Poster's note : long post with podcast extracts and some interesting listener comments at the bottom
http://www.econtalk.org/archives/2015/06/martin_weitzman.html Russ Roberts posts to Twitter as EconTalker. PERMANENT LINK | JUNE 1, 2015 Martin Weitzman on Climate Change EconTalk Episode with Martin Weitzman Hosted by Russ Roberts Is climate change the ultimate Black Swan? Martin Weitzman of Harvard University and co-author of Climate Shock talks with EconTalk host Russ Roberts about the risks of climate change. Weitzman argues that climate change is a fat-tailed phenomenon--there is a non-trivial risk of a catastrophe. Though Weitzman concedes that our knowledge of the climate is quite incomplete, he suggests that it is prudent to take serious measures, including possibly geo-engineering, to reduce the accumulation of carbon dioxide in the atmosphere. Play Time: 1:08:29 How do I listen to a podcast? Download Size:31.4 MB About this week's guest: Martin Weitzman's Home page About ideas and people mentioned in this podcast episode: Books: Climate Shock: The Economic Consequences of a Hotter Planet, by Gernot Wagner and Martin L. Weitzman at Amazon.com. Articles: "The Economics of Climate Change", by Robert P. Murphy. Library of Economics and Liberty, July 6, 2009. Present Value, by David R. Henderson. Concise Encyclopedia of Economics. Discounting future amounts. Externalities, by Bryan Caplan. Concise Encyclopedia of Economics. Web Pages and Resources: Normal vs. Fat Tailed Distributions. VUDlab.com. Stocks and Flows, sidebar in Macroeconomics and the Financial System, by N. Gregory Mankiw and Laurence Ball. Google Books, p. 20. The bathtub analogy in picture and words. Stock and flow. Wikipedia. Mount Pinatubo. Wikipedia. Podcast Episodes, Videos, and Blog Entries: "Option Value and the Non-Equivalence of Cap and Trade with Carbon Taxes," by Arnold Kling. EconLog, June 5, 2008. "Chart of the day: In 2013, America was more than twice as energy efficient compared to 1970 when Earth Day started," by Mark J. Perry. AEI.org. John Christy and Kerry Emanuel on Climate Change. EconTalk. March 2014. Judith Curry on Climate Change. EconTalk. December 2013. Nassim Nicholas Taleb on the Precautionary Principle and Genetically Modified Organisms. EconTalk. January 2015. Greg Mankiw on Gasoline Taxes, Keynes, and Macroeconomics. EconTalk. January 2007. Eric Topol on the Power of Patients in a Digital World. EconTalk. May 2015. Highlights Time Podcast Episode Highlights HIDE HIGHLIGHTS 0:33 Intro. [Recording date: May 15, 2015.] Russ: Now, you argue that prudence requires doing something about the growing concentration of carbon dioxide in the atmosphere. Give us an overview of what you see as the big-picture version of the problem: why action is a good idea, and in particular, what's the ideal of what we ought to do about it? Guest: Well, in the book and in other contexts, I, we have argued that the most important single way to view the economics of climate change is primarily as a problem of risk management. You can't--we don't know what's going to happen. It's highly uncertain what the outcome is going to be on temperatures, on weather patterns, and so forth. And instead of trying to pretend that it's deterministic by taking average values, we really need to look at the whole probability distribution of outcomes. And when we do that, we see that there is an uncomfortable amount of probability--small but it's not negligible--that there will be really very bad outcomes: that temperatures really could go up a great deal with a small probability, but not small enough to comfort us. So, what we should be doing, the way we should be thinking about this is more like a problem of buying insurance against terrible outcomes than it is to lower the average of such outcomes. Russ: So, this is, as you say in the book, a fat-tail problem, in your mind, what Nassim Taleb has talked about on the program with respect to finance. And also he has argued with respect to both GMOs (genetically modified organisms) and climate change--that there's such a catastrophic risk, a catastrophic outcome of a low probability, but that probability is not low enough that we can ignore it. Is that a good way to summarize it? Guest: Yes, it is. Russ: Let's talk about why you think it's a fat tail rather than an unlikelihood. We've had, I think--correct me if I'm wrong--0.8 degrees of Celsius warming, which is 1.4 Fahrenheit, above pre-industrial times. What is the Black Swan? What's the catastrophic outcome that you think we should worry about? And what would the consequences be? Guest: Any degree Centigrade, we probably can and we are living with it. It's going to go up--if there were no more carbon dioxide emitted, what's in the pipeline already is going to cause temperatures to go above 0.8 degrees Centigrade. But in these low-ish ranges, say, less than 2 degrees Centigrade, we have some more confidence that we can cope with the problem. When carbon dioxide concentrations, greenhouse gas concentrations in the atmosphere get high enough, then you really might get into the 6-degree or 4-degree range. And we did, in the book, some fairly simple calculations, but there were calculations, that--I'll throw some numbers in here. Before the Industrial Revolution, the level of greenhouse gases in the atmosphere was 280 parts per million. And it had hardly ever been above 280 parts per million in 800,000 years. We know that 800,000 years from arctic ice cores. And it stands to reason--we've been in this period of glacial advances and retreats for about 3 million[?] years, so this is probably at the upper end of what parts per million of carbon dioxide and greenhouse gases were for the last 3 million years or so. Now we are up to about 440 parts per million of carbon dioxide equivalent gases. That's an increase of 50% over what was the highest for the last 3 million years at least. When you ask, 'What is going to happen with 440 parts per million?' you are looking at something called, a famous acronym in climate change, something called Climate Sensitivity. And that is an iconic number that tells us the eventual temperature change that goes along with a greenhouse gas concentration. It's a probability distribution. So this essential thing about what will be the temperature response to 440-560 is an answer that has a distribution. And the climate sensitivity is the temperature change for a doubling of carbon dioxide. So, we're not there yet. But it's almost sure that we'll reach at least that, at least 560 parts per million. For the last 35 years, the uncertainty around this climate sensitivity, this temperature response, has not much changed. Thirty five years ago in some of the first early engineering studies it was stated that it's likely between 1.5 degree centigrade and 3.5 degree centigrade--oh, I'm sorry--it's likely between 1.5 degrees centigrade and 4.5 degrees centigrade. That's a pretty wide range, 1.5-4.5 degrees centigrade. And that's in the latest IPCC (Intergovernmental Panel on Climate Change) report from last year, it gives that same range. So that, what's happened, seemingly, is that although there has been much, much more research into climate change, and many, many more models and observations, we must be--as we are resolving some of the uncertainty about something like climate sensitivity, new forms of uncertainty are emerging. So there's other things that we hadn't counted on. Okay, so this 1 degree centigrade to 4.5 degree centigrade--what we estimated is that if the greenhouse gas concentrations double, the chance of being greater than 4.5 degrees centigrade is around 10%. If greenhouse gas concentrations double, the probability of being greater than 6 degrees centigrade response is around 3%. So this is the bad tail of climate sensitivity, which is symbolic of the bad tail of what the damages could be. And these numbers just seem alarming, with the doubling of CO2, which is almost inevitable, there is a 3% chance of having temperatures greater than, a temperature response greater than 6 degrees. If we go to a concentration of greenhouse gases of 700 parts per million--and that's a number that's thrown around, for example the International Energy Agency, that's their most likely scenario taking account of all the pledges that had been made and so for--their point estimate is that we will reach 700 within a century. If it's at 700, then the probability that the temperature response is greater than 6 degrees centigrade becomes around 10%. So that's what--my best translation into actual numbers of what it means to have a fat tail. Those 8%, 10% probabilities are low--they are unlikely. But they are not nearly so low as to put our minds at ease. And that's what I, we see as the major driving factor in wanting to mitigate carbon dioxide emissions. It's not so much as what happens in the middle so much as what's happening in those bad tails. 9:54 Russ: So, the outcome there is so catastrophic, the argument goes, that the fact that it's "only 10%" or only 3% is not comforting. Those are alarmingly large probabilities of a very, very bad event. Guest: Exactly. Russ: Which would be a temperature increase--and just to keep the numbers clean--we're at 440 parts per million in the atmosphere now. Pre-industrial revolution we think is around 280. So that's your point that we are about 50% higher. We expect to get to double the pre-industrial concentration--that's what you said is inevitable. That's 560. If we get something close to double where we are now, we get to 700 and above, and there, you are suggesting that the odds, then, of an at least 6-degree centigrade increase would be 10%. And 6 degrees is considered, something above 6, would be life-altering. So, before we talk about the probabilities of that 700, because I want to come back to that, whether that's a realistic concern, what else goes into that number: What do you think we know--and you conceded many times in the book there are many things we don't know, still--about life on earth at 6 degrees centigrade above the current average. Guest: Lord. For that you'd have to go way back. To find that much carbon dioxide, an increase of that much carbon dioxide or greenhouse gas, that rapidly, so that rapidly, to 700 hasn't been seen for at least 50 million years. Fifty million years ago there was a spike in temperatures that was something like this 4 or 5 degrees; and also there were higher levels of carbon dioxide. So, we really are going way, way back. That would alter--6 degrees centigrade, if that were achieved would alter life on earth as we know it. We're into the fantasy world here in guessing what that would be like. It would completely up-end ecosystems and cause a lot of species to go extinct. I don't know what would happen to humans. I don't see how anyone can know. Maybe we'd be clever enough to figure out how to live underground or something like that. Science has achieved marvelous things. But it somehow wouldn't be at all, I'm guessing, a pleasant existence. And we would miss life on earth as we know it today. You'd have a lot of trouble venturing outside your underground shelter, if we could even survive at all at 700 parts per million. So, again, it was that that first, it was numbers like that that first started to bother and then alarm me about climate change--that you put it in geological, historical perspective, and what we're doing is really tampering with these greenhouse gas levels to an extent, by the time we're done, that hasn't been seen for at least 50 million years. Well, that's a big deal. If there's the amount of uncertainty that IPCC seems to think there is, this incredible range of climate sensitivity between 1.5 and 4.5 degrees centigrade, if there are ranges like that for what the response is, we haven't seen such things since, as I say, 50 million years ago. 13:56 Russ: So, I'm going to make an analogy I've made here before, which is: it does remind me a little bit of macroeconomics, which is something I have a similar agnosticism about or sometimes a skepticism. So, in macroeconomics, we're told that there's a theoretical reason to expect that a dollar of government spending financed by debt will have a certain impact on GDP (Gross Domestic Product) or on unemployment; and if it doesn't happen, say, after WWII, as was predicted when government spending shrunk and we were told we were going to have a catastrophic economy, then we say, 'Well, there were other things we didn't anticipate'--and the theory survives. So, what is your thought on the last 15 or 16 years, sometimes called the Pause, where concentrations of carbon dioxide have risen dramatically as China has grown dramatically, the world economy has grown dramatically, and yet the expected temperature increases didn't happen, haven't happened? It's true the world remains hot. But the theory is predicting that it should get a lot hotter. Does that give you any uncertainty about this relationship between greenhouse gases in the atmosphere and temperature and the likelihood that 700 parts per million is going to be 6-plus degrees centigrade hotter than it is now? Guest: With a 10% probability. Well, I think it emphasizes how unsure we are. The models are all pointing in a general direction of the planet heating. But they can't really capture--they certainly can't capture year-to-year changes or even decade-to-decade. The big picture is that--see, if you look at a plot of temperature against time, it's as if we are on a plateau now but that's looking back for 12 years or so. If you look decade by decade, there's an unambiguous increase in temperature. It's indicating we don't know, and maybe the effect is going to be more than 9. But it's not nearly enough years or enough data to undo this thinking that we're handed for pretty high temperature changes. There's things that the models somehow can't seem to model very well, and that are maybe very important: cloud formation--we don't know what's going to happen. That's a huge deal in saying what temperature change will be. None of the models predicted melting of arctic sea ice, which has continued to increase, the melting of arctic sea ice. That was not predicted. And yet the twiddle with the models that try to make them come out with something like that. Russ: [?] that. We're good at twiddling. As econometricians, for example, we know how to do that. Guest: Yeah. But if every time there's some news, you need to revise the model, you're left unsure about the uncertainty in it. Russ: Correct. 17:27 Russ: Well, let's move to the one policy change that you talk about quite a bit in the book, and that many economists continue to come back to, which is a tax on carbon. So, you argue that we should put a $40 per ton tax on carbon, to at least begin reducing the rate of increase that we're currently having in CO2 in the atmosphere. Where does that number come from? Or, what's our best way we have to make a stab at that number? The reason I ask that is--we understand something about other types of pollutants and their impacts on health, say, or the economy, we have a measure of the externality at the margin. This is a strange one, because, as you say, in our current existence, we are getting along okay with the 0.8 that we've had. It's not obvious that an extra half a degree should be discouraged. It's a non--the way I think about it is, it's an infra-marginal problem, really. Right? Guest: Yes, I suppose. Russ: So, make a case for $40. Guest: Okay. I can't make a very firm case. And no one can. Russ: Understand. Guest: Like, so much else in this area of climate change, that's a calculation based on a series of models. It's a consortium, as it were, of U.S. government agencies that got together, including the Department of the Interior, the Council of Economic Advisers, the Treasury, the Environmental Protection Agency (EPA)--they formed a fairly large task force to come up with what the price on carbon that would be used in regulation by the EPA. The Supreme Court said, and mandated, that EPA should take account of carbon dioxide. It's not that they are going to put a $40 tax on carbon--they don't have the power to do that. But in evaluating various new technologies and machinery and various controls, they are using this number. Where did they get it from? Well, the thought experiment is this: You have some given trajectory of carbon dioxide emissions and carbon dioxide concentrations, and then temperatures that go along with that. It might be uncertain, but you have a sort of projected profile of temperatures and damages into the future. Then, you do a thought experiment: via the computer you make there be 1 less ton of carbon dioxide that's emitted this year. That will translate into fractionally lower temperatures in the future, and fractionally lower damages in the future. And then you take these damages, these changed damages, and discount them back to the present, and ask: What is the so-called cost of carbon--which is really the price of carbon that's coming out of the model--that it wants you to impose? They use 3 models, 3 so-called Integrated Assessment Models, IAM. And they got 3 different answers. They just averaged them. And a huge part of the uncertainty about this $40 per ton comes from the discounting aspect. If you discount--because consequences of climate change unfold across centuries and even millennia, and certainly generations, the discount rate you use becomes absolutely critical. And the discount rate they used was 3%. They looked at 2.5% and at 5%. You get very different numbers for 2.5% or for 5%. Or for any change in the discount rate. So, the deficiencies of this, ambiguities of it, are known to those who work in this area. This is not in any sense a hard and firm number. But it's sort of a ballpark estimate that's very sensitive to a bunch of assumptions, including, especially, the discount rate. And that's the number that they came up with after averaging over three models. So that's where that number, $40, comes from. Russ: So, right now, worldwide, you suggest that we subsidize--right now in reality we subsidize carbon in various ways. Which would certainly seem to me, regardless of what you think of climate change, that that would be a good thing to stop. And you point out that that, whether that's a good thing to stop or not, it's a very hard thing to stop politically. But if we reversed that, and stopped subsidizing it and instead taxed it, one question to ask would be: What is the likely cost of that level of taxation on economic growth, or on people living in very poor places that desperately need energy to catch up? You didn't talk much about that in the book. I was a little bit surprised. Do you have any feel for what kind of magnitudes that kind of tax would have on, say, the price of gasoline per gallon? Something that would be more easily related to, as a consumer? Guest: I think $40 per ton of carbon dioxide doesn't affect gasoline that much. I think it will come out to about 4 cents per gallon in the United States where it's already taxed. It would show up for sure in electricity prices. One point I want to make clear is that a difficult point to get across to the public: When the public thinks of a tax of $40 per ton of carbon dioxide, say, they think of that $40 as going somewhere, away from them. It goes into a sinkhole or it's transferred to another country-- Russ: planet-- Guest: or it's transferred--yeah--to the United Nations, or something like that. That's not the case. This tax really represents a country that would be taxing itself on carbon dioxide. And with the receipts that they gather on the carbon dioxide from that weight [?] carbon dioxide, they could do things like relieve more distortionary taxes elsewhere. Because a bunch of calculations show that if you tax--you end up better from a welfare point of view if you tax this bad of carbon dioxide, and relieve taxes on goods, such as labor or capital. So this would allow a refund of $40 per carbon dioxide on going elsewhere into the economy. Russ: In theory. In theory, at least. Guest: Yes. And people have thrown around numbers--there's models, and there's numbers; and some of the models seem to indicate that actually if judiciously done, things [?] words, this could increase national welfare, because you are eliminating or cutting back on distortionary taxes. So, depending upon--the hurt that it does depends on what you do with the internal proceeds of the tax. So, the idea--maybe it's better to call it a price on carbon. The idea is that a country would price carbon, hopefully at $40 per ton; would collect these receipts and use it to offset taxes elsewhere. Or to do other-- Russ: Or to do other good things, if they have good things to do with the money. In general. Guest: That's something that's very hard. We economists have not done a very good job of explaining that--that it's not a tax in the sense that it's going away from you and to some larger entity and disappearing from you. The nation as a whole, it doesn't disappear from the nation. The nation collects it. Russ: Well, it will go away from you if you if you are a relatively heavy user of carbon, in whatever dimension that comes out. So, if you are, like, mail order--if you do a lot of mail order shopping, this is going to increase the cost of jet fuel and other things that are electricity intensive, etc., etc. But the point, the basic point you are making is a very important one. The goal here isn't to make government bigger--although people worry that's what it would do. But the goal of it, at least, would be to reallocate--not reallocate, but alter the price of carbon relative to other goods that are currently just priced to high because of the taxes that are put on them. So that, in theory, could be a welfare-improving tax, at least in theory. 27:33 Russ: The other alternative, which you mention, is some kind of cap-and-trade scheme. It seems to me that, given that many of the effects occur at sort of a tipping point of sorts, at, say, 500, 600, maybe 700 parts per million, that ideally--I'm going to emphasize 'ideally'--ideally you would want to put some kind of total cap on global emissions and then allow people to trade those. Allow governments and corporations to trade those, so that the allocation of that a fixed amount was in some sense sufficient. Of course, that would be--if you don't endow people with certain amounts, you can certainly make the argument that poorer countries should get bigger allocations to start with because they are behind, and it would seem to be a very cruel system--as is the tax--to punish them, make it hard for them to catch up. But in theory you could give people an endowment of these rights to emit, allow it to be traded, and then you could make sure it didn't go over 600, or 500, if you knew how to monitor and enforce it, right? Guest: Yes. Some tricky parts in that. First of all the thing you care about is not emissions per se. It's the accumulation of the stock of carbon dioxide that's in the atmosphere. And that becomes a little trickier, how to link that to a cap-and-trade system. Look, a cap and trade system, and a tax or price on carbon, are very similarly related. And within the United States, or within the advanced OECD (Organisation for Economic Co-operation and Development) countries, I'd say, gee it would be great if you could get either one of these meaningfully linked up. When it comes to the entire world, including the developing countries, my own opinion is that a cap and trade system is inferior to this general agreement to put a price on carbon, for several reasons. One is that by putting a price on carbon you are stabilizing the price of energy. It's going to be linked to that price of carbon. If you have a cap and trade system, energy prices could go all over the case, depending on whether you are in a recession or not. And they have gone all over the place, in Europe, and now way below what they were previously. In the United States, cap and trade prices have gone lower than was anticipated. And the public is very averse to these price changes. So, the public doesn't feel comfortable--if the price soared on cap and trade, on a cap and trade mechanism, if the price of energy soared, why, then, people would be accusing Wall Street of manipulating some prices because they [?] the will, make[?] decisions on these cap and trade systems. And it could end up discrediting the whole movement, to put on an economic basis, on a rational economic basis, the control of carbon. So that's one reason. Another thing that bothers me about a cap-and-trade international system is, let's face it, somehow if this were distributed, there are going to be huge flows of billions, maybe trillions of dollars from the United States or advanced countries to China. And I don't think that would be tolerated very well domestically. So--I, myself, favor, for the international solution, an international price or tax on carbon. Also, with a cap and trade system, you are into, right from the beginning, who gets assigned what caps. And a lot of money is riding on that. Russ: That's right. Guest: So you've got to negotiate with n parties somehow. Russ: It's not going to happen. Guest: Yeah. Russ: I want to read a paragraph from the opening of your book. It might be the first paragraph. I can't remember. But I cut and pasted it. It says: Climate change is an urgent problem. But you're fooling yourself if you think getting off of fossil fuels would be simple. It will be one of the most difficult challenges modern civilization has ever faced, and it will require the most sustained, well-managed, globally cooperative effort the human species has ever mounted. Well, 'sustained, well-managed, and globally cooperative'--I can't think of anything that we've ever done that fulfills those adjectives. So, it's a long shot. One nation--a particular nation can put a tax through its own political process on its own carbon emissions. The odds that we will as a globe come together to figure out and solve the problems you are talking about seems to me to be close to zero. Guest: Well, this gets into another point, which is: When does the world sort of wake up? And the pessimistic side of me says it would take the perception of a catastrophe, of a climate change catastrophe, in order to make this be an issue on the grass roots level. Like analogous to the 2008 Recession. Russ: To give it salience. For it to rise to the level of fear and panic on the part of the everyday person, you'd need to see things like there are no vegetables in the grocery store or they are only available on a limited basis because of agricultural change. Right? And then it's too late--probably, as you'd suggest. Guest: That's right. But, the pessimistic part of me says that that makes the perception of the catastrophe not exogenous but endogenous. Because if we go up by another hundred parts per million and there's no terrible outcomes perceived, we'll go up another hundred parts per million. And then another hundred. Until there is this perception on a grass roots level that this is really biting, this is really hurting. Though, then it becomes a question not whether there will be a perceived--it's the perception that's important--a perceived catastrophe, but when that will occur. Yeah, these proposed solutions are all difficult; and cap and trade has some things in its favor over and internationally agreed-upon price of carbon. But I think we got going on the wrong foot when we started down, when we began with this quantity path. Because it's so very, very difficult to get n countries to agree on what their initial reductions ought to be. Everyone wants some leniency in that. Somehow, a uniform price, if we can get everyone to agree on a uniform price and then they--I don't know--vote on it or negotiate what that price is going to be--you are then negotiating with a one-dimensional entity, the price, instead of n-dimensional different caps. And that somehow seems to me to have more promise. But it ain't easy. 35:41 Russ: I want to read a somewhat lengthy excerpt from the book that I thought really captured the nature of the problem. And it captures this issue, the one we are talking about now, which is the salience issue--what's at the front of people's minds and the political challenges of dramatic action if it's not at the front of people's minds. And I think that is part of what drives climate scientists crazy, that the rest of us are just kind of like thinking, 'Not much going on here. Why are you yelling at me?' And just as an aside, I think the biggest--of course, this failure to get people excited about it is despite the steady drumbeat by the media which in general are more concerned about it than the average person; movies that suggest it's going to be catastrophic. And I think that one of the reasons it's failed is, Al Gore being a spokesperson for a movement--he's a politician, he's seen as a partisan. And that immediately took about 35% of the population into hostility toward the idea. Whether that was wise or not is a different question. But I think, just an interesting question of why so many smart people are worried about this and so many somewhat smart people are not. There are smart people who are not worried about it; we've had some of them on the program; we may hear from them again. But it's an interesting political question of how do you get people to worry about a problem that's in the future. And you have a nice metaphor that captures that. And it also captures the uncertainty. So let me read it: If a civilization-as-we-know-it altering asteroid hurtling toward Earth, scheduled to hit a decade hence, and it had say a 5 percent chance of striking the planet, we would surely pull out all the stops to try to deflect its path. If we knew that same asteroid were hurtling toward Earth a century hence, we may spend a few more years arguing about the precise course of action, but here's what we wouldn't do: We wouldn't say that we should be able to solve the problem in at most a decade, so we can just sit back and relax for another 90 years. Nor would we try to bank on the fact that technologies will be that much better in 90 years, so we can probably do nothing for 91 or 92 years and we'd still be fine. We'd act, and soon. Never mind that technologies will be getting better in the next 90 years, and never mind that we may find out more about the asteroid's precise path over the next 90 years that may be able to tell us that the chance of it hitting Earth is "only" 4 percent rather than the 5 percent we'd assumed all along. So, I don't know about that, actually. When I read that--you gave that analogy to make a point. I guess the question would be: I'd want to know what pulling out all the stops would do to life here on earth. It's true that if there's a 5% chance that life on earth is going to be altered by the impact of this asteroid 100 years from now, I'd be worried about it. I'd think, 'Yeah, we should do something now.' But would I pull out all the stops? Would I devote 50% of world GDP, 30% of world GDP, to create the technology that's going to allow us to destroy it or deflect it? I might want to wait a little bit. I might want to invest in those technologies now but not to solve the problem in 10 years. And I'd want to think about what the scope of it would be. But if it meant impoverishing people, say, terribly, I'd be loathe to attack the problem now. I would be tempted to wait. Or do you think I'm wrong? Guest: Well, the way that example was set up, it was as if this is really a catastrophic asteroid and something is going to have to be done, and it would make people nervous--it would make me nervous--to just stall for 10 years, even, because we really want to dig into the science of this and run some experiments and get in place asteroid-deflecting technology and so forth. And the fact that that would alter or destroy civilization or much of life on earth makes it, would dominate our image or it would dominate mine. And I think that climate change has this probabilistic uncertain aspect to it. The probability of really bad outcomes is nerve-rackingly high. And there is a lot of inertia in this. And people don't--that's another thing that makes this so hard to contemplate--there's very wide misconception on flows versus stocks. It's as simple as that. To get the stable--the goal is to stabilize the stock of carbon dioxide in the atmosphere. It's not to stabilize the flow. So if we cap the flow at this year's level, that would not stabilize carbon dioxide stocks, which would continue to rise. Russ: The total amount that's already in the atmosphere. Guest: Yeah. Russ: Use your bathtub analogy, because I like that. Guest: Yeah. Well, it's like a bathtub, where, there was water going in, let's say, and there was water coming out of the drain, and the bathtub height of water was something like a foot--12 inches. And so the incoming water was just matched by the outgoing water, and it remained at this 12-inch level. That's sort of what the planet was like before, with respect to carbon dioxide. Now, we've pushed up the spigot so that what's happening now, that 12 inches is going up. The stock of it is going up. And it's going up as we're turning up the spigot on carbon dioxide. But suppose you said, now, wait a minute, we've been turning up this spigot for 30, 40 years now. Let's stop turning up the spigot. Let's just leave it at where it is now. Then that would continue to accumulate, the height of water in the bathtub. So, let's say it was 12 inches; we turned up the spigot incrementally with time, and now the water is at 24 inches. And we say, 'Let's leave the spigot now at where it is now,' we've already brought the water from 12 inches to 24 inches. If you held it at where the spigot, at 24 inches is pouring water in, it would cause the height of the water to continue to go up, maybe to 36 inches and overflow the tub. So, it's not nearly enough to stabilize the flows of emissions. To stabilize emissions, you've got to lower the spigot. You've got to lower the emissions. Russ: To stabilize the stock. To stabilize the water level, or the stock of CO2 in the atmosphere. Guest: Yes. And that's the part--that's another part that's just so worrisome, that people are thinking in terms of 'Well, let's limit emissions.' Sometimes they are lowered, but let's limit emissions--so the Chinese have pledged that as of 2030 they will, at least as of 2030, they will start lowering their emissions. Well, they'll stabilize or lower their emissions. Well, if they stabilize the emissions levels in 2030, that's still going to cause a massive rise in the stock of CO2, and eventually result in the perception of a catastrophe. Russ: So, that's alarming. And I just want to mention that--I happened to see today on Twitter, Nassim Taleb put up a letter he had co-authored that argues that the increasing amount of uncertainty about the uncertainty just makes the case even stronger that we ought to do something. I'll try to find a link to that if we can. 44:14 On the positive side--I want to turn now to geo-engineering, which is a last third of the book or so. But before I do, I just want to say on the positive side, we have seen some technology improvement--quite dramatic, actually--in, say, the amount of energy that's used per dollar of GDP; as technology has gotten more efficient, energy use has gotten more efficient. We have turned increasingly to natural gas because of recent discoveries, that is lower carbon content than, say, oil, crude oil. So, there is some--it's true the rate is still increasing of the stock in the atmosphere. But it is increasing at perhaps a slightly decreasing rate, even as the people in the world get richer and use more energy. Which is something I certainly hope for. So these kind of technology improvements would have to be large enough to offset those increases in material well-being on those people's parts, correct? Guest: Yes. If you look at carbon dioxide emissions per unit of GDP, they decrease somewhat. Something less than or about 1% a year. But if the world is growing at 2% a year, or China is growing at 7% a year, that overwhelms the lower carbon dioxide emissions per growth of GDP because some of these countries are projected to grow so fast. And yes, the costs have been lowered significantly on solar technology and on wind technology. The total energy coming from them, worldwide, is still pretty minuscule. Russ: Trivial. Guest: Yeah. Absolutely. And no one is sure what would happen if you had a massive ramp-up, if you scaled this up. If you try to think about a world where wind and solar are each contributing 25% or something like that, that is a very different world, with windmills all over the place and deserts covered with solar panels. And neither of those two yet--neither the solar nor the wind--has conquered this devil's problem of, how do you store the stuff? Because they are intermittent sources. They can't be base loaded. You can't depend upon them. The only technology out there that is carbon free that is tested would be base-loaded nuclear. Russ: Oooh, oooh, don't say that word. Guest: That's right. Russ: No, that's the only really attractive, viable solution, at least right now. But it's got a lot of bad pub. And perhaps deservedly so. I don't despair, but-- Guest: I think it's undeserved. People just have a fear button on that side. The French have significantly lower emissions of carbon dioxide per French citizen than the Germans have emitted carbon dioxide per German citizen, and Germany has really pulled out a lot of the stops. There's a lot of wind power there. There's a lot of solar. But they still are nowhere near the French level, which is based primarily on nuclear power. Yeah, it's gotten very bad press, I think. There are problems with it, but everything has to be viewed in the light of what the alternatives are. Russ: Everything has problems. Camels in Canada, which is an image that you evoke, if we approach some of the prehistorical levels of carbon dioxide in the atmosphere, camels in Canada, that's a horrifying thought. Yes, a nuclear meltdown that gives people a higher chance of cancer at a younger age is a terrible tragedy. But it probably beats not being able to grow food in most of the world, or many other things we could imagine. It's an interesting challenge that the activists who are most worried about climate change are often most hostile to nuclear. For whatever reason. It would be interesting to collect all of the politically viable, imaginable things we could think of, short of cap and trade, short of a $40 carbon tax: if we let nuclear be easier to get to, if we increased urbanization, if we made it easier to get to natural gas, if we gave a prize for solar and wind. Those are all politically viable. Maybe not the nuclear right now. But the other ones, we could imagine. It would be interesting--and I don't know if anyone has tried to calculate how much we could dent the problem with those kind of, with a cumulative bunch of solutions like that. Policies like that. Guest: Yeah. Calculations have been made. Nuclear would come out a major player if you had a high enough price on carbon. The typical environmentalist views climate change problem as urgent, as a big problem. They also are opposed, typically, to nuclear power and to genetically modified organisms (GMOs), and I think they've got one of those three right--that's that climate change really is dangerous and scary. But I don't agree with the positions on the other two. Mark Lynas, who is a famous environmentalist and has written on climate change and lots of other environmental issues, agrees on this that nuclear power has a real place and it's important. And genetically modified food looks like it could be a real boon. So, most of the scientists that work with climate change think it's worrisome. Scientists that work directly with nuclear power think that's manageable; and the scientists who work with genetically modified organisms think there's a tremendous amount of promise for alleviating hunger and doing other good things around the world. So this environmental movement has slid[?] from the scientific consensus, as it were, on these two--nuclear and genetically modified organisms. Russ: Well, I do worry about their objectivity. You would expect engineers in the nuclear field to be optimistic about its safety, perhaps. Maybe you'd expect scientists working on GMOs to be less worried about it than others. But there is evidence that those things are relatively safer, at least not as likely to be catastrophically destructive as 6-plus degrees Celsius increase. 51:31 Russ: Let's move to geo-engineering. I found that quite interesting. We've talked about it very briefly in the past on the program: we've touched on it. And you go into some detail. Why don't you start with talking about Mount Pinatubo and what that did as a way to open people up to the idea that there could be some improvements of geoengineering; in particular, the leveraging effect that you talk about is very dramatic and provocative. Guest: Yes, well, Mount Pinatubo was an explosive volcanic eruption that threw lots of stuff into the sky, and lots of it high up into the stratosphere. And it sent out a massive amount--not a massive amount, but a large amount of sulfur dioxide into the stratosphere. That acted, that combined with other molecules there, acted as a reflector of the sun, and it cut sunlight by 1 or 2%, which was enough to send temperatures down by a half a degree centigrade for the next year or two. We've known about this effect of calderas, of explosive volcanoes, for a long time, and their effects have been observed over centuries--that after, in their aftermath, temperatures go down significantly. And the idea is okay--this is done by nature, whether we like it or not. Why don't human beings imitate nature? Would that be a good policy to actually seed the stratosphere with sulfur dioxide? One of the things that is amazing about this is how incredibly cheap it is to lower temperatures by geoengineering--solar radiation management forms of geoengineering. To lower earth's average surface temperature by 1 or 2 degrees centigrade would cost less than $10 billion a year. You need a fleet of planes or rockets or something like that to keep pushing this stuff into the stratosphere, but there's not that much that's needed. And it's incredibly cheap. So, you compare what it costs to lower temperatures by a degree from geoengineering, with how much it would cost to lower temperatures by a degree via new technologies or via solar and wind--it's overwhelmingly cheaper to fool with the sulfur dioxide. And that's something we didn't need, we don't need--the economics of climate change is already the economic problem from hell because of all these complexities, because it's an international public good, because of timing, because of lots of things-- Russ: It's a wicked problem. Guest: And now you've suddenly made it more wicket. Because you've really got two externalities of public goods out there. The one, the traditional one, is that people free ride because it's so expensive to change from a carbon burning technology and everyone wants to free ride. Here you've the opposite kind of public goods or international problem, where many, many nations, and even individuals could afford this $10 billion a year; and somehow you need governance of both of these things. So, in a sense, it's twice as difficult an international public goods problem as we thought it was before geoengineering emerged as a kind of a conceptional at least alternative. Russ: It seems like a very attractive insurance policy. On the surface. I guess the issue, which you touched on in the book is, well, a lot of people would say, 'That's playing God.' We're already playing God; we're putting the carbon into the atmosphere, so that part's not so alarming. It's really the unintended consequences. So, what do we know, if anything--well, you just sort of said, 'Well, you put a bunch of planes up there; you put up the sulfur into the atmosphere.' What are the worries? Guest: Oh. There are many worries. I think this has a place as a kind of Plan B, in case--we need to do research to know what this is about just in case some catastrophic outcomes emerge. You've got a series of issues where it would affect the weather patterns. It would affect the weather patterns; it's probably going to make the ozone hole more of a problem. Ocean acidification would proceed apace because you are not changing the carbon dioxide in the atmosphere. You are changing the amount of sunlight that's hitting the earth, basically. There's an argument that you might become dependent upon this. Suppose that you are thinking of temporary particles like sulfur dioxide which will come out of the stratosphere within a year or so--supposed you got hooked on that, and then you discovered that it's got some very bad side effects, maybe some Black Swan side effects that are really bad, terrible. Russ: Feedback loops that you weren't aware of. Guest: Right, right, right. Now if you go off of that solar radiation management geoengineering, there is an abrupt increase in temperatures. So, this thing is a blessing and a curse. It will immediately cause the temperatures to go down, but if you want to get away from it, it will immediately cause the temperatures to go up throughout the planet, in too rapid a way. If this hubris argument, that carries a lot of weight, that 'Look, we geoengineer the planet already--that's what's causing the problem of climate change and the problems of future climate change. Now we're going to geoengineer it the opposite way,' there's too much human tampering with the system. There's a moral hazard type of an argument that's out there that's--I don't myself much subscribe to this--but if people knew that this cheap method was available for cutting down carbon dioxide, they would go towards that as a solution rather than cutting carbon dioxide emissions. Russ: All right, so we can't talk about it. It's too dangerous. Guest: Yeah, there's a bunch of possibly bad issues. It's a gamble. What I think is, we need more research in this area; that truly can be said. So we shouldn't be--it's probably politically correct not to do more research in this area, but we need more research even if we're not using this thing. Even if we come down deciding it should not be used, we need research on how this is going to be done, what the effects would be. And so forth. And I think it needs to be out there as a Plan B, just in case. Russ: Your remark about hubris, that this is how we got in the problem--our over-confidence in our ability to manage the planet, this is how we got into the problem to start with; we could fix it by doing the same thing: I just have to say, having seen Avengers: Age of Ultron this week, that it's the Tony Stark effect. Which--it's kind of a spoiler, perhaps. I don't want to say it, how it turns out in the movie. But there is this--I've kind of got my tongue in cheek there because it's hard to imagine that I could spoil the ending for anybody, whether it's a happy or unhappy one. 1:00:14 Russ: I want to close with a sociological observation and let you respond to it. I found your book pushed me somewhat toward being somewhat more concerned about climate change than I was before. I'm generally in the agnostic/skeptic camp. Mainly because I do see these parallels with macroeconomics; I'm not really convinced the macro is much of a science, and I see a similar complexity problem unfurling in climate change. And a similar problem with the advocates being way too confident, given what I see as the uncertainty about their estimation techniques and science. Your book is a breath of fresh air in that sense, in that you don't overclaim. You are extremely modest; and yet despite that modesty you still want some dramatic solutions. Which I'm slightly more interested in being in favor of after reading your book. Do you think this clamor on the part of scientists and activists, the overconfidence that they project relative to the imprecision of their numbers, is part of the problem? Do you think that the problem has been marketed badly, to put it in bald language? Because I do. I referred earlier to Al Gore being a spokesperson; I think that was a terrible marketing blunder. I mean, no one chose it; it just happened because of his prominence and Nobel Prize and all that--and his movie. But do you think that, in terms of speaking to your fellow warriors--and I put you in the worrying camp--do you think tone and style are important in getting people to change their minds or important in getting people to change their minds or to be alarmed about something that might be 100 years away? Guest: I think it probably does play a role. And I've thought about what is the best way to present this. I don't know any other way except that it's got to emphasize that we'll probably be all right if we can keep levels moderate. But it does have this disaster side to it that really should make people nervous. If some climate scientists or the majority come across as overly confident, I know they can't be confident--they can be confident about the big picture but they can't be confident about very many specifics at all. And it's [?] this asymmetric distribution where, okay, by their talking maybe they're conveying that they are more sure than they actually are. But if they are wrong in one direction, the consequences are much greater than if they are wrong in the other direction. And that's still a huge part of the problem. It's a wicked problem, because of this timing. You've got something occurring that's very long by the measures of the political cycles or people's lifetimes, even. But it's a remarkably short experiment by geophysical. And that's what causes a lot of the uncertainty. We haven't seen this in millions of years. So, it's right there in between. It's geologically instantaneous, which makes us very unsure about the probabilities and everything else about it; and it's much longer than even a human lifetime, which makes people want to put it away and say, 'Let's worry about this when it starts occurring.' Russ: Well, you and I will probably not be alive in 2100. I don't expect to be. But there's a pretty good chance that my children, who were born in the 1990s, they'll be alive in 2100. They may not make it, for a bunch of reasons, obviously, but there's a chance that they will. If they have children, they will, those children are very likely to be alive in 2100. So, my grandchildren, it's their lives that are at risk. So it's not that long a span. I guess it's hard to think about your unborn grandchildren and worrying about them, but certainly the next generation, either my children or their children's children, will have a worry about this, if it is indeed worrisome, that will be very different from ours. Because they will live longer; it will fall much more--it's more likely to fall in their lifespan. Guest: I agree with you. Look, 2100 is very hard to think of, it's so far away. But what makes the part of, again making this problem so devilish, is that a lot--there's going to be bad consequences. Really bad consequences. They are going to come in after 2100. Actions now and in the near or middle future are going to impact the planet not just in 2100: certain things will be showing up by then, I believe. But beyond that, you are condemning, sort of future centuries to some very bad things. That's how--people can't even think in terms of 2100. How are they supposed to think in terms of 2200? Which is when a lot of disastrous things really would start to materialize. Russ: A couple of weeks ago we had Eric Topol on talking about technological change in medicine. So, we'll be living to 150, 200 years, no doubt. Although he did not predict that. I don't want to put words in his mouth. But there are some interesting things coming in medicine that may extend lifespans. We'll see. Do you want to close with something optimistic? That was a pretty cheerless close. Do you have anything optimistic to say? Guest: Uh, well. Anything optimistic--I keep chipping along, hoping for the realization that we need to put a price on carbon dioxide and greenhouse gases. And maybe we can push that argument forward to where people find it acceptable. There was an interesting, very interesting experiment in British Columbia where they put a tax on carbon. But they rebated it by having a per capita check to everyone go out, and they very wisely first had the check go out and then put in the tax on carbon. And that worked. It worked--at first it was very controversial. Business didn't like it. But they got it through. And now, it's so ingrained that if you are going to take off that tax, it's politically difficult because then you've got to name where you are going to get the taxes from. So, my hope--the optimistic thing--is that more and more of the world sees this British Columbia style system and is enticed to adapt it. Comments and Sharing CATEGORIES: Data and Evidence (24) , Environment (27) , Martin Weitzman (1) , Regulation (64) TWITTER: Follow Russ Roberts @EconTalker 6 Email this COMMENTS (7 to date)Latest Comment Scott Packard writes: In the Lundberg survery: https://docs.google.com/file/d/0B10tltNyRvx6ZkhQWGxURWhNd1k/view (This is a Calif. cap-and-trade implementation for fuels/CO2/Global Warming, and an observation of where monies are being redirected) The collection of funds from AB32 is already huge. So huge that new avenues for assignment of the funds are cropping up like weeds. Last year’s state budget earmarked 35% or $130-million of “global warming” funds for affordable housing. Governor Brown’s budget proposal would add $400-million for housing projects. Nearly all of the nearly $200-million spent on the state’s “bullet train” project has come from the cap-&-trade and FUC fees. Posted June 1, 2015 9:48 AM Dan writes: The climate has and always will change. This has been going on for thousands of years without man' involvement. Jefferson and Noah Webster warned of increasing temperatures in the late 1700's. How'd that turn out? Fact:The temperature stopped increasing 18 years ago despite the increase in green house gas. As the previous post implies- follow the money trail. A whole industry has started due to the illusion of climate change, mostly funded with taxpayer dollars. The University of Minnesota recently received a $4 million grant to study the effects of climate change on the prairie. How objective will they be?? Posted June 1, 2015 12:37 PM Floccina writes: 1. It might be cheaper to remove co2 from the atmosphere. (Deep ocean iron fertilization/biochar are 2 methods.) 2. He ignores the possibility that global warming could be saving us from an ice age. 3. 2 million people live in Manaus Brazil, 146 live on Ellesmere Island? Warmer appears to better for humans especially since the invention of air conditioners. Never the less I would support a co2 tax (I would like to see it paired with a payout for removing co2 from the air) but I do not support cap and trade which seems like it would be easier for politicians to use to scam the voters and taxpayers. I also think that it quite safe to wait. Posted June 1, 2015 1:16 PM Speed writes: Weitzman said, " ... what we estimated is that if the greenhouse gas concentrations double, the chance of being greater than 4.5 degrees centigrade is around 10%. If greenhouse gas concentrations double, the probability of being greater than 6 degrees centigrade response is around 3%. So this is the bad tail of climate sensitivity, which is symbolic of the bad tail of what the damages could be. And these numbers just seem alarming, with the doubling of CO2, which is almost inevitable, there is a 3% chance of having temperatures greater than, a temperature response greater than 6 degrees." Catastrophic Global Warming alarmists postulate that temperature rise will reach the “potentially horrendous” level of +6°C by from the inclusion of major positive feedbacks from additional water vapor in the atmosphere. The +6°C temperature level would still only bring global temperatures only to about the level of the previous Eemian maximum. The Eemian interglacial ~120,000 years ago, was a warm and more plentiful period in the worlds recent history: hippopotami thrived in the Rhine delta. As ice sheets substantially receded in the Eemian, resulting sea levels were about 3 meters higher than found at present. But that ice sheet disintegration process would have taken millennia to be fulfilled. http://wattsupwiththat.com/2015/06/01/ice-core-data-shows-the-much-feared-2c-climate-tipping-point-has-already-occurred/ The tail may be fat but there is no reason to believe that it will be all bad. Or even mostly bad. Posted June 1, 2015 1:32 PM Joe writes: It strikes me that the concerns/arguments of the proponents that are suggesting for societies to take climate science serious (and be progressive on action) are analogous to concerns/arguments for proponents of too much national debt. Both argue that there is this possible, although small, catastrophic risk if we do nothing. The cynic in me wonders (in a two party system) why I can't vote for both issues to be proactive or both issues to be of little concern. Once again it appears that the political parties have 'divided the spoils' and I can't be consistent when I go to the poles. (other examples are I can't vote pro-life and against the death penalty; I can't vote pro social welfare and against government waste etc. - there are many if you think it through.) Posted June 1, 2015 1:59 PM S M V writes: I disagree with Mr. Weitzman on many things, but I think he is correct when he states that some level of insurance would be prudent, given how easy and low cost it could be to implement. Simply impose a $50/ton carbon tax while reducing FICA by 10-12%. The two would offset each other at about $100 billion. As carbon usage in the US dropped taxes flowing to Washington would drop. Once the debate is firmly about what other taxes would be reduced to offset the new carbon tax then the two parties can compete to give the tax reductions to their special interests and to increase the size of the reduction. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/geoengineering. 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