Economics and Policy Issues in Climate Change

Economics and Policy Issues in Climate Change

Economics and Policy Issues in Climate Change

Economics and Policy Issues in Climate Change

Synopsis

Global climate change has emerged as one of today's most challenging and controversial policy issues. In this significant new contribution, a roster of premier scholars examines economic and social aspects of that far-reaching phenomenon. Although the 1997 "summit" in Kyoto focused world attention on climate, it was just one step in an ongoing process. Research by the U.N.'s Intergovernmental Panel on Climate Change (IPCC) has been ongoing since 1988. An extensive IPCC Working Group report published in 1995 examined the economic and social aspects of climate change. In this new volume, eminent economists assess that IPCC report and address the questions that emerge. The result is a reasoned, cogent look at the realities of climate change and some methods (and difficulties) of dealing with them. William Nordhaus's introduction establishes the context for this book. It provides basic scientific background, reviews the IPCC's activities, and explains the genesis of the project. Subsequent contributions fall into two categories. Early chapters review analytical issues critical to social and economic understanding of climate change. For example, Granger Morgan looks at how typical decisionmaking frameworks relate to this topic. Other chapters in this section discuss discounting and intergenerational equity, the possible role of cost-benefit analysis, and the institutional architecture needed to address the problem effectively. A second set of chapters address specific economic questions surrounding climate-change policy. For example, John Weyant and Tom Kram look at the costs of slowing climate change. Weyant agrees with the IPCC that the economic cost is high, relative to other economic and environmental policies. There is tremendous uncertainty in these estimates, however, and different approaches to modeling -- economic, engineering, and social-psychological -- yield very different interpretations and prognoses. In another chapter, Robert Mendelsohn examines the costs of not slowing climate change. What impacts can we expect, how might they vary among different nations and regions, and how likely are we to encounter catastrophic results?

Excerpt

"Understanding the science, economics, and policy aspects of global warming has proved to be one of the most exciting and challenging tasks facing the natural and social sciences over the last decade." This somewhat understated opening sentence by William Nordhaus sets the stage for a rich, well-crafted book on the economic and policy dimensions of climate change. The problems are complex, and the stakes are high. The essays in this volume, and the comments on those essays, will provide valuable insights for analysts and the policymakers they advise for years to come.

The starting point for the volume Professor Nordhaus has assembled is a 1995 report on the economic and social dimensions of climate change by the Intergovernmental Panel on Climate Change (IPCC). This unusual institution was somewhat presciently created by the United Nations and the World Meteorological Organization in 1988, several years prior to the signing of the Framework Convention on Climate Change in 1992. The IPCC's charge is to provide high-quality, unbiased, and policy-relevant syntheses of knowledge concerning not just the science of climate change and its potential impacts, but also the socioeconomic consequences of climate change and greenhouse gas limitation policies. The IPCC's activities are carried out by international teams involving many of the world's best experts on topics almost too numerous to enumerate.

The IPCC's first and second assessments have proved to be a trove of knowledge and analysis. Nevertheless, some questions have been raised: Do the assessments consistently address the right questions? Do they reflect the best and most up-to-date scientific evidence and analysis? And can the analytical and factual insights in the assessments be translated into terms useful for decisionmakers in a timely way?

To address such questions, Bill Nordhaus has assembled a first-rate panel of ex post peer reviewers who address a number of themes. These . . .

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