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I find myself in the strange position of wanting to defend climate economists.
There's a lot to like in this piece but I think Noah misleads about the past and ongoing contributions of climate economics.
https://twitter.com/Noahpinion/status/1381932679696838659
There's a lot to like in this piece but I think Noah misleads about the past and ongoing contributions of climate economics.
https://twitter.com/Noahpinion/status/1381932679696838659
I say this as someone who has been critical of the "market failure" framework for understanding climate change and critical of carbon taxes in all sorts of contexts. https://issues.org/book-review-no-really-why-are-we-waiting/
Nordhaus/DICE lays out climate mitigation as, fundamentally, a cost-benefit challenge, which is how everyone, including Noah, still treats it.
DICE also gave us an early modeling proxy for improving the cost-benefit calculation via a "backstop technology." Noah acts like Nordhaus and other climate economists ignore technological innovation but they don't.
I agree with Noah that more scholarship should be done on innovation/R&D, but 1. modeling innovation is hard! and 2. there's quite a bit of work in the climate economics literature on this subject.
Links:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2217490
https://www.c2es.org/site/assets/uploads/2004/10/induced-technological-change-and-climate-policy.pdf
https://econpapers.repec.org/article/eeeecolec/v_3a72_3ay_3a2011_3ai_3ac_3ap_3a28-36.htm
https://www.sciencedirect.com/science/article/pii/S0140988308000443
https://economics.mit.edu/files/8076#:~:text=We%20propose%20a%20simple%20two,machines%20and%20creates%20environmental%20degradation.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2217490
https://www.c2es.org/site/assets/uploads/2004/10/induced-technological-change-and-climate-policy.pdf
https://econpapers.repec.org/article/eeeecolec/v_3a72_3ay_3a2011_3ai_3ac_3ap_3a28-36.htm
https://www.sciencedirect.com/science/article/pii/S0140988308000443
https://economics.mit.edu/files/8076#:~:text=We%20propose%20a%20simple%20two,machines%20and%20creates%20environmental%20degradation.
There are present-day economic costs to shuttering fossil fuel industry operations, agriculture, transportation, and industrial production, most of which we have vanishingly few alternatives for today.
Noah gets around this by observing, correctly, that solar and wind have gotten much cheaper in the last couple decades.
But wind/solar/EVs do not fully obviate the costs associated with the energy transition in the electricity/LDV sectors, let alone the *majority of the global economy* for which we have few/no scalable low-carbon alternatives to incumbent technologies/systems.
This part is just totally inaccurate and confused. DICE and especially other climate models do not totally ignore technological change. They do not present a choice between impoverishing ourselves today and an unlivable future. Noah's zero-sum description here is bad faith.
DICE and William Nordhaus's whole raison d'etre is to make the case that there is a benefit to paying upfront costs *today* to avoid damages in the future. DICE is so useful that Noah credits a bunch of scientists for using it to criticize Nordhaus!
The entire school of climate economics, and Nordhaus himself, have updated DICE and other models continuously over the past generation. Noah seems to focus his critique one (old) run of one model.
We don't get to throw out this entire field of scholarship because climate scientists say a climate changed future will be "unlivable." (Incidentally, they overwhelmingly do not say that.)
Also, Noah casts @RichardTol as some crank academic. Tol was the coordinating lead author of the IPCC's Fifth Assessment Report (Working Group II). Tol has also argued very consistently that it's worth paying for more mitigation today to avoid climate damages in the future.
Again, there's a lot to like in this post. Neoclassical economics is an imperfect framework for understanding climate action. Carbon taxes are insufficient, especially for accelerating the innovation that climate-economy models tell us is so important for cost-benefit clearing.
We need to better understand innovation policy and the effects of RD&D. I, like Noah, am largely heartened by the Biden Administration's approach here, as we laid out @TheBTI https://thebreakthrough.org/articles/saying-the-quiet-part-loud
Argue all you want w/ Nordhaus, Tol, et al about discount rates, assumed rate and source of technological change, assumptions about emissions trajectories and future climate damages, tail risks and uncertainties. I have!
But as you argue about those things, recognize that you are using many of the tools created by climate economists to do so.
fin.
fin.
