Costs and Benefits

by Russ Roberts on October 17, 2007

in Environment

James Pethokoukis calls it Al Gore’s $307 Trillion Gamble, pointing out the costs of actions and the benefits of inaction on global warming:

In one of its occasional assessments, the Intergovernmental Panel on
Climate Change—the cowinner with Al Gore of the Nobel Peace
Prize—posited a scenario in which the global economy would grow at
about 2 percent a year for the next 100 years (it’s growing at more
than twice that pace currently) with "fragmented" and "slow" per capita
economic growth and technological change.

Indeed, it is just this scenario that was used by the influential
Stern Report on the economic impact of climate change. By the year
2100, the size of the global economy would be $243 trillion. However,
there is another IPCC scenario. It imagines "a future world of very
rapid economic growth, low global population growth that peaks in
mid-century and declines thereafter, and the rapid introduction of new
and more efficient technologies." According to this story line, the
global economy would grow at 3.5 percent per year, giving us a $550
trillion global economy in the year 2100, more than twice the size of
the economy assumed in the first scenario.

I don’t know about you, but give me a century of accelerating
technological change and $300 trillion to pay for it, and there are few
problems that would keep me up at night. So the question is: Which
policies will get us there?

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{ 7 comments }

Darren October 17, 2007 at 10:24 am

Exactly. Underlying all the climate change hysteria seems to be an innate distrust of both technology and mankind's unique ability to adapt rapidly to change.

Tim October 17, 2007 at 12:11 pm

Darren – you nailed it.

The other Eric October 17, 2007 at 12:35 pm

Life in a representative democracy constrained only by enumerated rights and a participatory legal system is dangerous… Except that it provides extraordinary benefits to the majority of its citizens, other residents, and visitors.

Technology in the modern world has captured our children's attention and enslaves us… Except where its benefits allow us to better use our time and live healthier, longer.

A dynamic and global economic system makes us subject to the whims of the market and insecure… Except where market forces provide living conditions, opportunities, and wealth at levels previously available only to royalty.

Mass culture is shallow and grotesque, weakening our civilization and dumbing down our culture…Except that mass culture has been replaced by individually selected sampling of global cultural resources on demand, bridging time and space considerations, at ever lower costs.

Rampant consumerism ruins the environment…Except where consumer choice and property rights promote effecient land use and conservation efforts on scales previously undreamt of.

The future is dangerous, dark, energy-poor, and out of control… Except we haven't been there yet.

Tim Worstall October 17, 2007 at 1:39 pm

Very roughly, and painting with a very broad brush indeed, the difference between the two families (Gore and Stern used A2, the other is A1) is between expanding globalization in A1 or contracting it in A2.
Worth noting that those two familes are nearly a decade old now (we're nearly 10% into their life) and we do seem to be, in both emissions and growth, going down the A1 path.

Dr. Troy Camplin October 17, 2007 at 5:52 pm

It would seem to me that anybody in favor of having a cleaner environment would 1) encourage protection of property rights, as that a) prevents people from decimating MY property, b) encourages people to take care of THEIR property, and c) has resulted in prosperity and technological advances everywhere it has been tried, leading to 2) decreased population growth, which naturally puts less stress on the environment. High economic growth and more technological advancement (particularly green technology, which can only be developed if technology is advancing) are good for the environment in the long run.

Mesa Econoguy October 17, 2007 at 6:20 pm
jim mcclure October 17, 2007 at 6:31 pm

The lesson of the erroneous dismal prediction in economics by Thomas Malthus appears to have been lost on those who are again predicting doom and gloom for humanity. Long-run forcasting is a tricky business; human inventiveness and ingenuity is underestimated in such forcasts at the peril of the historical legacy of the predictors of doom and gloom.

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