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.