David Friedman at Ideas delved into the best estimate of the global cost of global warming – by William Nordhaus – $4.1 trillion this century. This is $48 billion a year – 1/20th of one per cent of world income! Friedman then asked this:
Friedman’s even better argument on the social costs of global warming is that the costs of unlikely but catastrophic risks are included in the social cost arithmetic to make the problem serious. Without including them, global warming up to about a 2-degree warming provides a net benefit.
Friedman shows great insight when he goes on to say that there is “no similar attempt to take account of low probability, high cost consequences of preventing global warming”.
That low probability, high cost consequence, which will occur sooner or later, is the next ice age. The next ice age could include a drop in sea levels of three hundred feet and half a mile of ice over the top of London and Chicago. That would bring a new meaning to climate change refugees. We are in a relatively warm period – an interglacial – in an ice age that started two million years ago.
Friedman asked whether “It is at least possible that global warming is all that is preventing the interglacial from ending”.
The great tactical victory of environmentalists is keeping the debate on the science going because even if the science is right, the economic costs are small.
How much will global warming cost is the correct question for policy debate. Let the science be settled!
Economists have no more expertise to judge the science of global warming than they do in judging the science behind the inevitability of super volcanoes going off again such as the one just north of me. The Yellow stone national park super volcano is 50,000 years overdue, by the way.
Economists can comment on the likely consequences, intended and unintended, of different choices and the constraints that different national and international institutional frameworks place on what policy choices might be made.
The chances of India, China and the rest of the Third World agreeing to forego or even slow their economic development to fight global warming is zero even before you consider the international collective action, verification and free rider problems. Adaptation and ‘richer is safer’ are the only game in town whichever way the climate goes!
Utopia, you are standing in it! 
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