Harvard economist Martin Weitzman’s paper [PDF] of Feb 8, 2008 argues that conventional cost-benefit-analysis [CBA] may not yield the “right answer” when the scenario includes a small-probability catastrophic event. A paper around the Weitzman version of the Dismal Theorem naturally has stirred up some interest. The math is dense enough that I’m not going to find the time to fully understand it, though I agree with his main point that CBA doesn’t capture possible catastrophic outcomes.
If one accepts the methodology, the policy implication is something like an inverse of the William Nordhaus DICE model optimum [gradual ramping up the price of carbon at 2 to 3% per year]. The Weitzman-implied policy would be more like “stabbing the oil vampire with a big stake”.
I think the Nordhaus conclusion is the useful one because:
1. If there is no political agreement we have not accomplished anything. I.e., Kyoto didn’t work so let’s do more of it.
2. The Nordhaus policy is just possibly marketable — dramatically slowing worldwide growth is not going to happen.
3. A practical policy is to do quickly what is feasible, monitor changes closely, continue/increase our research on how the whole ocean-atmosphere really works — then make the indicated policy changes when we learn more. Analog: driving your car in your lane.
Humans have repeatedly demonstrated feedback sensitivity. All of these models assume a non-adaptive future. We aren’t that stupid.
This is the classic insurance problem, isn’t it? How to assess the risk arising from events which may have high impact even if they have low probability. This is why you pay your auto and homeowner insurance - you recognize the consequences of a serious car crash or a house fire could be catastrophic, even if they are unlikely.
With the climate system we have to decide what would constitute “catastrophic.” What we consider “catastrophes,” in climatic terms, are usually sudden acute events whose timing, magnitude, and precise are difficult, if not impossible to predict years ahead. All we can do is put long-term probabilities on these events. These are usually hurricanes, floods, tornadoes. And as of now it is not clear how the probabilities of these events would change under global warming scenarios.
Other impacts are slower and more inexorable. A good example is the component of sea-level rise due to thermosteric expansion of the ocean. This is not “catastrophic” in and of itself. BUt it does shift the risk profile of low-lying coastal areas, in terms of the probability of inundation due to storms (because the baseline is shifted).
Risk mitigation for events like these would have to include changes in planning for example - changes to zoning and/or insurance provision to lower the number of structures built on barrier beaches and flood plains. This type of mitigation measure recognizes that the risk from, say, storm surges, is not only (and thus far probably not mainly) due to sea-level change but due to the simple fact that we’ve built up so much infrastructure in low-lying coastal regions.
“Catastrophic” is one of those terms which needs to be clearly defined before it can be included in scientific assessments. For example, “sea-level change exceeding x cm/yr.”
As an example one of the IPCC AR4 model runs (I forget which emission scenario) suggests a 20% loss of the volume of the Greenland Ice Sheet over the first 270 years of the model run. Assuming the GIS is equivalent to 6 meters of sealevel (prob. a high estimate but close) this would imply 1.2 meters of sealevel rise over 270 years, or 40 cm/century. “Catastrophic?” Not clear - it would depend on the pattern of change.
So should we put effort into thinking carefully about coastal infrastructure planning, or into greenhouse-gas emissions reduction? My answer is “yes.” To both.
Will,
I appreciate your well-argued points. I think I’ll ‘promote’ to a blog post soon.
If you come across a politican promoting such ‘no regrets’ policies as sane coastal zoning please point same out to me. So far the US political scene remains rather dismal in this whole arena.
“sea-level change exceeding x cm/yr.”
That’s a good example. I can’t, but you can probably supply a value for x from which avoidance of serious suffering is impossible — barring large scale air capture or some other geo-engineering program like Lagrange Point “umbrellas” or seeding reflective aerosols.
When I think of “catastrophic” what first comes to mind is positive feedback. As a lay person I don’t have a good feel for the possibility that our science appreciates too late a looming feedback or some other “tipping point”. Possibly even informed researchers like yourself cannot make that assessment by anything other than gut feel.
It seems important to me to have a view on how likely that scenario is. Because as I wrote above I can imagine success at some point getting a policy approved that preserves most economic growth but turns out to be too little abatement. If we can monitor and adjust policy sufficiently then that scenario can work out OK — as well as any real-world political program works.
What do you think?