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A Nobel Prize in Economics a Climate Change Denier Might Love

It has been a scary month in climate science. Hurricane Michael and a frightening report from the U.N. Intergovernmental Panel on Climate Change underlined the potential costs of human-caused global warming. Then to add insult to injury, William Nordhaus won the economics Nobel Prize.

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A Nobel Prize in Economics a Climate Change Denier Might Love


Monday November 05, 2018

It has been a scary month in climate science. Hurricane Michael and a frightening report from the U.N. Intergovernmental Panel on Climate Change underlined the potential costs of human-caused global warming. Then to add insult to injury, William Nordhaus won the economics Nobel Prize.

Nordhaus was recognized for his work developing a model to guide policymakers on how best to address the costs and benefits of limiting greenhouse gases. That’s a noble goal, but Nordhaus’ work has no more helped to defuse the threat of global warming than Neville Chamberlain’s appeasement of Germany prevented World War II. Rather, Nordhaus’ low-ball estimates of the costs of future climate change and high-ball estimates of the costs of containing the threat contributed to a lost decade in the fight against climate change, lending intellectual legitimacy to denial and delay.

In Nordhaus’ 1993 paper, “Rolling the ‘Dice’: An Optimal Transition Path for Controlling Greenhouse Gases,” he wrote: “A growing body of evidence has pointed to the likelihood that greenhouse warming will have only a modest economic impact in industrial countries, while progress to cut [greenhouse gases] will impose substantial costs.” How modest? Nordhaus estimated that a 3 degrees Celsius warming would cost the U.S. economy a miniscule one-quarter percent of national income. He admitted that unmeasured and unquantifiable variables might affect that prediction, but in his view, they might only bring the cost up to about 1% of national income.

Given such a tepid assessment of the threat, it is little wonder that Nordhaus’ biggest cheerleaders have come from the “do nothing about it” crowd. In 1997, for instance, William Niskanen, then chairman of the ultra-conservative Cato Institute, seized on Nordhaus’ estimates to argue before Congress that it was premature to take action on climate change because “the costs of doing nothing appear to be quite small.” Yet four years before his testimony, scientists had discovered that, in the past, climate changed quite abruptly and dramatically, not slowly and moderately as Nordhaus’ model assumed.

The warming we’ve experienced so far allows us to put this in context. Global temperatures are now 1 degree Celsius above pre-industrial levels, but even this increment has accelerated the melting of the ice caps, spurred sea-level rise and increased the frequency and intensity of storms, droughts and floods. It has also spawned myriad derivative impacts: the spread of tree-killing bark beetles that provide fuel for record-setting wildfires in the West, as well as intolerable temperatures and droughts in the Middle East and Africa that have contributed to war in Syria and destablilizing migration.

The IPCC report, released the same day Nordhaus got his Nobel, heightens the award’s absurdity. Nordhaus in 1992 estimated the net economic damage of 3 degrees Celsius of global warming, under a business-as-usual scenario, at $5.6 trillion globally (about $10.2 trillion in today’s dollars). The climate change panel now estimates the damage from 2 degrees’ Celsius warming to be $69 trillion. Even this figure might prove radically conservative.

Four years after climate scientist James Hansen told Congress that global warming was already happening, Nordhaus suggested that the “thermal inertia of the oceans” meant climate change would have a “lag of several decades behind [greenhouse gas] concentrations. That year, 1992, scientists studying ice cores taken from the Greenland Ice Sheet, confirmed that, in the past, climate had undergone huge swings in as little as a few years.

In fairness, Nordhaus has always recognized global warming as a threat. He advocates a tax on carbon, which is a good idea. If the price is right, a carbon tax would push people and industries to cut emissions without cumbersome bureaucracy.

Nordhaus has also revised and updated the model he developed as the IPCC has revised its forecasts, and he and his colleagues have (in their view) gotten a better grip on the variables at work in the interplay of climate and an economy. His most recent work implies an optimum tax on carbon at $31 a ton, which, in real terms, is about three times his too-low 1992 estimate.

Nordhaus and his colleagues concede that even with a $31-a-ton carbon tax, the planet would be on a track for 3 degrees Celsius of warming, but they don’t appear to recognize that such an increase would render much of the world unrecognizable and vulnerable to mass starvation (a number of studies predict yield declines of up to 70% for vegetables if the world warms beyond 2 degrees Celsius). In any event, 26 years after his first publications, the U.S. still doesn’t have a carbon tax, in part because Nordhaus (and others who shared his views) underestimated the cost of doing nothing.

Most economists famously failed to predict the near-collapse of the banking system in 2008, and it may be asking too much that such a “science” ace the far more complicated problem of estimating the impact of climate change. Still, it’s jarring that the same organization that in 2007 gave its Peace Prize to Al Gore and the IPCC for their efforts to come to grips with climate change, would, 11 years later, honor an economist whose work more undermined efforts to deal with the threat than helped them.

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Short Take

GOP Scare Stories Point to the Real National Emergency

A couple of months ago, in the days before President Trump declared a national emergency to try and circumvent Congress and fund his Wall, a number of Republicans scrambled to articulate sufficiently horrifying examples of how others might misuse those powers. Florida Congressman Matt Goetz offered a nightmare scenario in which a Democratic President forcing elementary schools across the country to build transgender bathrooms. Florida senator Marco Rubio went on CNBC and asserted that the true nightmare was that, “Tomorrow, the national emergency might be, you know, climate change…” Permit me to rephrase this: for Rubio, the problem with Trump using emergency powers was not that he was using a phony emergency as a pretext, but that in the future Democrats might use those powers to try to deal with an actual emergency.

That’s what’s truly scary. Rubio’s example reveals his assumption that Congress can block action on climate change going forward, forcing a President to assume emergency powers. The Wall Street Journal editorial page also chimed in, warning that Trump invoking a national emergency might embolden a future president to use these powers to deal with rising carbon emissions, again implying that other means of dealing with rising emissions could be blocked.

OK, let’s go with this. Imagine the circumstances in which some future President thought it necessary to use a declaration of national emergency to deal with climate change. Maybe it would be a collapse in the housing market as sea level rise, super storms, and wildfires made trillions of dollars in property uninsurable, and thus ineligible for mortgages. Or perhaps it would be the banking and financial crisis attendant to these developments.

It would also imply that the public was not yet concerned enough to elect a Congress that would take action to contain the threat. It’s true that there has been a rapid uptick in concern about climate change as determined by polling, but a recent study by the Energy Policy Institute found that while 57% of those polled people thought climate change was sufficiently threatening that they would spend $1 a month to avert it, most would still balk at $10 a month. 

To put this in perspective, the amount the U.S. spent on defense and intelligence last year equates to roughly $650 a month per household and that figure does not include spending at the state and local level for police. The amount the U.S. spent last year just to fight ISIS amounted to $40 a month per household. Is ISIS, which has never successfully mounted a mass attack on U.S. soil, really 40 times the threat that climate change poses?

Part of the problem is that the threat of climate change remains something that is still treated as a matter of belief; i.e. whether one “believes” in global warming (and recent polling reported that even today, only 52% of Republicans agree that global warming is happening). Given that climate change is staring (most of) us in the face, we should be past that point, but we’re not. This cognitive dissonance will ultimately resolve itself, however, because whether you “believe” in climate change becomes irrelevant if sea level rise and storms render your house unsaleable.

Still, the Trump administration continues to fight a rear-guard action, pushing back on its own agencies that have warned about the threat.  The White House wants to convene a 12-member panel to review whether climate change is a national security threat – despite the assertions that it does threaten national security that come from intelligence agencies and defense departments around the world in the form of reports as recent as the Department of Defense report on its vulnerability to climate change this January and dating back to the 1990s. 

The real purpose of the panel becomes apparent from its membership. One of the leaders will be William Happer, who serves on the National Security Council and who has argued publicly that climate isn’t changing and that additional CO2 in the atmosphere will be beneficial rather than harmful. If this panel attaches the prestige of the White House to a report pooh-poohing global warming it could sew further confusion in the public and reduce any sense of urgency. More likely though, it will backfire as so many Trump initiatives do. Rather than undermining a sense of urgency, a clown car convention of fossil fuel apologists could undermine the prestige of the White House.

 Now, the Trump administration has also targeted the climate assessments produced by its own agencies. As assessments of the future impacts of climate change have become ever-more dire, the administration’s response is to cut off any forecasts beyond 2040. Because of the lags in the climate system, this would eliminate many of the worst scenarios as many impacts accelerate in the second half of this century. As the global scientific community will not go along with this willful blindness, this initiative will only further underscore the impression that the White House is more interested in propaganda than science.

As for the rest of us, those of us who see the changes that that climate is working in the world around us, we can only hope that some future President has the guts to declare a national emergency if things worsen and Congress continues to abnegate its responsibilities.



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