Would the end of corn and soy from the Midwest really bother the grandchildren of our children? How much?
Cost/benefit analysis. Economists do it all the time. So, just what is the cost to society of a ton of carbon? The Institute for Policy Integrity consulted 144 top economists and released the result: (pdf) Economists and Climate Change: Consensus and Open Questions. By sensibly limiting the sample to economists with the most expertise on climate change, the survey was able to avoid the ignorance of economists who have not studied climate change.
84 percent agreed that the environmental effects of greenhouse gas emissions, as described by leading scientific experts, create significant risks to important sectors of the United States and global economies. A near unanimous 98 percent agreed that putting a price on carbon through a tax or cap-and-trade will increase incentives for efficiency and innovation. 55% preferred a tax, and 35% preferred cap-and‐trade.
But they came up with very widely divergent numbers for both the costs and the benefits. The cost estimates ranged from $10 a to $10 million a ton, with a median of $50 a ton. The benefits of prevention also ranged between $383 billion and $5.5 trillion over the next five decades.
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Economics offers a crucial perspective not only on the most cost‐effective and efficient responses to climate change, but also on the need to respond in the first place. Economists have built sophisticated “integrated assessment models” that combine complex data on the global economy and climate, in order to estimate the economic consequences of a particular policy. A necessary first step in that process is to project what would happen if no policy were enacted (called a “baseline” or “business‐as‐usual” scenario).
In other words, economists have devoted considerable effort to identifying and quantifying the dangers of unabated climate change. A two year old GAO survey found 78% of economists found that the benefits of action would outweigh costs. The industries most threatened by climate change economic losses were agriculture, fishing, forestry, and insurance.
Three quarters of the economists felt that the uncertainty regarding climate change risks actually increases the value of taking action to control emissions. The low probability, but catastrophic-if-it-happens risk like tipping point climate change needs to be factored in.
These are hard numbers to crunch. We really have no idea how much damage we are doing. It is 3 billion years since any other species made such a huge change in this planet’s environment. We really are in completely uncharted territory.
As Grist’s Jonathan Hiskes suggests: “We can’t know every detail of what pumping the atmosphere full of greenhouse pollution will do. It’s like driving your car off a cliff—you can’t predict which parts will break, but you know enough to know the results won’t be good.”
Image: Bob Davidson
Source: (pdf) Economists and Climate Change: Consensus and Open Questions via EENews
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