Tag: discounting

The GAO's Panel of Economists on Climate

I just ran across a May 2008 GAO report, detailing the findings of a panel of economists convened to consider US climate policy. The panel used a modified Delphi method, which can be good or evil. The eighteen panelists are fairly neoclassical, with the exception of Richard Howarth, who speaks the language but doesn’t drink the Kool-aid.

First, it’s interesting what the panelists agree on. All of the panelists supported establishing a price on greenhouse gas emissions, and a majority were fairly certain that there would be a net benefit from doing so. A majority also favored immediate action, regardless of the participation of other countries. The favored immediate action is rather fainthearted, though. One-third favored an initial price range under $10/tonCO2, and only three favored exceeding $20/tonCO. One panelist specified a safety valve price at 55 cents. Maybe the low prices are intended to rise rapidly (or at the interest rate, per Hotelling); otherwise I have a hard time seeing why one would bother with the whole endeavor. It’s quite interesting that panelists generally accept unilateral action, which by itself wouldn’t solve the climate problem. Clearly they are counting on setting an example, with imitation bringing more emissions under control, and perhaps also on first-mover advantages in innovation.

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Ethics, Equity & Models

I’m at the 2008 Balaton Group meeting, where a unique confluence of modeling talent, philosophy, history, activist know-how, compassion and thirst for sustainability makes it hard to go 5 minutes without having a Big Idea.

Our premeeting tackled Ethics, Values, and the Next Generation of Energy and Climate Modeling. I presented a primer on discounting and welfare in integrated assessment modeling, based on a document I wrote for last year’s meeting, translating some of the issues raised by the Stern Review and critiques into plainer language. Along the way, I kept a running list of assumptions in models and modeling processes that have ethical/equity implications.

There are three broad insights:

  1. Technical choices in models have ethical implications. For example, choices about the representation of technology and resource constraints determine whether a model explores a parameter space where “growing to help the poor” is a good idea or not.
  2. Modelers’ prescriptive and descriptive uses of discounting and other explicit choices with ethical implications are often not clearly distinguished.
  3. Decision makers have no clue how the items above influence model outcomes, and do not in any case operate at that level of description.

My list of ethical issues is long and somewhat overlapping. Perhaps in part that is due to the fact that I compiled it with no clear definition of ‘ethics’ in mind. However, I think it’s also due to the fact that there are inevitably large gray areas in practice, accentuated by the fact that the issue doesn’t receive much formal attention. Here goes: Continue reading “Ethics, Equity & Models”

Exhibit A – the Social Cost of Carbon

I recently discovered a cool set of tools from MIT’s Simile project. My favorites are Timeline and Exhibit, which provide a fairly easy way to create web sites where visitors can interact with data. As a test, I built an Exhibit containing Richard Tol’s survey of assessments of the social cost of carbon (SCC):

Social Cost of Carbon Exhibit

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