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Contact Jim: jdipeso@rep.org (253) 740-2066 / 2008 Archive / 2007 Archive / 2006 Archive / 2005 Archive
Do-It-Yourself Climate Modeling
March 10, 2008
How do economists know that reducing greenhouse gas emissions would result in this or that level of costs and benefits?
Since there is no experience to draw from, they do what climatologists do in projecting how the climate may react to rising greenhouse gas emissions. They build models.
Models are not magic. They have no more access to the future than we mere mortals do. They spit out conclusions based on the assumptions that the model builders feed into them.
Put in bad assumptions and you’ll get bad results, like the old "garbage in, garbage out" aphorism that was popular during the pioneering days of computer science. Good assumptions will yield useful results.
When one economist says that cutting emissions will wreck the economy, and another says it will be a boon, it all comes down to their assumptions.
Which do you believe? The Yale School of Forestry and Environmental Studies has put up a web site that puts you in the driver’s seat and lets you build your own projection. You don’t have to be a mathematician to use the tool. All you need to do is adjust a series of seven assumptions on a scale of 0, which means "no chance," to 1, which is a slam-dunk. The seven assumptions were derived from an analysis of 1,400 runs of the various models in circulation.
The tool lets you test the economic impacts on the U.S. of cutting emissions 20 percent or 40 percent by 2030. Channeling my inner James Inhofe, I tried the tool assuming the worst possible scenario. In this crabbed world, nothing goes right.
Would households and businesses adjust their energy use in response to higher prices? Not a chance. They’d go on guzzling merrily away.
Would the U.S. use international allowances trading to keep emissions reduction costs down? Nope.
How about renewables? Would they be competitive with fossil fuels at higher fuel prices? Pie in the sky.
How likely would climate change damage the U.S. economy if emissions were not reduced? Are you kidding? It would be good for us!
Well, how likely would cutting greenhouse gas emissions reduce emissions of other air pollutants? No way.
OK, how likely is it that climate policies would stimulate technological innovation that improves energy efficiency or reduces the cost of renewables? Not at all likely. Inventors would stop inventing, engineers would think of nothing new, and entrepreneurs would be like deer in the headlights.
Finally, how likely is it that policies to tax carbon or sell emissions allowances would yield revenues that the government could use to offset the economic impacts of reducing emissions? If you believe that would happen, Don Young has a bridge to nowhere he’d like to sell you.
The end result: In 2005 dollars, the projected size of the U.S. economy in 2010 will be $14.4 trillion. Without any effort to reduce greenhouse emissions, the economy would grow to $26 trillion in 2030, again using 2005 dollars.
How big would the 2030 economy be if greenhouse gas emissions were cut 40 percent, under the Inhofe assumptions of dearth and destitution? $23.2 trillion, a full 61 percent above the 2010 level.
How about reversing the assumptions and testing a sunshine and lollipops scenario? The 2030 economy totals $26.1 trillion, a bit above business as usual.
Split the difference, then. Plug in 0.5 for all the scenarios and the economy’s size grows to a middling $24.6 trillion.
No matter which scenario you try, the U.S. economy grows and Americans get richer. In reducing greenhouse gas emissions, we also get new industries, cleaner air, and a step off the oil dependence treadmill. All of the talk about climate policies wrecking the economy doesn't hold much water.
Try it yourself. On line at http://www.climate.yale.edu/seeforyourself/
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