Extract only. For full article, follow link. http://www.econlib.org/library/Columns/y2009/Murphygeoengineering.html
The Benefits of Procrastination Many critics of geo-engineering overlook an important fact: there is a gain from procrastination. In some of their expositions, they argue, implicitly and sometimes explicitly, that because humans will eventually have to reduce greenhouse-gas emissions anyway, we might as well do the adult thing and start the painful adjustment today.5 But this ignores the principle that a "quick fix" can allow the deferment of solving a particular problem, lowering the total cost of the long-run solution.Although procrastination is often a sign of immaturity, in the context of climate change it may not be. In the typical debate over geo-engineering, proponents argue that it is "the" solution to global warming, while the critics worry about all the things that could go wrong. Yet this "geo-engineering: yes or no?" debate overlooks the important possibility that the most economically efficient outcome involves the postponement of carbon-abatement strategies, along with the simultaneous research and development of varied geo-engineering techniques to be deployed if they should become necessary. Back-of-the-envelope calculations suggest that this strategy could leave our descendants many trillions of dollars richer than the alternative of implementing immediate and large cuts in emissions.A wait-and-see strategy is probably optimal because immediate cutbacks in fossil fuel make economic sense only in worst-case climate scenarios. If we rely just on the "point estimates" of the benefits and costs of aggressive legislation, then the literature suggests it is much cheaper if governments do nothing rather than impose steep emission cuts and other regulations. Richard Tol recently published a survey article on comprehensive estimates of global welfare effects from unrestricted climate change, where the effects included monetary estimates of damages to non-market areas such as human health.6Of the thirteen studies Tol surveyed, the best-guess estimate of global GDP effects ranged from a loss of 4.8 percent to a gain of 2.5 percent. Most of these impacts were calibrated for temperature increases of 2.5 to 3.0 degrees Celsius, which are not expected to occur until the second half of the 21st century. (Currently the globe is about 0.7 degrees Celsius warmer than the preindustrial benchmark.) Of the estimates in the eleven studies published since the year 1995, the worst case is a global GDP loss of 1.9 percent.In contrast to these surprisingly modest estimates of the dangers of unrestricted climate change, the economic costs of zealous government interventions could be far worse than the disease. For example, the Congressional Budget Office surveyed a range of studies and concluded that the cap-and-trade emissions targets in the Waxman-Markey climate bill would reduce U.S. GDP by 1.1 percent to 3.4 percent by 2050.7 Thus, the midpoint of this range, 2.3 percent, is higher than the worst estimate of unrestricted climate change (in any surveyed study published within the last fourteen years).8 In other words, the costs of Waxman-Markey exceed even the most optimistic estimates of benefits. Moreover, the damage to the economy occurs decades earlier than the full benefits of avoided climate change and the Waxman-Markey plan, even if adopted by all major governments, would not eliminate all climate damages.Thus if we were to rely on best-guess point estimates, it would be much cheaper to allow unrestricted carbon emissions and simply adapt to the climate change, rather than unleashing governments to embark on what would surely not be a textbook implementation of a worldwide "optimal carbon tax." Unfortunately, this strategy by itself would be very risky. Concerned climate scientists point out that it is possible, however unlikely, that the earth's sensitivity to emissions is much higher than the point estimates, and that today's forecasts of tolerable climate damages will turn out to be catastrophically optimistic. This is why advocates of aggressive government intervention reject the standard cost-benefit approach to carbon policies, and instead favor the "precautionary principle."9But it is precisely this uncertainty over the threat of climate change that yields the great benefit of geo-engineering. So long as humans have the ability to stave off catastrophic warming for years and possibly decades, geo-engineering places far more options at our disposal. Rather than take very costly actions now, it is better to proceed with "business as usual"—while the climate scientists continue to refine their models and the engineers continue to explore new techniques of carbon-free energy production—knowing that we have an extra decade or two of "breathing room"10 because of various geo-engineering techniques.The following example is for illustrative purposes only, but, to make the numbers plausible, it is loosely based on a leading model.11 Suppose that without geo-engineering, humanity can (a) pay $30 trillion (in present discounted value) to keep the atmosphere at a "safe" level of greenhouse-gas concentrations and thereby avoid the risk of significant climate damages down the road; or (b) allow unrestricted emissions, thereby facing a (100-x) percent probability of $20 trillion in future climate damages, and an x percent probability of a catastrophic $100 trillion in future damages when the climate passes a "tipping point."The proponents of option (b) would point out that in all likelihood—especially the smaller x turns out to be—humanity would be wasting $10 trillion by curbing emissions, because we would be forfeiting $30 trillion in potential output in order to avoid what would probably be only $20 trillion in climate damages. On the other hand, the proponents of option (a) would invoke the analogy of fire insurance and claim that a normal level of risk aversion—especially the larger xturns out to be—makes that "actuarially excess cost" of $10 trillion well worth the peace of mind it brings.In this setting, we can see the advantages of a third option (c): Allow unrestricted emissions and, if it turns out that humanity has entered one of the disaster scenarios, implement a geo-engineering proposal in conjunction with draconian emission cuts, which will cost (from our vantage point now, in evaluating the scenario) $15 trillion in forfeited economic output, as well as $35 trillion in collateral damage from the geo-engineering techniques during the period when the atmosphere's greenhouse-gas concentrations returned to safe levels.With these stipulated numbers, option (c) (involving the possibility of geo-engineering) renders the option (a) of slamming the brakes immediately on carbon emissions much less tenable. With no possibility of geo-engineering, option (a) was plausible, despite its higher expected cost, simply because option (b) of "doing nothing" carried the threat of a catastrophic $100 trillion disaster. Yet the possibility of geo-engineering gives humanity a much safer gamble, where the worst outcome is a much more tolerable $50 trillion loss ($15 trillion plus $35 trillion.) We can continue with unrestricted carbon emissions, hoping—and expecting—that the climate's sensitivity to greenhouse gases lies within the moderate range. But in the unlikely event that our children do realize they are on a runway to disaster, geo-engineering allows them to limit the damage. They can cap the rise in global temperatures through the various techniques discussed above, while engaging in a crash course to reduce atmospheric CO2concentrations. Even if the fears of Gavin Schmidt and others pan out, and the geo-engineering techniques are at best a temporary fix that masks the symptoms, it is still very significant that we have such time-buying strategies at our disposal. Because costs deferred are often costs lessened, temporary fixes are often valuable. Imagine the huge economic waste involved if homeowners never used "temporary" fixes on appliances or their vehicles, and bought a new washing machine or transmission every time they encountered a minor problem.The critics of geo-engineering ignore this crucial benefit of additional time. In general, it is cheaper to achieve a goal when there are fewer constraints. It is a matter of economics, not engineering or physics, to confidently state: "Insisting on carbon-free energy production by 2080, rather than by 2050, would raise cumulative GDP during the 21st century."When it comes to atmospheric concentrations of greenhouse gases, matters are not so simple as a basic statement of economic logic. Economics tells us: "It would be cheaper to stabilize the atmosphere at 420 ppm of carbon dioxide-equivalent gases from 2080 forward than it would be to stabilize it from 2050 forward."12 However, this statement is self-evidently true only if we assume that people know from the outset the constraint on atmospheric concentrations. The critics of geo-engineering worry that industries will proceed with "business as usual" and then realize—to their horror—that they need to stabilize at 420 ppm, when the atmosphere is already far above that threshold. At that point, the actual geo-engineering technologies (and their respective costs) would come into play, to determine whether the total compliance costs from the procrastination strategy would be higher or lower. Notwithstanding this important qualification, I still maintain that the benefits of delay are well worth it in present circumstances. Even just ten additional years of data collection could allow for much greater confidence in estimates of the climate's sensitivity to greenhouse-gas emissions.13 If Freeman Dyson's fanciful ideas turn out to be right, then avoiding the costly (and, in retrospect, unnecessary) impairment of economic growth could leave our descendants tens of trillions of dollars wealthier.14 And if Dyson turns out to be wrong, other options would still give the next generation valuable time to recover from the misplaced optimism. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. 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