11 May 2012

My Response to Nordhaus on “Global Warming Skeptics”

Climate Change, Shameless Self-Promotion 33 Comments

Back in March economist William Nordhaus wrote a long essay in the New York Review of Books in which he took on the “global warming skeptics,” and in particular 16 scientists who had written a WSJ op ed urging caution before embracing government measures to limit greenhouse gas emissions.

Today IER put up my detailed response. The two pieces get into some fairly technical issues, but I hope I managed to keep everything understandable to the reader who is willing to sit down and read both articles. If you’re interested in the economics of climate change, these two articles are worth reading. Nordhaus is a world-renowned pioneer in the field, whereas I am (to my knowledge) the only person with a journal critique of his policy conclusions, from a free-market perspective. (There are interventionists who have criticized Nordhaus on the grounds that his approach is far too timid in its recommendations for a carbon tax.)

One thing I will draw your attention to, is that (I must say) Nordhaus is very misleading when he reports on the economics literature modeling the potential damage from climate change. I won’t go so far as to say he intentionally misled his readers, but that almost certainly was the result. Here is Nordhaus discussing the state of the literature:

The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade. Major areas of concern are sea-level rise, more intense hurricanes, losses of species and ecosystems, acidification of the oceans, as well as threats to the natural and cultural heritage of the planet.

Now when I first read that, my Spidey Sense was tingling. I was familiar with Tol’s work, and remembered progressive bloggers biting his head off, because his work showed that global warming was beneficial (on net) for decades. So I went and looked up the very survey article that Nordhaus is citing, and guess what? Tol shows that the majority of economic analyses do indeed find net benefits from global warming, up through 2 degrees Celsius, and only after that point do (most of) the models start moving into net harm territory. Furthermore, coupled with the IPCC’s estimates, this crossover point probably won’t happen for another 50 – 60 years.

So tell me, in light of that, if Nordhaus did his readers justice when he said: “The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade.”

Lastly, David R. Henderson and David Friedman both discuss my post. They are interested because they each had talked about Nordhaus too (here’s Henderson and here’s Friedman).

33 Responses to “My Response to Nordhaus on “Global Warming Skeptics””

  1. Daniel Kuehn says:

    Hard to say without reading the Tol piece myself (stickman – have you read that?). Is it truly a net benefit that Tol finds, or is it a net benefit in the first fifty years and cost afterwards? If it’s the later, and the total net benefit is negative this obviously seems fine. If it’s the former, while it seems like one could technically argue that it’s correct, it is quite misleading, because “range of damages” is that all or most of the range is in the negative net benefit territory.

    So to all my anti-coercion friends out there: if you had solid evidence that there would be substantial net cost, would you consider this coercion? If not, why not?

    • Richard Moss says:

      So to all my anti-coercion friends out there: if you had solid evidence that there would be substantial net cost, would you consider this coercion?

      I, for one, would need to go back re-read Chapter 12 of Keynes’s General Theory before deciding whether I could answer that question.

  2. Daniel Kuehn says:

    btw – your nordhaus link isn’t working

  3. stickman says:

    Whoa boy. Lots to say about this topic.

    Busy wrestling with a macro assignment right now, but I’ll try get a reply up later, Bob :)
    (Though, I’m still upset that you never responded to my Heartland posts. I feel like a spurned lover…)

    PS – DK, yes I have read Tol’s paper. There’s much to be said about it (including the choice of papers that he surveys, which do not include anything passed 2005 if I recall correctly). I’ll skim over it again to make sure, but I remember him being pretty clear about the net flow of damages and the relevant turning points. That includes factors such as notable downside risk (fat tails) and the inertia of CO2 build-up, which would necessitate establishing a carbon price a lot sooner than when we actually reach 2 degrees warming.

    • Bob Murphy says:

      Stickman, I really hope you don’t say that Tol’s survey isn’t a good survey. I mean, you can say that if you want, but Nordhaus doesn’t have that out–he was telling his readers that Tol was the man on this issue, and that was the paper he cited when doing so.

    • Bob Murphy says:

      Also read my footnotes–I didn’t say that a carbon tax would be unnecessary (in Nordhaus’ framework) until the turning point. All I was doing was showing how incredibly misleading Nordhaus was when he said “wide range of damages” and “now and in the future.”

  4. Bob Roddis says:

    I heard that D-Kuehn was writing a book entitled:

    “Is the Sky Blue and Can Cows Fly? — No and Yes, but the Real Answers are Surprisingly Nuanced!:)”

    • Bob Murphy says:

      Well, the beginning was funny. But then this is how I summarize your response to me:

      ==> Bob was wrong to defend the WSJ writers on the temperature record. Bob wants to look at what they actually said, and see if it is true. But that’s crazy. I agree with Nordhaus: If we take the WSJ guys to be implying something that they didn’t actually say, then they are wrong. And anyway, what the heck does the lack of warming of the last ten years have to do with anything important?

      ==> Bob’s discussion of the climate models is odd. All he’s really showing is that they have totally underpredicted warming in the last ten years. I can’t see why this is relevant to anything. It’s not like someone recently made a statement about the last ten years of warming.

      ==> Bob says Nordhaus is wrong about what Tol’s research says. And that’s true, if we look at what Nordhaus actually said. However, if we assume Nordhaus meant something else besides the words he wrote, then Nordhaus was right.

      • stickman says:

        Thanks, you’ll find that I’m a funny guy. Still, if that’s how you wish to summarize my post, then you are an awfully generous fellow… to yourself!

        C’mon Bob, claims 1 and 2 of the WSJ 16 really go together. So, first they point to the 10-year record — which anyone with a modicum of science understanding knows to be absurdly misleading — and then go on to claim that the models “greatly exaggerate” the rate of warming due to CO2 influence. Nordhaus points out how dumb using a decadal timeframe is. (Analogy: I’d like to see responses here if I used the gold price from the last six months as an indication of it’s underlying value…) Even then, if falling within the 95% confidence interval of model predictions qualifies as “greatly exaggerating” the level of warming… Then we may be dealing with epistemic closure.

        For your readers that are interested in model predictions and performance, these two links are worth going over:
        - http://bit.ly/oDKY1o
        - http://bit.ly/xj9PfS

        As for Tol and Nordhaus, I found your claim that — “The reader will surely agree with me that that message doesn’t leap out of Nordhaus’ discussion.” — to be a pretty mild accusation, as far it goes. What I point out, however, is that Tol’s survey in no way suggests that we should leave GHG unregulated for sixty years… precisely because of the incredible inertia associated with CO build-up (let alone structural barriers in the economy). Indeed, he highlights the fact that immediate policy steps to reduce GHG emissions today would kick in just around the time that we want them to at mid-century.[*]

        At this point let me just say that Nordhaus and Tol both propose pretty modest prices on carbon, typically around $10-15/tonne if I recall correctly. That would suggest that the average American would pay, e.g. $150 per year (not quite the right way to do it, but bear with me).

        [*] Of course, there are other aspects to consider as well, such as fat tail risk and marked regional disparities in benefits/costs. E.g. A one degree rise in global temps could cause species loss and severe weather devastation in some regions of the world, even as others benefit. Sounds like a violation of property rights to me…

        • Bob Murphy says:

          Stickman, are you prepared to say this?

          “I, Stickman, do agree that Nordhaus used incredibly misleading–some would say borderline lying–statements in describing Tol’s work. He also misrepresented the claims of his opponents regarding temperatures. However, since Nordhaus ultimately comes down on the side of the right policy conclusion, I am not terribly bothered by these slight goofs on his part. I think Murphy is kicking up sand on this issue, by focusing on Nordhaus’ misleading statements and misrepresentations, since some readers might then falsely walk away with the wrong policy conclusions.”

        • stickman says:

          Hmmm… I think that we could converge to some agreement here. Are you prepared to say this?

          I, Bob Murphy, wish to acknowledge the following. Focusing on a ten-year temperature record is largely meaningless in the climate debate, and serves little more than to distract from the long-term warming trend. Claiming that CO2 isn’t a pollutant because it is “plant food” is just plain dumb. Bad WSJ skeptics!

          Further, it is misleading — some would say borderline lying — to state that climate models “greatly exaggerate” the rate of warming, or “are on the verge of failing”, when observed readings actually fall within the 95% confidence interval of predictions. Lastly, despite the net benefits that come from moderate gains in warming, Tol shows that this is a “sunk” benefit that will occur no matter what policy choice we make today. Thus, we would have to implement a (moderate) carbon price now for the effects to kick in around mid-century when we really need them to. It is misleading to suggest the unregulated emissions up until that point will avoid long-term negative affects on welfare.

          • stickman says:

            For the record, you may replace gains in warming with simply warming.
            :)

          • Bob Murphy says:

            No, Stickman, I would never use “affects” when I mean “effects.”

            On a more serious note, I’m curious about this statement you make:

            “Further, it is misleading…to state that climate models “greatly exaggerate” the rate of warming, or “are on the verge of failing”, when observed readings actually fall within the 95% confidence interval of predictions.”

            Are you talking about the Santer et al. chart that I used, or are you talking about the RealClimate chart with the grey uncertainty bands that you linked? Because again, I am afraid we’re butting up against another example of you saying, “Yes, what Bob said is totally right, given his actual words. But if we assume he is looking at a different chart when he utters those words, then he is lying.”

            • stickman says:

              I’m confused by your reply. What do you think the yellow bands in the Santer paper represent if not the confidence interval?

              Let me try again: Knappenberg’s framing of the prediction issue — which he at least has the courtesy to acknowledge differs from the study authors — is very misleading. It’s rather like me claiming that I nearly scored a goal, when in fact I didn’t… and my team lost.

  5. Nikolaj says:

    Bob, I think that your projection of the future rate of warming is highly pessimistic. The new estimates of climate sensitivity (Spencer and Braswell 2010, Lindzen 2011) show that the warming one would expect to see from doubling the CO2 concentration is less than 1 degree C. The reason is simple; the atmosphere is dominated by the negative feedbacks, especially by low clouds. So whatever additional amount of greenhouse warming you get, the clouds and water vapor will act to dampen it, rather than exacerbate it. All IPCC climate models you rely on in your projections are based on the opposite and incorrect assumption; on the positive feedback which in reality do not exist (or more precisely, they exist but are negligible as compared to the negative ones). Bear in mind that CO2 warming only per doubling is about 1deg C. In order to reach at its median value of 3 degrees C per doubling of CO2 IPCC had to postulate a strongly positive feedback of water vapor and clouds (by far the strongest greenhouse substances). This feedback simply does not exist, so the entire scary story is baseless. The warming we have seen thus far was only partially CO2 driven, and the likely warming to the end of century would not be 2.5 C but less than 1 deg C.

    Satellite data cover the period 1979-2012, starting in a very cold period, so it is not surprising that we have seen some warming since then. But, even accounting for this the decadal rate of warming was 0.13 or 0.14 C. So even if we extrapolate uncritically the present trends into the future, we see less than 1.5 degrees C of warming until 2100, not 2.5 C.

    • Bob Murphy says:

      Well it’s not “my” projection, it’s the IPCC AR4′s. I didn’t want to get into looking at “skeptic” climate scientists, because then people would think I was disagreeing with Nordhaus over which scientists to trust. And no, I’m saying looking at the very “consensus” studies that Nordhaus cites, his summary was very misleading.

  6. Bob Roddis says:

    Let me get this straight. After the government built all the freeways via taxes and eminent domain and further subsidized sprawl via the public schools, funny money loans and interest deductions, and subsidizes farms crops on land that would otherwise be forest, and through its military empire, is the largest user of oil in the galaxy, we now learn of the ephemeral “global warming” which may or may not be (and probably isn’t) caused by CO2 going from 3 parts per million to 5 parts per million. And, even if we get some more warming, the next 2 degrees Celsius of warming will be great for mankind. But, in case the warming is caused by mankind and in case it might go over 2 degrees Celsius in fifty years, we’re going to let the government control things. The same government that caused the housing bubble but didn’t see it coming, the same government that nuked civilians in Japan, the same government that tortures the heroic Bradley Manning, the same government that perpetuates economic bad times via the Keynesian Hoax is going to have the wisdom to collect “carbon taxes” and do a real good job of cutting down on CO2 emissions. It’s just a coincidence that everyone will have to ask permission of the government to basically breathe and it’s just a coincidence that almost every warming hysteric is a Keynesian or worse type of economic illiterate.

    • Bob Murphy says:

      Uh, Roddis, there is a mistake in your analysis. You wrote that the government would “do a real good job of cutting down on CO2 emissions.” But you should have said “do a really good job of cutting down on CO2 emissions.” You use an adverb to modify an adjective.

    • Jason B says:

      There is another error, your numbers are off by a factor of 100. The volumetric CO2 concentration is currently in the upper 300 parts per million.

  7. Bob Roddis says:

    On a serious note, if all of this CO2 emission stuff is really the cause of global warming, then the obvious solution would be the abolition of Keynesian economics and the public school system. Keynesianism is responsible for the stimulation of untold amounts of unsustainable economic activity, much of which concerns building real big stuff using bulldozers and other nasty machines all spewing out literally tons of vile, nasty engine exhaust. Further, the public school system makes people move far away from the core cities to get away from you know who. Keynesianism not only subsidizes their moves and commutes but it makes people need some form of inflation hedge which often takes the form of real estate and real estate development. Without the need for an inflation hedge, people wouldn’t need to “develop” so much forest land. And without the wonders of “progressive” policies, Detroit’s population would not have dropped from 2 million to 700,000.

    So, the question is: What do Keynesians love more? Their totalitarian dreams or the future of our planet and our children?

  8. Bob Roddis says:

    Even after decades of indoctrination at government schools, only 20% of young people agree government spending is an effective way to economic growth and 28% agree government should do more to curb climate change even at the expense of economic growth.

    http://www.forbes.com/sites/johnzogby/2012/05/02/libertarian-bent-of-young-voters-tests-obama/

    Of course, if we abolished Keynesianism, we could curb “climate change” while enjoying economic growth.

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