Sunday, May 31, 2009

No reason to do nothing

Greg Mankiw, former chairman of the Council of Economic Advisors for George W. Bush, seems to think there was "logic for not doing much to address global climate change" during the Bush years.

What was this logic? He leaves it up to Keith Hennessey to summarize. The key piece of logic, I suppose, comes here:
I believe there is a small but non-trivial risk that there will be severe climate change over the next century or two. And so I am willing to consider significant and effective policy actions to slow the growth of greenhouse gas emissions to reduce that risk. I do not, however, believe that risk is so great or so certain that we must immediately commit to drastic changes in our economy, or that we must ignore the costs of those policy actions. I treat this like any other policy question: Given tremendous quantitative uncertainty, what are the marginal costs and benefits of our current emissions path, compared with various recommended policy options?
Everything that follows from this statement is reasonable, but, as I feared, the logic of Hennessey, and the previous administration, was based on lack of any logic. It was in fact the assumption that they, and not the many, many scientists who disagreed with them, somehow knew that the risk was not really that great.

I'm not going to list the entire literature on the range of possible climate change outcomes. Its big, and no one is sure of the outcome. I'll just let Martin Hellman remind us that people don't do a good job of dealing with low probability, high risk events. (HT to Freakonomics)

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