The Economics of Uncertainty in Climate Science

In 1990 Yale economist William Nordhaus wrote an article entitled “Count Before You Leap” in which he warned of the consequences of doing too much to prevent climate change given the uncertainties regarding both the effects of climate change and the likelihood that these effects would actually occur. Nordhaus advocated careful cost-benefit analysis based on more certain information regarding climate change rather than a knee-jerk reaction to gloomy prophecies about the end of the world as we know it. He argued that very little economic activity in industrialized societies is dependent on the climate and that significant losses to GNP were likely to be incurred in an effort to mitigate climate change at all. In his words, “A vague premonition of some potential future disaster is insufficient grounds to plunge the world into depression. But if scientists can identify the probability of catastrophic risks, people and governments can then rationally decide how much ‘climate insurance’ to buy”. Thus in Nordhaus’ view, what was known about climate change merited further research but it hardly justified aggressive action to prevent the possibility of climate change.

There is a lot of pressure for climate scientists to be certain about their theories because of the way policy is made (Norgaard). Policymakers need to allocate money in such a way that the costs of any given policy are justified by the benefits, and climate change mitigation is one item on an agenda of hundreds of different issues. Estimates of the cost of reducing CO2 to neutralize the effects of climate change have ranged from $10/ton of CO2 reduced to $250/ton (Norgaard). Given such a wide range of estimates, it is understandable that policymakers would dema...

... middle of paper ...

...h certain levels of CO2 because by that time it will already be too late to avoid certain unacceptable consequences. Because the consequences of waiting might cause severe or irreversible harm to the public, in the absence of clear scientific data on what exactly will happen, the burden of proof is on those who advocate waiting. Let them prove that we must wait. In the meantime, we must act on what we already know and move aggressively toward a policy of climate change mitigation and prevention.

Works Cited
1. Hansen, James, et al. “Target Atmospheric CO2: Where Should Humanity Aim?” Washington D.C.: NASA, 2007.

2. Hansen, James. “Why We Can’t Wait.” The Nation. 7 May 2007.

3. Nordhaus, William D. “Count Before you Leap.” The Economist 7 July 1990.

4. Norgaard, Richard. Lecture. ERG 280. Cory Hall, UC Berkeley, Berkeley, CA. 11 March 2008.