Geoscience Reference
In-Depth Information
How do economists respond to these questions? Most would agree
that doing a sound cost-benefi t analysis for climate-change policy is a
daunting task. But it is necessary if people are to make reasoned choices
about policies. We might not be able to make defi nitive estimates about
the impacts of higher temperatures on different sectors, but by a pro-
cess of careful study and analysis, we can get order-of-magnitude esti-
mates and use them in our analyses. Care must be taken to include all
impacts—market, nonmarket, environmental, and ecosystem impacts.
Moreover, in those areas where the estimates are particularly sparse,
such as ecosystem valuation, economists and natural scientists need to
cooperate to produce better estimates. However, if we are to act respon-
sibly with people's money and not make foolish investments, we need
to compare the price tag with the things we are buying.
Consider the following thought experiment. Suppose that you have
a trusted team of experts who provide you cost estimates for attaining
different climate objectives. Suppose the estimates look like those in
Figures 29 to 32. What target would you pick?
You would need to study the impact analysis and think about tip-
ping points. Perhaps you would modify the damage functions to add an
insurance premium for damages to ecosystems and species, which are
often omitted from damages.
You would also need to make a realistic estimate of country partici-
pation. If you really thought that only half of all countries would par-
ticipate, then aiming for 2°C is like hoping you can take Amtrak to the
moon. On the other hand, if you thought you could induce all countries
to get on board very quickly, with no free riding, and that the policy
tools you could realistically deploy are effi cient ones, then you might
well aim for the Copenhagen target.
Based on the analysis in the last two chapters, what should we con-
clude about setting objectives for climate policy? To begin with, it is
important to have coherent and valuable objectives. Some scientists are
convinced that a temperature target is the right goal. While that argu-
ment is not beyond debate, limiting climate change is defi nitely a wor-
