Saturday, April 5, 2014

Forget the cost—time to go to work

There are two approaches a builder / contractor can take when presented with a set of plans that is unique, unprecedented, and difficult.  They can come up with some bid so high that every possible disaster can be covered—plus a few no one has considered.  But sometimes the scheme is so far out, the builder will just say—we only do projects like that on a cost-plus basis because we cannot possibly predict enough to risk some fixed-cost arrangement.

For many years, I have taken the route of the "big bid" when someone asks me how much I think it will cost to seriously address the problems of climate change.  My figure since the late 1980s has always been $100 Trillion—or $2 Trillion per year for 50 years.  I have an assortment of ways of explaining why I think it will cost that much but in truth, I don't know.  I DO think it important to come up with a serious price tag—if only to differentiate between my thinking at the "50 Easy Ways to Save the World" crowd.

So I am quite pleased to read that a couple of serious researchers have said, "No, we don't want to play that game.  We don't know what it will cost—and no one else does either."  Truth-tellers, those two.

More importantly, what possible difference does it make what it costs.  It must be done and there a millions of people who need a good job.  If we can create all this economic activity without becoming slaves to the debt ghouls, why ever would we not do it?

‘Forget the cost – tackle climate anyway’

By Alex Kirby  Climate News Network  April 3, 2014

Forget the cost of mitigating climate change, say two researchers. It’s impossible to work out how much it will be – and whatever it is, we should do it anyway.

LONDON, 3 April – Two researchers who tried to work out the economics of reducing global climate change to a tolerable level have come up with a perhaps surprising answer: essentially, we do not and cannot know what it would cost.

Even more surprising, probably, is their conclusion: not knowing is no excuse for not acting. “Mitigating climate change must proceed regardless of long-run economic analyses”, they conclude, “or risk making the world uninhabitable.”

Their report, entitled The economics of mitigating climate change: What can we know?,is published online in Technological Forecasting and Social Change.

The pair are Dr Rich Rosen, who specialises in energy system planning and is a senior fellow of the Tellus Institute, based in Boston, Massachusetts, and Edeltraud Guenther, professor of environmental management and accounting at Dresden University of Technology in Germany.

In a densely-argued analysis of the long-term economics of mitigating climate change they say various kinds of uncertainties raise serious questions about whether or not the net costs and benefits of mitigation over periods as long as 50 years or a century can be known accurately enough to be useful to policymakers and citizens.

Crisis ‘trumps uncertainty’

Technological change, especially for energy efficiency technologies, is a key factor in making the net economic results of mitigation unknowable over the long term, they argue. So policymakers should not base mitigation policy on the estimated net economic impacts computed by integrated assessment models (IAM – models which combine scientific and economic insights).

Instead, “mitigation policies must be forcefully implemented anyway given the actual physical climate change crisis, in spite of the many uncertainties involved in trying to predict the net economics of doing so”.

This argument directly challenges the many politicians and others who insist that governments should adopt policies designed to limit climate change only if they can make a strong economic case for doing so. Essentially, it shifts the ground of the debate from “what is affordable?” to “what is survivable?”

The authors say economic analyses of mitigating climate change rely on flawed sets of IAM results, which are invalidated by uncertainty over future technologies and their costs. They also believe changes in production and consumption patterns will affect mitigation costs.

‘Meaningless’ results

They write: “Since the Western lifestyle can probably not serve as a role model for the life styles of the nine billion people likely to inhabit our planet by 2050, significant but unpredictable changes to consumption and production patterns not incorporated in existing IAMs are likely to occur, adding another layer of uncertainty to the economic calculations made by these IAMs for the net costs and benefits of mitigating climate change.”

“The IPCC and other scientific bodies should no longer report attempts at calculating the net economic impacts of mitigating climate change…”

The authors do not hide their scorn for the results provided by existing IAM scenarios. These, they write, are “not useful because even the simplest comparison of model results yields meaningless results — the uncertainties are too profound.”

They end by posing a question: “Should these findings and conclusions about the inadequacies of current IAMs really matter to policymakers who are trying to figure out when, and to what extent, to implement effective climate change mitigation policies?

Their response is terse: “Our answer is ‘no’, because humanity would be wise to mitigate climate change as quickly as possible without being constrained by existing economic systems and institutions, or risk making the world uninhabitable.”  more

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