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Category — Climate economics

Nordhaus, Tol, and Climate-Change Economics: Turning Around the Conventional Wisdom

“The scientific modeling of climate change, and its possible impacts on human welfare, are very technical…. When experts try to summarize the fields for the layperson, they sometimes present matters in misleading ways, however inadvertent. William Nordhaus’s treatment of the economics literature, and RealClimate’s discussion of the accuracy of climate models’ temperature predictions, are good examples.”

At the Institute for Energy Research (IER) blog, I rebutted Yale economist William Nordhaus’s New York Review of Books criticism of a Wall Street Journal editorial by 16 “global warming skeptic” scientists, including MIT’s Richard Lindzen.

To understand the full point-counterpoint, the interested reader should consult the above links chronologically. Elsewhere I have challenged the entire case for a carbon tax. However, in the present post I want to focus on just two issues in the overall debate, that were raised in the wake of my initial IER post:

(1) the timing and amount of net damages from climate change, according to the best economic models, and

(2) what the climate scientists mean when they talk of a “confidence interval” in temperature projections.

The casual reader in these areas may be very surprised at what I have to report.

Richard Tol: Climate-Change Damages

There were several things that Nordhaus had written in his piece that bothered me. One, in particular, was misleading and a disservice to the debates. When talking about the economic approach to classifying greenhouse gas emissions, Nordhaus wrote (bold added): [Read more →]

July 11, 2012   31 Comments

Climate Hearings in the 112th Congress: GOP Chairmen Will Need Talent Like Jim’s

Next year, Republicans will be the majority party in the House of Representatives, which means they’ll hold the committee chairmanships and run the hearings. They’ll have opportunities aplenty to review the Obama administration’s global warming policies and the alarmist “science” that supposedly justifies cap-and-trade, renewable energy mandates, and EPA regulation of greenhouse gases. 

They would do well to study how in the 105th and 106th Congresses, a GOP House committee chairman from Missouri single handedly debunked the Clinton-Gore administration’s economic analysis of the Kyoto Protocol. 

Kyotoism: Down but Not Yet Out

Politically, the last eighteen months have been remarkable. In June 2009, the House passed H.R. 2454, the “American Clean Energy and Security Act,” popularly known as the Waxman-Markey cap-and-trade bill. Waxman-Markey’s passage was the culmination of a 20-year PR/lobbying campaign waged by U.N. officials, regulatory bureaucrats, environmental activists, lefty politicians, and corporate rent seekers.

Many of them crowed that ultimate victory was inevitable. With Barack “Blueprint for Change“ Obama in the White House, Speaker Pelosi and Chairmen Waxman and Markey running the climate show in the House, and Majority Leader Reid and Chairman Boxer setting the agenda in the Senate, expectations ran high in green circles.

Their optimistic scenario went as follows: Congress would finally enact cap-and-trade, which would shame China into accepting binding emission limits at the Copenhagen conference, which would then remove the chief obstacle to U.S. ratification of a successor treaty to the Kyoto Protocol.

Things did not turn out that way. [Read more →]

December 14, 2010   4 Comments

Climate Alarmism vs. the IPCC (did Manzi get what Romm missed?)

The innocent layperson may have gotten the idea that the Intergovernmental Panel on Climate Change (IPCC) represented the “consensus” view that urgent government action is needed to avert catastrophic impacts on humanity.

And yet, as Jim Manzi’s recent exchange with uber-alarmist Joe Romm makes perfectly clear, even the latest IPCC report punctures holes in the alarmist claims. Perhaps without realizing it, Romm implicitly admits that the IPCC AR4 report never supported the alarmist view.

Manzi Uses the IPCC to Take Down Al Gore

In his relatively new position as “in-house critic” at The New Republic, Manzi criticized a characteristically alarmist piece that Al Gore had published in the same venue. Manzi wanted to show that Gore was misleading the public on what the “scientific consensus” actually had to say about the risks of climate change. [Read more →]

August 2, 2010   8 Comments

‘Cap-and-Divide: More Civil War on the Left’ (Classic MasterResource re-post)

[Editor note: This post from economist Robert Murphy originally appeared on 2-10-10. It is reprinted given the growing opposition to pricing carbon within the Democratic Party.]

George Carlin once asked, “Is it really possible to have a civil war?” Readers of Joe Romm’s pronouncements on greenhouse gas legislation would answer in the negative. Romm has always been a caustic critic of the “anti-science disinformers” who do not toe the line on the alleged scientific consensus, but lately he has turned his fire on former allies who dare to question the legislative developments in Washington.

An illustration of this internal squabbling is Romm’s recent post on the “cap and dividend” proposal put forth by Senators Cantwell and Collins. Here’s Romm’s take (emphasis added):

Climate politics can be very strange indeed. Because cap-and-trade bills like Waxman-Markey are seen as having no chance of passing the Senate, some enviros appear to be shifting their support to bills that are politically even less attractive and environmentally even less adequate.

The latest misguided missile is the Carbon Limits and Energy for America’s Renewal (CLEAR) Act put forward by Maria Cantwell (D-WA) and Susan Collins (R-ME) — full text and info here. Supporters call it “Cap-and-Dividend,” but right now I think the best term for it is, “Cap-and-Divide,” since it has no chance whatsoever of becoming law but is serving to undercut the tripartisan effort by Graham, Kerry, and Lieberman to develop a bill that might get 60 votes…. [Read more →]

May 21, 2010   No Comments

A Positive Human Influence on Global Climate? Robert Mendelsohn, Meet Gerald North!

“[Robert] Mendelsohn’s position is rather similar to yours…. He believes the impacts are not negative at all for the US and most of the developed countries. Most impact studies seem to be showing this. It leads us to think that a little warming is not so bad. Glad I have kept my mouth shut on this issue of which I know so little.”

- Gerald North (Texas A&M) to Rob Bradley (Enron), November 12, 1999

“I agree that the case for 2C warming [for a doubling of manmade greenhouse gas forcing in equilibrium] is pretty strong.”

- Gerald R. North to Rob Bradley, email communication, August 13, 2007.

Yesterday, the Wall Street Journal published my letter-to-the-editor rebutting Kerry Emanuel’s letter, which, in turn, was critical of his fellow MIT climatologist Richard Lindzen’s op-ed, “Climate Science in Denial.”

My arguments opposing those of Professor Emanuel (see entire letter below) are fairly straightforward, but I end with this challenge:

“But when will many climate scientists, including Mr. Emanuel, face Climategate and the fact that the human influence on climate, on net, is as likely to be positive than negative?”

Is this challenge rash, or is it backed by the facts?  Well, let’s consider the views of an esteemed climate economist and an esteemed climate scientist. They are, respectively,

Robert O. Mendelsohn (Edwin Weyerhaeuser Davis Professor of Forest Policy; Professor of Economics; and Professor, School of Management)

Gerald R. North (Distinguished Professor, Physical Section, Department of Atmospheric Sciences and the
Department of Oceanography
).

Dr. North’s long held sensitivity estimate of 2ºC for a doubling of atmospheric greenhouse concentrations is one-third below the “best guess” of the Intergovernmental Panel on Climate Change (or the IPCC’s best guess is one-half greater than that of Dr. North). That is a big difference, and if you believe Mendelsohn et al. that a 2ºC for 2x results in net positive benefits for the world, then voila!

Is it radical to believe that the human influence on climate, on net, has more positives than negatives for many decades out and even beyond a century or more?  After all, the CO2 fertilization effect is a strong positive, and warmer and wetter is going in the right direction for the biopshere…

Perhaps CO2 as the green greenhouse gas is ’closet’ mainstream, if North’s (private) views are considered. [Read more →]

May 6, 2010   23 Comments

Krugman Paints False Picture of Consensus Alarmism

Nobel laureate Paul Krugman wrote a lengthy article, “Building a Green Economy,” in last Sunday’s New York Times Magazine. Krugman is an able writer.  He laid out the textbook arguments on climate change from the problem-and-act perspective, and his fact-of-the-matter tone and apparent expertise no doubt misled many readers.

Although he technically said nothing demonstrably false, Krugman gives the impression that there is widespread consensus that drastic action is needed to avert catastrophic climate change. This is simply not true, and all we have to do is actually read the consensus reports to see that Krugman is misleading his readers.

Krugman’s Summary of the Climate Science

After giving a good summary of the standard issues in the economics of climate change, Krugman pauses to comment on what the natural scientists (as opposed to the economists) have to say on the subject:

This is an article on climate economics, not climate science. But before we get to the economics, it’s worth establishing three things about the state of the scientific debate.

The first is that the planet is indeed warming. [I]f you look at the evidence the right way ­— taking averages over periods long enough to smooth out the fluctuations — the upward trend is unmistakable: each successive decade since the 1970s has been warmer than the one before.

Second, climate models predicted this well in advance, even getting the magnitude of the temperature rise roughly right. While it’s relatively easy to cook up an analysis that matches known data, it is much harder to create a model that accurately forecasts the future. So the fact that climate modelers more than 20 years ago successfully predicted the subsequent global warming gives them enormous credibility. [Krugman page 3, emphasis added.]

Now Krugman’s summary above is either accurate or not, depending on how much error we will tolerate in the predictions. But fair enough, we’ll agree with Krugman that climate models 20 years ago predicted higher average global temperatures, and that’s indeed what we’ve experienced. [Read more →]

April 16, 2010   5 Comments

Climate Mitigation: Costs versus Benefits (reassessing Robert Frank’s call for policy action)

In a recent New York Times article, economist Robert H. Frank–“The Economic Naturalist”–argues that fighting global warming through government intervention entails a small cost and promises a large benefit. Yet to cast serious doubts on his claim, all we need do is quote from U.S. government and IPCC reports. We find that even in a textbook implementation, it’s not obvious that government mitigation efforts deliver net benefits.

Of course in the real world, if the politicians and/or EPA starts intervening in the energy sector, their actions will be far from the economist’s theoretical ideal. Then the case for such policy activism falls apart.

Frank’s Pros/Cons of Intervention

Frank’s opening paragraphs nicely summarize his views on climate policy:

FORECASTS involving climate change are highly uncertain, denialists assert — a point that climate researchers themselves readily concede. The denialists view the uncertainty as strengthening their case for inaction, yet a careful weighing of the relevant costs and benefits supports taking exactly the opposite course.

Organizers of the recent climate conference in Copenhagen sought, unsuccessfully, to forge agreements to limit global warming to 3.6 degrees Fahrenheit by the end of the century. But even an increase that small would cause deadly harm. And far greater damage is likely if we do nothing.

Frank goes on to quote a new MIT study, which paints an alarming scenario of damages from warming if world governments sit on their hands. In contrast, Frank argues that the cost to the economy of limiting greenhouse gases is not in the same ballpark. He sums up with, “In short, the cost of preventing catastrophic climate change is astonishingly small, and it involves just a few simple changes in behavior.

So if the risks of inaction are potentially catastrophic, while the costs of preventive government measures are relatively trivial, then who but a fool or a stooge for Big Oil would question the need for immediate intervention? [Read more →]

March 15, 2010   3 Comments

Empty Shell: The Unbearable Lightness of U.S. CAP (A critical look at Marvin Odum’s Op-Ed)

Yesterday (Mar. 9), the Houston Chronicle published an op-ed by Shell Oil CEO Marvin Odum titled, Why Shell Oil Co. and I are staying in the U.S. Climate Action Partnership. It’s pretty thin on substance. Kinda reminds me of that ’80s film, ”The Unbearable Lightness of Rent-Seeking.”

Maybe Mr. Odum got his marching orders from The Hague (Netherlands), or maybe he really believes cap-and-trade is good for the oil (and natural gas) business. These are strange times. Confusion abounds in high places.

In this post, I provide a running commentary on Odum’s column.  Odum’s verbiage is indented; my comments follow in bold type. 

Today, Washington is having the wrong energy and climate debate, and the future of the U.S. economy may be the biggest casualty.

A rather amazing statement, considering that the party of cap-and-trade controls the White House and the leadership of both the House and Senate. Saint Barack, Czarina Browner, Lisa Endangerment-Finding Jackson, General Boxer, and Inquisitor Waxman occupy the commanding heights of energy and climate policy in the nation’s capital, yet ”Washington is having the wrong energy and climate debate.” How did they let that happen? Odum offers no explanation.

Rather than developing sensible legislation that creates a viable market for low-emission energy while developing more of our own oil and gas resources, Washington is engaged in a snowball fight over the science of global warming.

Yep, move along, nothing to see here. ”Snowball fight” indeed. Top IPCC-affiliated scientists conspired to bias the peer-reviewed literature they would assess, ignored research that did not fit into the “nice tidy story” they wanted to tell, and violated the UK freedom of information act to prevent independent researchers from checking their data and methods. These IPCC insiders repeatedly flouted U.S. Government standards of openness and transparency, rendering the IPCC reports  unsuitable as basis for policymaking, as Peabody Energy documents in its 240-page examination of the Climategate files. [Read more →]

March 11, 2010   5 Comments

Easy, Cheap ‘Green’ Energy? Just the Reverse!

[Editor note: This post by Kenneth P. Green and Aparna Mathur of the American Enterprise Institute, is a slightly revised version that originally appeared at The American, AEI's flagship monthly publication.]

In December 2009, economists Hector Pollitt and Chris Thoung of Cambridge Econometrics published a self-described “short” modeling exercise on an 80 percent greenhouse-gas emissions reduction by 2050 in the United Kingdom.[1] Pollitt and Thoung used the Energy-Environment-Economy Model of Europe (E3ME), which they observe has been “used for a variety of analyses including greenhouse-gas mitigation policies, incentives for industrial energy efficiency, and sustainable household consumption.”[2] The E3ME model covers 29 European countries and uses detailed data on 42 economic sectors, 41 categories of consumer goods, 12 types of fuel, and 14 emissions, including the six major greenhouse gases.

Surprisingly, the study estimates that prices for most goods would rise by less than 1 percent. The highest price increases would be found for carbon-intensive fuels, such as natural gas, gasoline, and electricity. But it would be affordable overall.

Proponents of (forced) energy transformation trumpeted the findings. In a news piece “Low-carbon future: we can afford to go green,” Jim Giles of New Scientist quoted a climate policy expert at the London School of Economics: “These results show that the global project to fight climate change is doable” and “it’s not such a big ask as people are making out.”[3]

The New Scientist piece adds that these results correspond well to studies in the United States, quoting Manik Roy of the Pew Center on Global Climate Change as predicting that “even cutting emissions by 80 per cent over four decades has a very small effect on consumers in most areas.” The Pew Center would no doubt like to see a lot of rationing of CO2 here in the U.S.

No Inexpensive ‘Green’ Lunch

We disagree. Our prior research into the costs of indirect energy—that is, the energy used to produce, package, and distribute consumer goods and services—suggests that the Cambridge Econometrics numbers are unrealistically low. In a series of papers and studies conducted by us and coauthored with colleagues, we show that even a $15 permit price (one-fortieth of what Pollitt and Thoung model) would cause prices of most goods to rise by 1 percent or higher.[4] So hold on to your wallets. [Read more →]

February 26, 2010   4 Comments

Debating Climate Change on Stossel: Economics to the Fore

Last week, I appeared on the premier of John Stossel’s new show on Fox Business – a show titled (appropriately enough) Stossel.  The topic was global warming and, happily, I had an hour (well, actually only about 43 minutes once you subtract out the commercials) to discuss the issue with John and members of the studio audience.  If you missed the show, you can catch it here.

My arguments on Stossel tracked those offered here at MasterResource last month.  In short, I had no interest in engaging in a debate about the physical science of natural versus anthropogenic climate change.

I was entirely interested in the implications for public policy if we accept the most recent IPCC report at face value.  I think it’s quite interesting that even if one accepts the common definition of what constitutes “mainstream science” on this issue that one is still hard pressed to put forward a defensible mitigation scheme.

Alas, my inbox suggests that a number of people who watched the show thought I was too willing to accept the contention that there has been warming and that man likely has a lot to do with it.  Instead, a number of Fox viewers wanted me to launch World War III over the climate record. 

I didn’t for two reasons.  First, I am not a scientist and am more comfortable leaving that debate to those engaged fully in that field.  I know that this doesn’t stop a lot of people from holding forth regardless, but it stops me.  Second, one can be correct about the climate history being short of what Al Gore or Michael Mann make it out to be without being correct about the contention that anthropogenic greenhouse gas emissions has little to do with the warming at present.  For some reason, that’s an impossible point for many people to grasp. [Read more →]

December 19, 2009   12 Comments