Just to take Ken's Roman saver one stage further - if he'd put $1 on deposit at 1.65% he would own the entire assets of the world valued in 2000 at $163trillion (Davies et al The Economic Journal, 121 (March), 223–254. Doi: 10.1111/j.1468-0297.2010.02391.x. 2010). Whereas if he'd invested at Ken's 0.46% he wouldn't even have accumulated $10,000. If the choice between 0.46% and 1.65% makes such a huge difference economists would need to provide some very compelling arguments to justify the precision of the discount rate they choose if they wish to argue that discounting is appropriate over such long timescales.
Robert On Feb 26, 5:34 pm, Ken Caldeira <[email protected]> wrote: > A point of my Roman example is that we can expect the climate effects of > our CO2 emissions to persist far longer than human economic instiutions. > > I do not think it is reasonable to think that if a Roman had put a dollar > in the bank in year 12, say at 5% interest, that he or she would have more > than 10 to the 42nd power dollars worth of wealth today, so it does not > make sense to use regular economic discounting for problems with these time > scales. > > It is an impossible task to estimate GDP in year 12 in current dollar > terms, but it would nevertheless be interesting to try to estimate economic > growth rates on the millennial time scale. This might provide an effective > long-term discount rate that both environmentalists and economists could > live with. > > Population has probably increase by a factor of 20 or so. Hard to say how > per capita GDP has changed, if we say that per capita GDP increased by a > factor of 1000 and there are 10 times as many people, over 2000 years this > would imply a long-term growth rate of about 0.46 %. I think many > environmentalists would be happy to use this as a discount rate when > considering long-term environmental problems. > > On Sat, Feb 25, 2012 at 4:11 PM, David Appell <[email protected]>wrote: > > > > > > > > > On Feb 22, 8:38 am, Ken Caldeira <[email protected]> > > wrote: > > > On the other hand, if the Romans had discovered fossil fuels and had a > > > fossil-fueled industrial revolution, they would have maximized their net > > > present value and we would be here two millennia later with rising seas, > > > acidified oceans, melting ice caps, diminished biodiversity, etc, finding > > > little solace in the fact that they followed the path their economists > > told > > > them was economically optimal. > > > Perhaps. But we would have built on that wealth and be even wealthier > > than we are now, and so better able to deal with the altered climate, > > oceans, and biosphere that they caused (assuming they didn't cause a > > complete collapse of the ecosystem). Maybe we would have already > > perfected fusion by now. > > > One of the economists in Bjorn Lomberg's Copenhagen Consensus group > > pointed out that someone in our future, say 100 years from now and > > several times wealthier than we are, will be puzzled if he looks back > > on us and wonders why we decided not to pursue our own best economic > > interest on his behalf. > > > I grew up in a house with a coal furnace. Should my parents -- who > > were not even middle class then and struggled to get by -- not have > > burned coal, which was the cheapest option for them where I lived > > (western PA), because it would alter the climate and oceans? I don't > > know what else they would have done for heat. Eventually my father did > > better and we bought an oil furnace and then a nicer house, and then > > an even nicer house (but still middle class) with gas heat and A/C. I > > have to admit Lomborg's economist makes a lot of sense -- today I > > would have been puzzled if my parents had not heated with coal, but > > had taken out a loan to buy an oil furnace. (They couldn't even afford > > a proper bathroom, but had a toilet in a closet and a shower in the > > basement.) And now today we have all kinds of technologies to employ > > on the energy/climate problem that they did not have, and on living > > overall -- we can build seawalls if we have to. The future will have > > even cheaper options. > > > David > > St Helens, OR > >http://www.davidappell.com > > > -- > > You received this message because you are subscribed to the Google Groups > > "geoengineering" group. > > To post to this group, send email to [email protected]. > > To unsubscribe from this group, send email to > > [email protected]. > > For more options, visit this group at > >http://groups.google.com/group/geoengineering?hl=en. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/geoengineering?hl=en.
