Global Warming: Easy Economics but Hard Politics

The Times reports:

While virtually all of the largest developed and developing nations have made domestic commitments toward creating more efficient, renewable sources of energy to cut emissions, none want to take the lead in fighting for significant international emissions reduction targets, lest they be accused at home of selling out future jobs and economic growth.

The negotiations for a new climate change agreement to be signed in Copenhagen in December are badly stalled. With the agreement running more than 200 pages — including what negotiators estimate are a couple of thousand brackets denoting points of differences — diplomats and negotiators fear that the document is too unwieldy to garner a consensus in the coming months.

Sigh. The darn thing is, the costs of dealing with this are likely to be quite low. Further evidence of this comes from estimates by the CBO:

For example, CBO concludes that the cap-and-trade provisions of H.R. 2454, the American Clean Energy and Security Act of 2009, would reduce GDP below what it would otherwise have been—by roughly ¼ to ¾ percent in 2020 and by between 1 and 3½ percent in 2050. By way of comparison, CBO projects that real (that is, inflation-adjusted) GDP will be roughly two and a half times as large in 2050 as it is today, so those changes would be comparatively modest. In the models that CBO reviewed, the long-run cost to households would be smaller than the changes in GDP because consumption falls by less than GDP and because households benefit from more time spent in nonmarket activities. Moreover, these measures of potential costs do not include any benefits of averting climate change.

EconomistMom notes their reluctance to quantify the benefits, which makes the whole "cost benefit" thing a little hard:

What I see as the trouble with CBO–known as the official “scorekeeper” for legislation being considered by Congress–doing a quantitative analysis of the “economic effects” of climate change policy, is that all their qualifying statements about their inability to quantify (in dollar terms) the main point of climate change policy (avoiding environmental damage and what that means for the broader well-being of our society) will be lost on the policymakers, and hence on the public as well. People look for the numbers in a CBO report and will surely use the numbers about what’s bad about climate change policy as a reason not to enact that policy, as long as there are no concrete numbers to support the merits of the policy. In other words, it’s hard for CBO to be the unbiased arbiter on policy evaluation if they’re only “tooled up” on one side of the debate.

Indeed, the expected value is calculated as the probability weighted sum of the various outcomes. If we assign a value of infinity to "avoid complete destruction of human civilization" then, even if the probability is small, the expected benefit is infinite.

Also on the subject of global warming, Mark Thoma points us to this WSJ column by Robert Stavins of Harvard.