Eco-nomics: Carbon Mitigation Costs and Benefits

A while back Robert Frank of Cornell wrote about mitigation in the face of uncertainty of carbon emissions in his occasional column in The New York Times.  Here are some excerpts:

A Small Price for a Large Benefit

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.

The numbers — and there are many to choose from — paint a grim picture. According to recent estimates from the Integrated Global Systems Model at the Massachusetts Institute of Technology, the median forecast is for a climb of 9 degrees Fahrenheit by century’s end, in the absence of effective countermeasures.

That forecast, however, may underestimate the increase. According to the same M.I.T. model, there is a 10 percent chance that the average global temperature will rise more than 12.4 degrees by 2100, and a 3 percent chance it will climb more than 14.4 degrees. Warming on that scale would be truly catastrophic.

Scientists say that even the 3.6-degree increase would spell widespread loss of life, so it’s hardly alarmist to view the risk of inaction as frightening.

In contrast, the risk of taking action should frighten no one. Essentially, the risk is that if current estimates turn out to be wildly pessimistic, the money spent to curb greenhouse gases wouldn’t have been needed to save the planet. And yet that money would still have prevented substantial damage. (The M.I.T. model estimates a zero probability of the temperature rising by less than 3.6 degrees by 2100.)

Moreover, taking action won’t cost much. According to estimates by the Intergovernmental Panel on Climate Change, a tax of $80 a metric ton on carbon dioxide — or a cap-and-trade system with similar charges — would stabilize temperatures by midcentury.

This figure was determined, however, before the arrival of more pessimistic estimates on the pace of global warming. So let’s assume a tax of $300 a ton, just to be safe.

Under such a tax, the prices of goods would rise in proportion to their carbon footprints — in the case of gasoline, for example, by roughly $2.60 a gallon.

A sudden price increase of that magnitude could indeed be painful. But if phased in, it would cause much less harm. Facing steadily increasing fuel prices, for example, manufacturers would scramble to develop more efficient vehicles.

Even from the existing menu of vehicles, a family could trade in its Ford Explorer, getting 15 miles per gallon, for a 32-m.p.g. Ford Focus wagon, thereby escaping the effect of higher gasoline prices. Europeans, many of whom already pay $4 a gallon more than Americans do for gasoline, have adapted to their higher prices with little difficulty.

In short, the cost of preventing catastrophic climate change is astonishingly small, and it involves just a few simple changes in behavior.

The real problem with the estimates is that the outcome may be worse than expected. And that’s the strongest possible argument for taking action. In a rational world, that should be an easy choice, but in this case we appear to be headed in the wrong direction.

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WE don’t know how much hotter the planet will become by 2100. But the fact that we face “only” a 10 percent chance of a catastrophic 12-degree climb surely does not argue for inaction. It calls for immediate, decisive steps.