David Leonhardt at the New York Times  (HT: Jim Morse) reports on a lively debate at Yale on global warming between Nicholas Stern and Yale economists including William Nordstrom and Robert Mendelsohn:
Last week, Sir Nicholas Stern, a top adviser to the British government, came to the United States to talk about climate change . In October, a commission he led released a 700-page report 
calling for “urgent action” against global warming to prevent economic
damage that could rival that of the world wars and the Great
Depression. Given its source and its tone, the Stern Review has nudged
people to talk more seriously about climate change.
In the minds
of a lot of American economists, however, the review is a badly flawed
piece of work. These economists don’t doubt that earth is getting
hotter, that human activity is the cause and that the results could be
bad. But they think that Sir Nicholas may have exaggerated the likely
speed of warming, among other things, and overstated the case for big,
The epicenter of the opposition has been here at Yale ,
and so last week, after stopping in Washington to testify before
Congress, Sir Nicholas came to New Haven for a public debate with his
critics. With a couple of hundred students and professors in the
audience — and a sculpture of an angry Zeus-like figure looming above
the stage — the two sides went at it in the dignified, vicious way that
I like Leonhardt’s summary of who won:
The Stern Review assumed that a dollar of economic damage prevented
a century from now (adjusted for inflation) is roughly as valuable as a
dollar spent reducing emissions today. In effect, the report argues for
spending the money to cut emissions because future generations have as
much claim on resources as current generations. “I’ve still not heard a
decent ethical argument” for believing otherwise, Sir Nicholas said at
I’m guessing that your instinct is to agree with him.
Mine certainly was. The problem is that none of us actually behave this
way. If we really thought that our great-grandchild deserved our money
as much as we do, we would never go out to dinner again. Instead, we
would invest the $50 we would have spent on dinner, confident that it
would grow over time and become perhaps $1,000 for our great-grandchild
to put toward health care, education or a supercomputer. Any of that is
preferable to our measly dinner.
But a dollar today truly is more
valuable than a dollar a century from now. For one thing, your
great-grandchild will almost certainly be richer than you are and won’t
need your money as much as you do. So spending a dollar on carbon
reduction today to avoid a dollar’s worth of economic damage in 2107
doesn’t make sense. We would be better off putting the money toward
something likely to have a higher return than alternative energy, like
But then Leonhardt implicitly invokes the precautionary principle:
Technically, then, Sir Nicholas’s opponents win the debate. But in
practical terms, their argument has a weak link. They are assuming that
the economic gains from, say, education will make future generations
rich enough to make up for any damage caused by climate change. Sea
walls will be able to protect cities; technology can allow crops to
grow in new ways; better medicines can stop the spread of disease.
one knows whether this is true, let alone desirable, because no one
knows what life will be like on a planet that is five degrees hotter.
And so he concludes (Greg Mankiw will be happy) that it’s time for a tax on carbon emissions.
I’m not sure no one knows what life on the planet will be like if it were five degrees hotter. It’s a good question to explore.
I’d also like to see an estimate of the risks involved in living with an emissions tax large enough to stop five degrees of warming.
is it clear which risk is bigger?