Results for “climate change” 362 found
What is the relevant uncertainty for climate change policy?
A number of people have climbed onto Twitter and outlined (correctly) how increased uncertainty about the impact of climate change increases the value of doing something about it. There is downside risk, and of course we wish to buy insurance against that in the form of a more active climate change policy. Still, that is not looking deeply enough. I see some of the relevant uncertainties as embodied in the following scenario, which is more about policy means than climate change science:
Following a Trump debacle, finally the Democrats win all branches of government and pass a climate change bill. There is a carbon tax, and further anti-coal measures, but it isn’t enough to shift energy regimes in a transformational sense (besides, truly transformational technologies require luck and “the right time” far more than price incentives). Instead the United States becomes more like Western Europe, with higher levels of conservation but no ground-breaking new energy source. Solar goes up by ten percentage points, and wind by two or three, given NIMBY opposition. Fracking becomes more efficient yet, which nudges fossil fuels back a bit onto center stage. Nuclear is closed down altogether, and hydroelectric also goes in reverse or stagnates. China is as China does, and they slowly move away from their installed coal base, in the meantime taking steps to control their particulate matter but not so much their carbon, copying America in this regard. India starts a shift from coal to natural gas but still has rising carbon emissions. Africa and Vietnam exceed growth expectations, with a lot of solar power to be sure, but not enough to counteract their growing industrialization. The carbon tax causes a mild recession in America, and environmentalism becomes less popular. The global boost in temperature continues, unchecked. The people who die each year from regular air pollution — six to seven million at last count — diminish in number with economic growth, but we react largely with indifference to that problem, because it doesn’t fit into domestic political struggles very neatly.
Now, to me something like that is the single most likely scenario, albeit with a lot of uncertainty. I am still happy to try remedial policy measures, and to try them now, if only out of non-complacency or perhaps just desperation. But come on, let’s be honest. If all you are doing is trying to combat uncertainty about the science, you are unwilling to look the actual problem square in the eye, just like the climate deniers, the very people you so much decry.
Trump’s executive order on climate change
One of the best things about Cass Sunstein as a writer is that his goal is to inform us. Here is his opening bit:
Contrary to numerous reports, President Donald Trump’s executive order on climate change does not come even close to eliminating President Barack Obama’s legacy with respect to greenhouse-gas reductions. Most of that legacy, involving dramatic emissions cuts in the transportation sector and from household appliances, remains intact.
Nonetheless, the order is massively important and, in some respects, reckless. In addition to mandating reassessment of the Clean Power Plan, which regulates coal companies, Trump jettisoned, all at once, the Obama administration’s “social cost of carbon,” which has been the linchpin of national climate policy since 2009. But he did not say what the Trump administration will replace it with. On that count, he punted — which is not the worst thing, and which leaves some crucial decisions open for his staff.
Here is the full column, and it has much more of interest. I feel bad about running such “remedial material” on MR, but overall I see reporting on Trump as continuing at very low standards, even in some otherwise very good outlets.
How Berkshire Hathaway thinks about climate change
From their new report (pdf, pp.25-26):
…insurance policies are customarily written for one year and repriced annually to reflect changing exposures. Increased possibilities of loss translate promptly into increased premiums.
Up to now, climate change has not produced more frequent nor more costly hurricanes nor other weather-related events covered by insurance. As a consequence, U.S. super-cat rates have fallen steadily in recent years, which is why we have backed away from that business. If super-cats become costlier and more frequent, the likely – though far from certain – effect on Berkshire’s insurance business would be to make it larger and more profitable.
As a citizen, you may understandably find climate change keeping you up nights. As a homeowner in a low-lying area, you may wish to consider moving. But when you are thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.
The pointer is from Joseph Weisenthal.
Tom Schelling stressed a related point in his climate change talk
Vanishing glaciers raise urgent concerns beyond Tibet and China.
By one estimate, the 46,000 glaciers of the Third Pole region help sustain 1.5 billion people in 10 countries — its waters flowing to places as distant as the tropical Mekong Delta of Vietnam, the hills of eastern Myanmar and the southern plains of Bangladesh. Scattered across nearly two million square miles, these glaciers are receding at an ever-quickening pace, producing a rise in levels of rivers and lakes in the short term and threatening Asia’s water supply in the long run.
That treatment is from Edward Wong at the NYT.
Perhaps you’ve already read Alex’s report on Schelling. It was remarkable that Tom was able to talk for an hour straight, without pausing, without mistakes, grammatical or otherwise, and with a perfectly conceived factual, dramatic, and narrative arc. With excellent stories. All without notes. At the age of 94.
Thomas Schelling on Adapting to Climate Change
Yesterday, Thomas Schelling gave a seminar on climate change here at the Center for Study of Public Choice. Schelling’s main argument was that lots of resources are going into predicting and understanding climate change but very little thought or resources are going into planning for adaptation.
If Washington, DC, Boston and Manhattan are to remain dry, for example, we are almost certainly going to need flood control efforts on the level of the Netherlands. It takes twenty years just to come up with a plan and figure out how to pay for these kinds of projects let alone to actually implement them so it’s not too early to beginning planning for adaptation even if we don’t expect to need these adaptations for another forty or fifty years. So far, however, nothing is being done. Climate deniers think planning for adaptation is a waste and many climate change proponents think planning for adaptation is giving up.
Schelling mentioned a few bold ideas. We can protect every city on the Mediterranean from Marseilles to Alexandria to Tel Aviv or we could dam the Strait of Gibraltar. Damming the strait would be the world’s largest construction project–by far–yet by letting the Mediterranean evaporate somewhat it could also generate enough hydro-electric power to replace perhaps all of the fossil fuel stations in Europe and Africa.
Schelling didn’t mention it but in the 1920s German engineer Herman Sörgel proposed such a project calling it Atlantropa (more here). In addition to power, damming the strait would open up a huge swath of valuable land. Gene Roddenberry and Phillip K. Dick were fans but needless to say the idea never got very far. A cost-benefit analysis, however, might show that despite the difficulty, damming the strait would be cheaper than trying to save Mediterranean cities one by one. But, as Schelling argued, no one is thinking seriously about these issues.
I argued that capital depreciates so even many of our buildings, the longest-lived capital, will need to be replaced anyway. Here, for example, is a map showing the age of every building in New York City. A large fraction, though by no means all, are less than one hundred years old. If we let the areas most under threat slowly deteriorate the cost of moving inland won’t be as high as one might imagine–at least if the water rises slowly (not guaranteed!). Schelling agreed that this was the case for private structures but he doubted that we would be willing to let the White House go.
If we are going to save cities, especially buildings not yet built, should we not start taxing land today that is under threat of future flood? Act now to mitigate future moral hazard problems. John Nye and Robin Hanson raised this issue. See Robin’s post for more.
It was an enjoyable seminar. At 94, Schelling remains sharp, provocative, and in command of the facts.
Is stopping climate change a free lunch?
We’re again seeing the return of magical thinking in the economics profession and elsewhere. Limiting climate change is indeed worth doing, but it is not close to a free lunch. Eduardo Porter makes the relevant point quite nicely:
“If the Chinese and the Indians found it much more economically efficient to build out solar, nuclear and wind, why are they still building all these coal plants?” asked Ted Nordhaus, chairman of the Breakthrough Institute, a think tank focused on development and the environment.
China’s CO2 emissions increased 4.2 percent last year, according to the Global Carbon Project, helping drive a global increase of 2.3 percent. China now accounts for 28 percent of the world’s total emissions, more than the United States and the European Union combined.
“I don’t think the Chinese and the Indians are stupid,” Mr. Nordhaus told me. “They are looking at their indigenous energy resources and energy demand and making fairly reasonable decisions.”
For them, combating climate change does not look at all like a free lunch.
Note that doing something about air pollution and doing something about carbon emissions are two distinct issues. America did a great deal to clean up its air, for instance when it comes to the dangerous Total Particulate Matter, but has done much less to lower its carbon emissions. It is no accident that the former is a national public good, the latter is mainly a global public good. China, India, and other developing nations may well go a similar route and simply keep emitting carbon at high and perhaps even growing rates. If you lump everything together into a general “the benefits of getting rid of air pollution,” you will be missing that nations can and probably will make targeted clean-up attempts that leave carbon emissions largely intact.
By the way, here is yesterday’s report from India:
“India’s first task is eradication of poverty,” Mr. Javadekar said, speaking in a New York hotel suite a day after a United Nations climate summit. “Twenty percent of our population doesn’t have access to electricity, and that’s our top priority. We will grow faster, and our emissions will rise.”
India is the world’s third-largest carbon polluter, behind China and the United States, and Mr. Javadekar’s comments are a first indication of the direction of the environmental policies of the new prime minister, Narendra Modi…
In coming decades, as India works to provide access to electricity to more than 300 million people, its emissions are projected to double, surpassing those of the United States and China.
If you haven’t tried crossing the street in India, you don’t know much about how hard it is to fix the problem of carbon emissions.
How good a climate change solution do we need?
Responding to the recent Henry Paulson piece, Paul Krugman writes today:
In policy terms, climate action — if it happens at all — will probably look like health reform. That is, it will be an awkward compromise dictated in part by the need to appease special interests, not the clean, simple solution you would have implemented if you could have started from scratch. It will be the subject of intense partisanship, relying overwhelmingly on support from just one party, and will be the subject of constant, hysterical attacks. And it will, if we’re lucky, nonetheless do the job.
I would put it this way: climate change is like neither the financial crisis nor the Obama health care plan, but above all it is an international problem requiring an international solution. And it’s not like banning land mines, where most countries have little reason to continue with the practice. It is also not like ozone, where a coordinated solution is relatively low cost, more or less invisible to voters, threatens few jobs, and involves few incentives for defection. A climate change solution requires a lot of countries to turn their back on coal-generated pollution long before we did (as measured in per capita income terms) and long before the Kuznets curve suggests they otherwise are going to. A climate change solution, if done the wrong way, will look to China like a major attempt to unfairly deindustrialize them and, if it is backed by trade sanctions, it will look like an act of war. Trade agreements do best when most or all of the countries already wish to act cooperatively toward much lower tariffs. For a green energy solution, China (among others) in fact has to want to solve the problem, as do we. And the already-installed or in-process coal base in China is…forbidding.
The problem isn’t just coming up with “something better.” Think of today’s fossil fuels as a stock in the ground. The problem is coming up with something “better than the lower and falling prices for the fossil fuel stock once some countries start going green.” That’s really tough, because it means competing against a lower fossil fuel price than what we see today. What will Africa choose?
In other words, a climate change solution has to involve a relatively cheap form of energy, relative to the status quo. Not just cheap to citizens because it is subsidized, but cheap to governments and cheap at the national level too. Alternatively, you could regard all of this as reason to be pessimistic. But in the meantime, it is entirely reasonable to insist on solutions which can generalized, and that means solutions which are relatively cost-effective.
How eager is China to limit environmental damage from climate change?
They already have ruined the environment here, beyond what most people are willing to believe. And for a long time to come. Preventing further environmental damage by limiting climate change seems to the Chinese leadership like a small gain in comparison to the losses which already have been incurred. Furthermore as Chinese environmental damage accumulates, in relative terms the climate change issue may loom smaller rather than larger.
This simple point is not well understood. Consult the framework from Charles Karelis’s The Persistence of Poverty.
People here talk about the environment more than any place I have been — ever — but they are not talking about climate change.
Summers, Lomborg, Tabarrok, and Cowen on climate change
There was a brief symposium, here are the results:
Larry Summers
President Emeritus of Harvard University, Former Chief Economist of the World Bank
My sense is that cap and trade is not the route to the future. It did not make it politically in the US at a moment of great opportunity in 2009. And European carbon markets have been plagued by constant problems. And globally it’s even harder. My sense is that the right strategy has three major elements. First, as the G20 vowed in 2009, there needs to be a concerted phase out of fossil fuel subsidies. This would help government budgets, drive increases in economic efficiency and substantially reduce global emissions. Second, there needs to be assurance of adequate funding for all areas of basic energy research. As a practical matter my guess is the world will produce non fossil fuel power in the next 25 years at today s fossil fuel prices or it will fail with respect to global climate change. Third, there is a strong case for concerted carbon taxes to further discourage greenhouse gas emissions. But this is a follow-on step for after the elimination of fossil fuel subsidies.
Bjorn Lomborg
Director of the Copenhagen Consensus Center and adjunct professor at Copenhagen Business School
The only way to move towards a long-term reduction in emissions is if green energy becomes much cheaper. If it cost less than fossil fuels, everyone would switch, including the Chinese. This, of course, requires breakthroughs in green technologies and much more innovation.
At the Copenhagen Consensus on Climate (fixtheclimate.com), a panel of economists, including three Nobel laureates, found that the best long-term strategy to tackle global warming was to increase dramatically investment in green research and development. They suggested doing so 10-fold to $100bn a year globally. This would equal 0.2% of global GDP. Compare this to the EU’s climate policies, which cost $280 billion a year but reduce temperatures by a trivial 0.1 degrees Fahrenheit by the end of the century.
Alex Tabarrok
Bartley J. Madden Chair in Economics at the Mercatus Center, George Mason University
Neither the developed nor the developing world will accept large reductions in their standard of living. As a result, the only solution to global climate change is innovations in green technology. A carbon tax will induce innovation as people demand a way to avoid the tax. A carbon tax, however, will be more politically acceptable if technologies to avoid the tax are in existence before the tax is put into place. Prizes for green innovations can blaze a path down a road that must be traveled, making the trip easier. The L-prize successfully induced innovation in LED technologies, the X-Prize put a spacecraft into near space twice within two weeks and Google’s Lunar X prize for putting a robot on the moon is close to being awarded. Prizes have proven their worth. To speed both the creation and diffusion of green technology, green prizes should be awarded at the rate of $100-$200 million annually.
Tyler Cowen
Professor of Economics, George Mason University
This is a problem we are failing to solve. Keep in mind it is not just about getting the wealthy countries to switch to greener technologies, but we also desire that emerging economies will find green technology more profitable than dirty coal. A carbon tax is one way forward but the odds are that will not be enough and besides many countries are unlikely to adopt one anytime soon. Subsidies for technology could occur at a very basic level and we could make a gamble that nuclear fusion will finally pay off. We also need a version of green technology that will fit into existing energy infrastructures and into countries which do not have the most reliable institutions. The most likely scenario is that we will find out just how bad the climate change problem is slated to be.
There are further responses at the link.
Addendum: Ashok Rao adds comments.
What are the major market indices for climate change?
Dan Kahan asks me that question. The Credit Suisse index does not seem very liquid and it is not clear to me if it is still actively traded. In any case this earlier look at the index implies it is about mitigation efforts, not the extent of warming or climate change per se. UBS launched an index in 2007, but I don’t see recent activity in the index mentioned in Google. There are various anecdotal accounts of insurance companies being less willing to cover waterfront property in hurricane-prone areas.
I hit some walls on this one and so I turn it over to you, MR readers. What are the best market indices — of whatever nature — for tracking the extent of the problem? I thank you in advance for your assistance.
How to curb climate change?
Paying Canadians to keep their oil sands in the ground to curb climate change might not sound like an obvious vote winner to a cash-strapped European government.
But it makes more economic sense than people realise, according to Bård Harstad, a Norwegian academic who has just won a prestigious environmental economics prize for a provocative paper suggesting just such a move.
Mr Harstad, 40, has been awarded the Erik Kempe prize, worth SKr100,000, by the European Association of Environmental and Resource Economists for a study called “Buy Coal! A Case for Supply-Side Environmental Policy”.
The FT article is here, and you may recall an earlier MR suggestion that sealing or blowing up especially dirty fuel sources, in a Hotelling intertemporal resource extraction model, is more likely to be effective than many kinds of tax.
What next on climate change?
David Leonhardt has a very interesting column, here is one excerpt:
…history shows that government-directed research can work. The Defense Department created the Internet, as part of a project to build a communications system safe from nuclear attack. The military helped make possible radar, microchips and modern aviation, too. The National Institutes of Health spawned the biotechnology industry. All those investments have turned into engines of job creation, even without any new tax on the technologies they replaced.
“We didn’t tax typewriters to get the computer. We didn’t tax telegraphs to get telephones,” says Michael Shellenberger, president of the Breakthrough Institute in Oakland, Calif., which is a sponsor of the proposal with A.E.I. and Brookings. “When you look at the history of technological innovation, you find that state investment is everywhere.”
Here's the good news, sort of: we often hear, especially from left of center economists, that ideas are a public good which require subsidy, especially at the level of pure science. This argument has a strong pedigree, most of all from Kenneth Arrow. In that framework, if the relevant idea is a public good, a higher price of fossil fuels may not encourage its creation very much. If oil and coal are more expensive, it's still not worth it for a single firm or institution to produce this public good. If you think that technologically, we are fairly far from solving the problem (my view), you will be less crushed by the absence of a price incentive for something which is a public good anyway.
If you think we are fairly close to solving the technological problem — maybe souped up wind, nuclear, and hybrids can do it — then you should be quite disappointed by our inability to raise the price of fossil fuels. The switch to the already-available technologies is at least partially a private good and a higher price for fossil fuels would help a lot.
There is a kind of "utility diversification" at work here. If you are happy on "technological closeness," you are very unhappy on "policy implementation." If you are unhappy on technological closeness, you are less unhappy about failures at the policy level.
I believe we are far at the technological level because of institutional constraints. Wind and nuclear, whatever you think of them, run into fierce local opposition and they are not allowed to reach their potential. It seems we're only going to adopt a solution which is quite easy and cheap in any case, and doesn't crash into NIMBY; maybe that's a much-improved form of solar. And with that constraint in place, our inability to raise the price of fossil fuels may matter less than is sometimes suggested. Maybe only really cheap solutions will be adopted in any case and the rate of their discovery may depend more on research subsidies than on prices at the user level.
In the meantime, it still makes sense to clean up dirty coal, limit cow farts by taxing meat, and spread better indoor heating and cooking technologies in the poorer countries.
Addendum: Here is more from Leonhardt.
Elinor Ostrom on climate change
You'll find a two-part transcript here, or the podcast version. One recurring theme of her remarks is that we will need a great diversity of adjustment plans and that a "one size fits all" approach is bound to fail. In this dialog Elinor occasionally speaks in a personal manner:
To some extent I’m kind of worried that there are many, many more people who are apart from the Earth in their everyday life. How do we get more kids involved in research on nature earlier? And there are some very exciting programs where they’re getting kids, in terms of bird observation days, training kids how to take measurements of birds and be involved in the counts. How to get them involved in measuring stream flow. There’s just lots of things that kids can do— all the way up to college kids. I’m not talking about just five year olds…But, five year olds can start. [Clears throat] If we take self-consciously the recognition that if we’re going to understand ecological processes, we have to understand them in a deeper way than the experience the last twenty-five to fifty years has been leading people.
Bjorn Lomborg supports a climate change treaty
Bjorn Lomborg, an influential figure among climate change sceptics,
has thrown his weight behind a drive to forge a global deal to halt
rising world temperatures at a summit in Copenhagen this year.
“It’s incredibly important. We need a global deal on the climate,” Mr Lomborg told the Financial Times.
He does argue, correctly, that we should first focus on the low-hanging fruit, such as soot emissions and methane.
New CBO paper on climate change
It is here and a short summary is here. It is a good overview, noting that it does not cover the parts of the world most likely to be severely hit. The paper is especially good at discussing the policy implications of scientific uncertainty. This passage outlines a key issue and, in bureaucratese, asks how much it is possible to do:
Those insights have spurred some researchers who are particularly worried about low-probability but high impact outcomes to call for limiting long-term warming to no more than 3°F to 5°F with a high degree of certainty. However, since about 1.4°F of warming has already occurred, and past emissions have made a substantial amount of further warming inevitable, limiting long-term warming to such levels with a substantial degree of certainty would probably require very dramatic and potentially very expensive curtailment of expected future emissions. There is a large difference in costs between a policy that leaves a 50 percent risk of warming exceeding 5°F and a policy that virtually eliminates that risk. In moving along the continuum of risk from the former to the latter, each increment of risk reduction is likely to come at an increasing price.
I was taken by Paul Collier's earlier discussion of the ethics of climate change. Using different terminology, given that "probabilistic aggression" against people in the poorer countries is problematic, concern for climate change is (or rather should be) the libertarian point of view.
I also found useful the dialogue "The Big Heat" in the June issue of Discover magazine (not yet on-line). It's the best discussion I've seen of why the climate change skeptics clutch at a few pieces of (supposedly) favorable evidence but don't think about the issue at the very deep level or require that their scientific theories cohere as a whole or predict a wide range of climate-related data.
That all said, I come to the Waxman-Markey climate change bill. Here is one estimate that the impact of that bill on global temperature will be very small. I am not at all endorsing that estimate, but as someone concerned with the issue as a whole, I would like to know: what is the highest quasi-credible estimate for how much good that bill will do?
I would like to know.