The Cost of Climate Change

According to Climate Wire, the Obama Administration is trying to come up with a reliable economic estimate of the cost of unchecked climate change.   This sounds like a great idea but is actually full of pitfalls.

Many of the individual elements of the economic impact analysis are the subjects of serious debate.  For instance, economists hotly dispute the net effect of climate change on agriculture, with some finding an overall positive effect on U.S. agriculture (but with very large regional variations),while others find substantial negative effects. Now multiply that uncertainty by every sector of the economy.

And then there’s the question of how we should treat harm to future generations in the analysis — do those injuries get counted at full value, or do they get “discounted” and if so at what rate?  Economists tend to agree in principle on discounting but there’s no consensus about the rate — and the rate is hugely important.

Economists also increasingly believe that the risk of catastrophic outcomes is a key part of the analysis.  But we don’t know how to quantify that risk, so it’s hard to put a price on it.

There are a variety of reasons why pricing carbon is an important exercise, but it’s not going to be an easy one!

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Reader Comments

4 Replies to “The Cost of Climate Change”

  1. MILKY WAY ENDANGERED

    Scientific research has shown that the American SUV is polluting the Milky Way. The galaxy is negatively affected by the lighter-than-air carbon dioxide sourced directly to the American SUV. Because of the elevated concentration of America’s lighter-than-air carbon dioxide, the galaxy is being contracted and, within two or three decades, will be drawn in so close that stars and planets will be as close to earth as the moon, so close, in fact, they will bounce off one another like billiard balls. The green earth coalition has mounted an intense program to have government declare as criminals, all who drive an American SUV on all American Roads. The United Nations has assembled troops from all third world nations to occupy the United States, quartered in American homes, arresting and imprisoning all who violate laws against American SUV’s. President Obama and his family have designed the three wheel mini car for all Americans that run on animal waste gases, assuring the UN forces occupying America that they will solve the problem and keep the Milky Way milky.

  2. As we ease out of a serious recession it is becoming apparent that if we are to afford the costs of managing climate change the global economy must grow. Although the cost is admitedly hard to quantify, estimates of the cost of a global deal on climate change vary from less than $200 billion a year to over half a trillion dollars.

    See “The Cost of a Global Deal on Climate Change”
    http://thegreenmarket.blogspot.com/2009/11/cop-out-for-cop15.html

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About Dan

Dan Farber

Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…

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