Is it true that more carbon dioxide and additional warming will be beneficial

February 24, 2013 | By More

Briefly, the  answer is yes.

First, Nordhaus correctly states that net benefits (benefits minus costs) should be maximized.
This is mathematically equivalent to the well-known result that one should increase pollution
control as long as marginal benefits exceed marginal costs. As an expert economist, however,
Nordhaus should expand his discussion of more important points:

The discount rate plays a crucial role in the present case, where costs are incurred
today, while benefits may be realized 100 years hence. Nordhaus himself uses realistic
discount rates of 4%, but he should be more critical of others, like Lord Nicholas Stern,
who use discount rates close to zero, which severely skews any cost-benefit analysis by
greatly over-estimating the present dollar-value of benefits.

Further, one must ask if there is really any net damage at all from a warmer climate. I
wonder why Professor Nordhaus never mentions the work of Yale resource economist
Robert Mendelsohn and his 23 economist-colleagues, whose acclaimed book concludes
that a modest warming and higher CO2 levels would actually enhance GDP-raising
average income, prosperity, and general welfare. True, there are also respected
economists who hold a different view; the 1996 report of the IPCC lists results of several
of their analyses. While these agree surprisingly well on the total amount of damage, I
found that they strongly disagree on individual sectors (like agriculture and others) that
make up these totals. And they all assign large economic damage to sea-level rise—

Even though there is no observational evidence for an influence of short-term (decadal) temperature changes on the rate of rise of sea level.

Finally, it should be obvious, perhaps, but needs to be stated explicitly that if a warmer climate
produces positive net benefits rather than damages, then, in principle, one cannot even
conduct a cost-benefit analysis. Nor should one try to mitigate emissions of CO2 in any way; our
current policies are simply misguided.

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Category: Environment

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