An inconvenient chart
15 Jul 2014 Leave a comment
in economics of climate change, environmental economics, environmentalism, global warming Tags: an inconvenient truth, global warming
HT: aei-ideas.org
The global warming hiatus? Climate models all wrongly predicted warming, so let’s call it a discrepancy
22 Jun 2014 Leave a comment
in economics of climate change, environmental economics, global warming Tags: climate change, hiatus in global warming, IPCC
Ross McKitrick noted this week that the IPCC still uses the word unequivocal to describe the evidence, but has let a new word slip into its lexicon : hiatus – the global warming hiatus since 1998.
How times have changed. Up until now, to mention this hiatus was to be a climate denier – pure wickedness: to be anti-science and a paid lackey or wannabe paid lackey of Big Oil.
Has the IPCC become a climate denier? Trends change. Differentiating a break in trend from fluctuations around a trend is never easy.
I have not seen a statement of when this hiatus becomes a break in trend. Nor have I seen an estimate of when a return of warming, in what year in the 2020s or 2030s or whenever, will a return in warming make recent trends in global temperatures statistically significant evidence of global warming.
Addressing Global Environmental Externalities: Transaction Costs Considerations
20 Jun 2014 Leave a comment
in applied welfare economics, economics of climate change, Public Choice Tags: Gary Libecap, global commons, global environmental externalities, global warming, property rights, transaction costs
Gary D. Libecap, “Addressing Global Environmental Externalities: Transaction Costs Considerations.” Journal of Economic Literature (2014).
Abstract
Is there a way to understand why some global environmental externalities are addressed effectively, whereas others are not?
The transaction costs of defining the property rights to mitigation benefits and costs is a useful framework for such analysis. This approach views international cooperation as a contractual process among country leaders to assign those property rights.
Leaders cooperate when it serves domestic interests to do so. The demand for property rights comes from those who value and stand to gain from multilateral action.
Property rights are supplied by international agreements that specify resource access and use, assign costs and benefits including outlining the size and duration of compensating transfer payments, and determining who will pay and who will receive them.
Four factors raise the transaction costs of assigning property rights:
(i) scientific uncertainty regarding mitigation benefits and costs;
(ii) varying preferences and perceptions across heterogeneous populations;
(iii) asymmetric information; and
(iv) the extent of compliance and new entry.
These factors are used to examine the role of transaction costs in the establishment and allocation of property rights to provide globally valued national parks, implement the Convention on the International Trade in Endangered Species of Wild Fauna and Flora, execute the Montreal Protocol to manage emissions that damage the stratospheric ozone layer, set limits on harvest of highly-migratory ocean fish stocks, and control greenhouse gas emissions.
Peak oil versus global warming
16 Jun 2014 Leave a comment
in economics of climate change, energy economics, environmental economics, global warming Tags: global warming, peak oil
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The environmental movement manages to believe in both peak oil – oil will run out in the next two decades or so – and global warming based on runaway carbon emissions for the rest of the century burning the increasingly expensive and increasingly scarce crude oil that had ran out a long time ago previously.
Global warming will solve itself as long as we are willing to accept that the environmental movement is genuine in its predictions about peak oil.
The ideal green share market portfolio would be made up of shares in green energy companies and futures contracts in the natural resources sector to take advantage of peak oil.
Alternative energy sources are no substitute for low-cost, zero emissions nuclear power | AEIdeas
13 Jun 2014 Leave a comment
in economics of climate change, environmental economics, environmentalism, global warming
How Free Markets Will Beat Climate Change: Q&A with Matthew Kahn
03 Jun 2014 Leave a comment
in economics of climate change, environmentalism Tags: Matthew Kahn
David Friedman “Global Warming, Population, and the Problem with Externality Arguments”
01 Jun 2014 Leave a comment
IEA Graphic Shows How to Radically Reduce CO2
21 May 2014 1 Comment
in applied welfare economics, economics of climate change Tags: global warming
Climate policy targets revisited | Richard Tol
26 Apr 2014 Leave a comment
in applied welfare economics, economics of climate change, environmental economics, environmentalism, politics Tags: global warming, Richard Tol
The IPCC’s Fifth Assessment Report estimates lower costs of climate change and higher costs of abatement than the Stern Review. However, current UN negotiations focus on stabilising atmospheric concentrations of greenhouse gases at even lower levels than recommended by Stern.
This column argues that, given realistic estimates of the rate at which people discount the future, the UN’s target is probably too stringent.
Moreover, since real-world climate policy is far from the ideal of a uniform carbon price, the costs of emission reduction are likely to be much higher than the IPCC’s estimates.
PRTP is the preferred rate of time preference used in net present value calculations.
What global warming will cost us if we do nothing
18 Mar 2014 1 Comment
in David Friedman, economics of climate change, environmental economics, Public Choice Tags: climate change, global warming, ice ages, social cost
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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