Major climate change economics study released
July 6, 2008 5:16 PM   Subscribe

The draft Garnaut Climate Change Review was released last Friday. This is the most comprehensive look so far at the economic implications of climate change and emissions trading for a developed country (Australia). Essential (but weighty) reading for those interested in the economics of the issue, a useful localisation of Stern (2006).

Ross Garnaut is a distinguished economist from the orthodox school. He argues cogently for Australia and the developed world to play their part in reducing emissions, and notes that 450 ppm CO2-e is difficult but achievable.

Final Report with full econometric modelling due in September. Scope of an Australian ETS due by christmas.

Responses have dominated the weekend media cycle and blogosphere: The Age, evident scepticism on, blogs summary c/- Larvatus Prodeo.
posted by wilful (18 comments total) 8 users marked this as a favorite
Intrestingly I've seen some conservatives arguing that it wasn't a question weather global warming was happening but whether "the economic cost of stopping it would be greater then letting it happen." Which seemed rather insane to me.
posted by delmoi at 5:25 PM on July 6, 2008

Well i think that's a reasonable position to hold, in principle. But the answer is so blindingly obvious you'd have to be thick to think about it for more than a nano-second. But Garnaut (who aint thick) does go there in plenty enough detail.
posted by wilful at 5:32 PM on July 6, 2008

Sorry to stop spamming my own post, but I just came across the moral case for why we should not act on climate change.
posted by wilful at 5:54 PM on July 6, 2008

re: Stern, he just recently came out with an update (June 2008) saying the cost to global GNP will be double what the 2006 report initially had - he said the reason is warming is happening faster than previously thought (the 2006 Stern report was based on 2000 IPPC data) and so more drastic and quick action is needed. I suspect with time he will continue to move the cost upwards for this reason, in particular if nothing is done about it, the cost just keeps going up as time runs out.
posted by stbalbach at 6:08 PM on July 6, 2008

> the moral case for why we should not act on climate change.

And the complementary moral case why we should take bold, forward-looking action in inconsequential, feel-good ways.
posted by jfuller at 6:51 PM on July 6, 2008

delmoi writes "Intrestingly I've seen some conservatives arguing that it wasn't a question weather global warming was happening but whether 'the economic cost of stopping it would be greater then letting it happen.' Which seemed rather insane to me."

Jared Diamond, in Collapse makes the point that some of the worst polluters are devout believers in an imminent Christian end-time. Now why you have to be rich to be raptured isn't clear, but in any case they expect to literally ascend beyond the reach of their own pollution.
posted by orthogonality at 8:13 PM on July 6, 2008

I'd like to make a serious statement, followed by a funny one.

Clearly we need to act on this issue but I think that the PM may not be seeing the political side of this debate as clearly as he needs to be.

One of the lessons of the Whitlam Government was that a Government that tries to implement too much too fast gets kicked in the nuts. The PM, by his own admission, has a huge workload and a huge agenda for his Government to deliver. This is not surprising given he has to undo 12 years of damage from the Howard era, the last 3 of which (at least) were marred by inaction and complacency on every issue bar industrial relations. And clearly people want him to fix what went wrong when Howard was in office; that's why Rudd is PM now and Howard isn't.

But ignoring the lessons of Whitlam could well be Rudd's undoing. The opinion polls are already beginning to shift dramatically. Rudd as PM must come to understand, and understand soon, that he needs to focus on one or two issues at a time and implement them well lest the citizenry, who despite what they tell you largely crave pragmatism from their Government, kick him in the balls.

This carbon emissions trading scheme is the big one. The PM can win this argument, especially if the Labor states fall into line, but he needs to do it slowly so that people can adjust to it and not feel like they have personally been screwed over to save the planet. He needs to do this slowly so that he can be reelected for a second, third and even a fourth term so that the Oppositon, a party neck-deep in climate change sceptics and apologists for high polluting industries, can't get in and undo what he's done. He needs to be reelected over and over again so that he can implement the biggest answer to the biggest problem facing the world's industrialised nations.

Rudd needs to be sensitive to the political realities that the Garnaut Report present, not only so he can save his own political skin and that of his Government, but so that he can save the planet and us from ourselves and our own limited vision which barely sees past the money in our wallet.

Now that my serious statement is over, time for one of the funniest articles you'll ever read. It's Janet Albrechsten's latest bit, in which she says the media shouldn't be soft on the Government. Y'know... like she was back when Howard was in charge.

posted by Effigy2000 at 8:21 PM on July 6, 2008

Intrestingly I've seen some conservatives arguing that it wasn't a question weather global warming was happening but whether "the economic cost of stopping it would be greater then letting it happen." Which seemed rather insane to me.

Actually, to make economic sense, the cost of Global Warming to future generations must be several hundred times more than the cost of stopping it, since, as the argument goes, we'll be removing money from the economy which could be earning dividends for those future generations (like building a cross-atlantic bridge, or space elevator, or curing cancer).

Don't get too put out though, this is just economist talk. The "accounting" is supposed to include things that don't really have a money value, like the number of people who will die, or the value of a lost species (talk to an economist if you get a chance. It's amazing the way they come up with numbers for these.) The question isn't so easy to dismiss, when you consider that stopping climate change could mean sacrificing some of our gains in life-span, and preventing developing nations from ever reaching our quality of life.

Even if you decide that fighting climate change is worth the cost (most knowledgeable folks do, but not all), you still have to decide whether its better to reduce CO2 emissions, or develop alternative technologies to lower the earth's temperature. They're complicated policy questions, so it makes sense to come up with some ranking scheme. Money just happens to be a convenient one.
posted by Popular Ethics at 8:24 PM on July 6, 2008

PE, both Stern and Garnaut use a very low discounting rate, in the order of 0.1%, to reflect the likelihood of us being wiped out. And then they get very much stuck into the numbers, and any reasonable economist, or even accountant, would have a deal of explaining to do to craft a case for inaction. The debate has been had on that level, and it has been won, pretty comprehensively.

geoengineering is a high risk fantasy, at least at this stage. maybe needed later though!
posted by wilful at 8:49 PM on July 6, 2008

both Stern and Garnaut use a very low discounting rate, in the order of 0.1%, to reflect the likelihood of us being wiped out. And then they get very much stuck into the numbers,

Sorry willful, I'm having trouble parsing your reply. Why would they use such a low discount rate? I've seen some pretty big numbers thrown around for the cost of combatting climate change so whether or not its worthwhile (and I agree, it seems pretty evident), you'd think the opportunity cost would be more significant.
posted by Popular Ethics at 9:01 PM on July 6, 2008

Andrew Norton has been on about how Australians think something should be done about global warming, but they are cautious about spending much on it. It's an interesting point that is quite pertinent.

delmoi: Bjorn Lomborg is the main advocate of comparing spending on global warming to the probably damage it will do. He has a piece in the Guardian on the subject. It's worth noting that he accepts the IPCC average prediction as an assumption for his ideas.

As an aside, it's interesting to compare the orginal Hansen projections from 1988 against what has actually happened as shown here .
posted by sien at 10:48 PM on July 6, 2008 has a video of the opening remarks from Garnaut's speech, with part 2 on YouTube as well.

Garnaut's not the world's best orator, but I think he did well, and I liked his strong words against delayers and skeptics. He also gets in a little dig at people who think that small actions will be enough to fix the problem.
posted by harriet vane at 4:30 AM on July 7, 2008

That Hansen link is interesting. Imagine having spent money in 1988 on its basis...
posted by A189Nut at 9:35 AM on July 7, 2008

PE, opportunity cost and discount rate aren't really the same thing. They only apply a discount rate due to the likelihood of humans becoming extinct. Beyond that they think the utility of a normal climate is the same for future generations as it is now.

Discounting breaks down badly with low probability high impact risks.
posted by wilful at 4:07 PM on July 7, 2008

Target atmospheric CO2: Where should humanity aim? Hansen and others, 2008:
Paleoclimate data show that climate sensitivity is ~3 deg-C for doubled CO2, including only fast feedback processes. Equilibrium sensitivity, including slower surface albedo feedbacks, is ~6 deg-C for doubled CO2 for the range of climate states between glacial conditions and ice-free Antarctica. Decreasing CO2 was the main cause of a cooling trend that began 50 million years ago, large scale glaciation occurring when CO2 fell to 450 +/- 100 ppm, a level that will be exceeded within decades, barring prompt policy changes. If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm. The largest uncertainty in the target arises from possible changes of non-CO2 forcings. An initial 350 ppm CO2 target may be achievable by phasing out coal use except where CO2 is captured and adopting agricultural and forestry practices that sequester carbon. If the present overshoot of this target CO2 is not brief, there is a possibility of seeding irreversible catastrophic effects.
Atmospheric CO2 is rising steadily. Current CO2 level: 387 ppm.
posted by russilwvong at 11:34 AM on July 8, 2008

russilvwong, here are some lucid posts on Hansen et al. at my favourite blog:

Hansen's long view

IPCC and sea level change

Sea level rise: some real world implications

Greenland, Antarctica and sea level change

posted by wilful at 4:44 PM on July 8, 2008

See also a new book just out (I know one of the authors): Climate Code Red
posted by wilful at 5:38 PM on July 8, 2008

Wilful, that book looks pretty good (well, depressing, but informative, at any rate).
posted by harriet vane at 4:02 AM on July 9, 2008

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