Climate Change: Evaluating the Socio-Economic Impacts

Climate Change: Evaluating the Socio-Economic Impacts

Climate Change: Evaluating the Socio-Economic Impacts

Climate Change: Evaluating the Socio-Economic Impacts

Excerpt

Although the science remains uncertain, 1990 marked the year when many governments accepted the impending reality of global climate change. Some governments began to announce targets for reductions in carbon dioxide in order to prompt the international negotiation process. Some governments remain unconvinced that the greenhouse effect is real. Others accept the science, but not the need to act dramatically. This volume is concerned not with the scientific debate as such, but with the basis for climate change policy in OECD countries. Crucial to the whole process of policy development is an assessment of the impacts of climate change.

These impacts will appear first as physical changes in the environment, but will eventually translate into social and economic changes as well. Impacts are important, essentially because they represent the potential benefits that might be realised from taking political action against the climate change problem. If impacts are projected to be small, or if it is likely that the forecasted impacts could be easily managed, then the benefits of measures to contain global warming will be small, and the balance of costs and benefits will militate against major policy action. On the other hand, if the impacts are projected to be large, or if there is a real risk of some of them taking on "catastrophic" proportions, then early and firm action would be prudent. Put another way, the cost-benefit balance, however imperfectly understood, is fundamental to the policy process.

Because the costs of environmental policy are typically easier to quantify than the benefits, policy discussions often begin with an exogenously-determined "target", and seek to minimise the costs of achieving that target. This is more cost-effectiveness analysis than it is cost-benefit analysis. It has the advantage of being conceptually simpler, but it runs the risk that the initial target will be inappropriately set. If this target is too stringent (or not stringent enough), there is a likelihood that both economic and environmental resources will . . .

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