Environmental Engineering Reference
In-Depth Information
Internalizing that externality makes the producer some-
how include the cost in the price charged. If a coal-
red
power plant emits lots of greenhouse gases, you should
move in a reasonable time to add an emissions fee to the
price of electricity from coal, which will encourage the
replacement of coal with a less polluting power system, a
windmill for example with no emissions.
Nordhaus and Stern both start with a price to be
charged for emissions. Their initial prices are not far
apart, but Stern ramps his up far faster than Nordhaus.
When the reader thinks about who is nearer the truth,
remember that the difference between them comes down
to what we owe to future generations.
Nordhaus has written a new book, The Climate Casino
[
], in which he looks again at the issues. He discusses
the expected temperature rise if we do nothing, draws a
conclusion of what might be dangerous, and then uses his
model to say what we should spend to avoid the dangers.
There are two main conclusions that are not new, but if
they sway the economics community they are useful. One
is that the problem is serious and the sooner one starts to
address it, the lower the cost of avoiding the consequences.
The other is that the developing world must be involved,
because if it is not, we cannot avoid the dangers of a large
temperature rise. Both conclusions were already clear from
the earlier Nordhaus
-
Stern debate, and from a look at
Figure
which shows that emissions over this century
will be dominated by those from the developing world.
.
There is an extensive review of the topic by another economist, Paul
Krugman, in The New York Review of Books edition of November
,
,
http://www.nybooks.com/issues/
/nov/
/.
