[Dean's World] Dave Schuler: Weighing the Costs

[notify at powerblogs.com]

Posted by Dave Schuler:
Weighing the Costs
http://www.deanesmay.com/posts/1187276277.shtml


   I've already mentioned my preference for considering the implications
   of proposed policy over debating the science when discussing global
   warming and climate change and [1]this post by Ron Bailey is a good
   start at doing just that (hat tip: [2]Steve Verdon).

   In the post Ron considers the work of William Nordhaus in evaluating
   the costs and benefits of various different plans. [3]Dr. Nordhaus's
   work suggests that the Gore plan

     would reduce climate change damages by $12 trillion, but at a cost
     of nearly $34 trillion.

   and proposes the following as the optimal policy:

     Nordhaus reckons that the optimal policy would impose a carbon tax
     of $34 per metric ton carbon in 2010, with the tax increases
     gradually reaching $42 per ton in 2015, $90 per ton in 2050, and
     $207 per ton of carbon in 2100. A $20 per metric ton carbon tax
     will raise coal prices by $10 per ton, which is about a 40 percent
     increase over the current price of $25 per ton. A $10 per ton
     carbon tax translates into a 4 cent per gallon increase in
     gasoline. A $300 per ton carbon tax would raise gasoline prices by
     $1.20 per gallon.

     Following this optimal trajectory would cost $2.2 trillion and
     reduce climate change damage by $5.2 trillion over the next
     century. "The net present-value global benefit of the optimal
     policy is $3.4 trillion relative to no controls," writes Nordhaus.
     "While this is a large number absolutely, it is a small fraction,
     about 0.17 percent, of the discounted value of total future
     income." Keep in mind that in this optimal scenario climate change
     damages would still accumulate to $17 trillion (lower than $22.6
     trillion in the baseline case), but they are not abated because to
     do so would cost more than the benefits obtained.

References

   1. http://www.reason.com/news/show/121926.html
   2. http://www.outsidethebeltway.com/archives/2007/08/optimal_global_warming_policy/
   3. http://nordhaus.econ.yale.edu/dice_mss_072407_all.pdf