The New Economics of Climate Change

Almost unnoticed inside the Beltway, where attention is focused as usual on politics and the ins and outs of legislation, economic thinking about climate policy has undergone a fundamental shift.  In the past, economists who worked on climate usually were interested in balancing the costs against the benefits of reducing greenhouse gas emissions.  The economic debate centered on issues such as how to measure the macroeconomic impact of cap-and-trade or carbon taxes, how large is the potential for energy savings that would be profitable even without accounting for their environmental benefits, and measuring the effects of climate change on agriculture, recreational opportunities, land values, health care expenditures, electricity demand, and other specific sectors of the economy.  Continue reading…


Introduction

Four years ago, a group of economists met with representatives from some of the most prominent environmental non-profit organizations in the U.S. to discuss the importance of economics to the environmental movement. It was said that if public policy depended only on science and law, the environmental movement would be relatively well prepared to defend most of its positions. The case for, and against, environmental protection, however, is often made and won on economic grounds. It is this third leg of the stool, the growing dependence on economic analysis, that stands the environmental movement at a potential disadvantage.

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Collapse? The Economics of High End Warming

Much of E3 Network’s work has focused on reconciling the science and economics of climate change. Perhaps nowhere is the contrast as great as in the dueling metaphors governing the impact of high end warming: “Collapse” (following Jared Diamond) versus “Reductions in the Rate of Growth” (following all standard integrated assessment models in economics, including those of Nicholas Stern and the IPCC).

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