Modelling the cost of mitigating climate change

Forget it, it’s too hard!

That’s what two researchers, Dr Rich Rosen and Edeltraud Guenther of Boston and Dresden respectively, have concluded. They say it’s impossible to calculate the cost of mitigating climate change, there are too many variables and too many unknowns. Modelling which purports to do so cannot and should not be used by policymakers.

Nevertheless mitigate we must! Crisis trumps uncertainty:

“Mitigating climate change must proceed regardless of long-run economic analyses”, they conclude, “or risk making the world uninhabitable.”

Economic modelling of climate mitigation costs against business as usual (BAU) has commonly been used in developing policy after the Stern Review of 2006 and the IPCC’s Fourth Assessment Report of 2007. For example the Australian Treasury modelled the costs of the Gillard Government’s Clean Energy Future package through to 2050.

A complete waste of time, according to Rosen and Guenther.

Nevertheless treasuries in the future will no doubt continue with their best efforts. In the end a cost has to be entered in the budget, including the forward estimates. And no doubt the long-term story will continue to be told in order to convince us that the authorities know what they are doing.

We’ll know, however, that we are being fed a work of fiction.

8 thoughts on “Modelling the cost of mitigating climate change”

  1. We live in a country and world were the limitations of our current financial/economic system where human and physical resources that could be used to do what is necessary to create a renewable future lie idle. In addition there are those that may not be idle but do little that adds anything of real value.
    My take is that the best thing we could do for the world economy is go onto a war footing against climate change.

  2. John D it’s a strange phenomenon, but even the activity such as cleaning up a major oil spill contributes to GDP.

  3. John D. @ 1:
    That the resources necessary to create a renewable future lie idle or are underutilize is something that the infotainment media ignores completely – even though that in itself is a collection of headline-making news stories. Strange. very strange.

    Brian @ 2:
    Yes, that it – and similar activities – are said to be contributing to GDP is downright weird. Anyone for flat-earth and phlogiston and angels dancing in pin-heads, anyone?

  4. At various stages in history changes have had to be made to the financial system to allow economies to continue to grow. Trading was introduced to overcome the limitations of an “obligation economy.” Then money in the form of metal etc. coins was introduced to over come the limitations of the “trading economy”. Then paper money was introduced to overcome the problems with gold or silver based economies.
    Seems to me we have reached another point where the financial/monetary/economic system is not doing its facilitating role properly

  5. John,
    I am contemplating buying Thomas Picketty’s Capitalism in the 21st Century. People are saying he is offering new answers, though these answers are not likely to appeal to the neocoms. He was one of the writers referenced in an article I read the other day on the new, young Marxists thinking and writing after 9/11. I will see if I can find it and link here to it on this thread. Its quite long though.
    (Have already linked on Saturday Salon, I think to an article on him in the Guardian a few days ago.

  6. Paul, the article started to come alive for me about page 6 to 7, when he talks about Piketty, growth and inequality.

    According to the most reliable estimates—sketchy, but better than nothing—for most of human history, economic growth was on the order of 0.1 percent a year, provided there were no famines, plagues or natural disasters.

    That was before the industrial revolution.

    Economic growth was a recent invention, major reductions to income inequality more recent still. Yet the aftermath of World War II was filled with prophets forecasting this union into eternity.

    Growth escalated for a time, especially after WW2. Now it seems to be settling back to a sustainable 1%. Under these circumstances:

    With growth reduced, escalating income inequality is all but inevitable without aggressive policy intervention.

    The suggestion is for a tax on capital and ‘confiscatory’ taxes on high incomes – up to 80% for those earning above half a million pa. Not a bad idea!

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