So, the economics of climate change, while a sexy subgenre, isn't that different from any other "economics." And it has the same problems that all mainstream econ has (#1600565)
Still, Nordhaus, who's popular book I wrote about a few years ago is complete crap, died earlier this year, and Tim Harford is out here honoring him and his work.
Nordhaus is and became "the" climate economists. His "big thing" was that he turned the all-encompassing modelling into dynamic form.
William Nordhaus was one of the first economists to take climate change seriously, and he realised that the problem of greenhouse gases was a very different kind of problem from the one which was in the spotlight in the 1970s – that of running out of fossil fuels. [...]
His model described the interactions between the economy and the climate, and did so in a way that was transparent. If you didn’t like the basic parameters Nordhaus plugged into the model — and plenty of people did not — then you could use different numbers and see how the conclusions changed.
"loyal readers might see that when any resource becomes more scarce, it becomes more expensive, and when it becomes more expensive, people will find ways to use less of it."
In standard mainstream, most macro economists think there's a market failure in the overproduction of carbon dioxide. it's the dumping of damage on others into the commons (#1565551), and so the efficient quantity should be lower.
Not so for climate change; there is no price mechanism to discourage people from polluting the world’s atmosphere, which is why Nordhaus argued decades ago that some kind of regulation or carbon price was required if there was to be any hope of dealing with the problem.
I think all/most of this incorrect, but the rest of the economist world disagrees with me so here we are, celebrating Nordhaus.
His big thing is to calculate the efficient carbon tax to balance the PROs and CONs of production (which is valuable but has the downside of negative externalities on others)
"while our response to climate change should not be “do nothing”, neither should it simply be 'do something'. Some responses would do more harm than good."
A carbon tax is a sensible way to encourage producers, consumers and innovators to find ways to emit less carbon dioxide, but what should the tax be? One cent a ton would be negligible; a million dollars a ton would destroy the world economy (or, more likely, be flouted). But then what? Five dollars? Fifty? Five hundred?
You can find me arguing both sides of this case (if you dig a bit).
Interestingly, while a "climate economist" Nordhaus usually didn't favor the kind of craziness you've seen (phase out fossil fuels, net zero by-whatever-year
There are some mentions of two other elegant Nordhaus papers: the economics/history of the price of LIGHTING and the SOCIETAL BENEFITS OF INNOVATION and how the entrepreneur/invention capture a pittance compare to rest of society
What part (if any) do you think is correct?
I'd rephrase this as: "People do not have to pay to deal with greenhouse gasses they produce. People often do have to pay to deal with other waste products they produce, so why are greenhouse gasses different?"
Climate change "damage" vastly overestimated; higher rates make far-off damages way less concerning; we have bigger problems; and externalities are overblown economics phenomena
I can see a world where people aren't going to argue about water rights along a river as long as there is plenty of water. However, once the water starts to not be enough, they decide who has rights to what.
This happens often enough that I'd guess most river systems have water rights clearly worked out. But this may not have been the case two centuries ago.
The question I'm trying to figure out is whether we are on a trajectory to where (for whatever reason) the atmosphere is going to be treated in a similar manner to water rights.
There's not necessarily a reason to think that the atmosphere is different than the surface of the earth or the oceans: given enough people, we end up negotiating usage rights to everything.
It's possible but excess CO2 won't be the offender and neither will excess temperature. That's the silliest part of this. Both CO2 (plant food) and temperature (energy) are harvestable commodities that technology will take advantage of.
We already have legal mechanisms in place to stop people from pumping actual toxic (or otherwise damaging) substances into the atmosphere.
Eh, he seems pretty reasonable all things considered. Where I'd push back is that it's rather hubristic to think that we have the ability to calculate the efficient quantity of carbon production; much less there even being a single correct answer when likely the costs, benefits, and beliefs are totally heterogeneous.
This is one place where I agree with you about the benefits of writing down a model.
We can have much more civilized, and possibly even fruitful discussions, if they have to relate back to features of the model: i.e. "that elasticity should be 10% lower" or "there's a missing feedback loop that should go here."
yeah, maybe I wasn't too clear... I'm not too fuzzed by him either, pretty lukewarm(!) all things considered.