Welcome to the age of diminishing returns

Monday, March 5, 2012

William Nordhaus on climate change: the wisdom of economics

The Stern Review (2006) is a good example of the attitude of economists towards climate change. Economists may not be familiar with climate modeling, but they can notice a trend when they see one and they didn't miss that the ongoing rapid rise in the world's temperature is leading us to no good.

"Economist bashing" is rather fashionable nowadays (for a particularly scathing example, see here). I must confess that, occasionally, I have indulged in this habit, too. However, on the whole I agree with Lou that it is not a good idea.

True, economics as a science has a lot of problems and it is rarely able to come up with good models that take into account resource depletion. But there is a redeeming grace in the approach of economists to science: it is their nearly religious respect for the data.  Economists may not be familiar with climate models, but their respect for data makes them able to understand that the temperature record shows a robust warming trend. They also understand that global warming is leading us to no good. The consequence is that several economists are actively supporting real science in the debate on climate change. One needs only to mention the role of Nicholas Stern, with his "Stern Report."

Now, William Nordhaus, professor of economics at Yale University, comes up strongly in defense of science after having been misquoted in an article published on the Wall Street journal. Nordhaus does very well in highlighting the contradictions and the falsities of the global warming "skeptics" in this article. There is wisdom in economic sciences!


Why the Global Warming Skeptics Are Wrong

March 22, 2012

William D. Nordhaus

The threat of climate change is an increasingly important environmental issue for the globe. Because the economic questions involved have received relatively little attention, I have been writing a nontechnical book for people who would like to see how market-based approaches could be used to formulate policy on climate change. When I showed an early draft to colleagues, their response was that I had left out the arguments of skeptics about climate change, and I accordingly addressed this at length.

But one of the difficulties I found in examining the views of climate skeptics is that they are scattered widely in blogs, talks, and pamphlets. Then, I saw an opinion piece in The Wall Street Journal of January 27, 2012, by a group of sixteen scientists, entitled “No Need to Panic About Global Warming.” This is useful because it contains many of the standard criticisms in a succinct statement. The basic message of the article is that the globe is not warming, that dissident voices are being suppressed, and that delaying policies to slow climate change for fifty years will have no serious economic or environment consequences.

My response is primarily designed to correct their misleading description of my own research; but it also is directed more broadly at their attempt to discredit scientists and scientific research on climate change.1 I have identified six key issues that are raised in the article, and I provide commentary about their substance and accuracy. They are:

    • Is the planet in fact warming?

    • Are human influences an important contributor to warming?

    • Is carbon dioxide a pollutant?

    • Are we seeing a regime of fear for skeptical climate scientists?

    • Are the views of mainstream climate scientists driven primarily by the desire for financial gain?

    • Is it true that more carbon dioxide and additional warming will be beneficial?

As I will indicate below, on each of these questions, the sixteen scientists provide incorrect or misleading answers. At a time when we need to clarify public confusions about the science and economics of climate change, they have muddied the waters. I will describe their mistakes and explain the findings of current climate science and economics.

Read the rest of this article on "The New York Times"


  1. I think there's little doubt of the ability of economists to face facts, and use science, in the service of "stabilizing" ever more rapid expansion of the economies and their endless reorganization and depletion of the earth.

    That customary definition of economic "stability" has long stood the natural meaning of the term on it's head, though. Instead of using data directly they use "floating units", called "percent's" in a way that has indeed been very profitably for them, and for the scientific, business, government, labor, education and financial communities too, since the beginning of time, for mathematical economics. You can trace that error back to the dawn of history in fact.

    So, economists do respect data, yes, but they just switch to elastic units, defined by resetting the base of measure to 1 every single time you take a measurement. It lets you define stability as ever more rapid multiplication, without having to saying so.

    Stability for economics is not stability for the earth.

    It will clearly not be possible to stop accelerating climate change without correcting that particular long standing disrespect for quantitative data.

  2. Many economists don't always appear as scientists to me.
    However there are many economists that I respect.

    Considering the degree to which economics permeates our existence, it is affected far too greatly by ideology.

    Too many economists seem to consider their "science" as seperate from the physical universe.

    It seems to me that any "scientist" that doesn't recognize the relationship between their "science" and the physical universe needs to be reminded to reevaluate their perspective.

  3. Ok, nothing against economist if they are wise.

    For me there is no sane person advocating for "endless growth". And most of the economist just do that. I think there are the roots of bashing.

    BTW, Steve Keen is one such sane economist...


  4. Ok, let's try to be a little optimistic here, how about this (about electric cars)?

    Peak oil crisis: A breakthrough?

    Is it possible?


    1. Electric cars: yes but the article is short on details of the battery technology. I did read somewhere that there is just enough Lithium for batteries for a billion cars.

      Cold fusion: This sounds like 'snake oil' to me.

      BTW, I haven't seen any signs of reaching peak 'snake oil' but I live in hope :-)


  5. Well, it seems that not a few of us have a sort of "economist bashing" reflex; myself included! Yet, in the present situation; with the forces of anti-science on the rise, I think we need to close ranks and accept that economists are, after all, people who have a basic scientific attitude, as I say in my post. There is this bad discrepancy: many economists can't seem to understand that growth is now a thing of the past. But, there is also this good point that they tend to accept scientific data. So, about climate change, right now I can't think of a well known, serious economist who is also a climate change denier. Can anyone bring an example?

    1. There is an excellent comment by John Mashey in that article citing also Ayres et al. 2005 ASPO paper.... Alex

    2. Basically, the problem is (most?) economist assume economic growth even *after* peak oil... Paul Krugman is certainly among them, since he explicitly wrote it...


    3. Ugo,
      Here in Canada our Prime Minister, Steven Harper, is an economist. He does not understand limits to growth. His government is very concerned about "economic recovery".

      In Canada, a large part of "economic recovery" comes from expansion of tar sands development and finding markets for the bitumen. As an economist, Stephen Harper understands very well how to create a friendly macro environment for foreign investment in tar sands projects.

      Mr. Harper's government has also been very effective in dismantling government funded science programs and at muzzling government scientists from speaking to the media on issues contrary to the government's interests.

      Anti-science is win-win for our economist Prime Minister - he saves money and reduces the probability that government scientists will want to publish "inconvenient truths" about climate change.

      It is a sad state of affairs.

    4. Oh, well, I know a little about the Canadian situation. In the country of the oil sands, of course there are people who can't understand how their source of revenues is destroying the world. (in the sense that you can't expect someone to understand something if his/her money depends on not understanding it). But, getting back to the subject of the post, I think mr. Harper is primarily a politician - his training is in economics, as it is the case for many politicians. But it is not what makes his mind tick.

    5. a well known, serious economist who is also a climate change denier

      They have one in the Netherlands called Hans Labohm, and Ross McKitrick, of course. But they are not well known, serious economists. Rather libertarian hacks.

      There is Richard Tol, of course. He's a serious economist, and not unknown either, but I wouldn't call him a real rabid climate change denier.

  6. About your link, Alex, I am sorry but Tom Whipple is completely confused about everything. I don't know what he does when he doesn't write this stuff. If his everyday life is at the same level of confusion, I can't see how he can manage to tie up his shoes in the morning, or even operate the door knob in the right direction.

    1. I was afraid about that... :-(

    2. I have to agree with you Ugo that Tom Whipple has been losing me with his continued reporting on the latest developments in the E-Cat "cold fusion saga":

      I wonder if he has accidentally swallowed some "hopium"?

    3. It is unbelievable how many people got hooked in the E-Cat scam; myself included. At the beginning, I had thought that there was something serious in it. I was misled by the report of the scientists from Uppsala who had swallowed Rossi's bait whole. What is even more unbelievable, though, is how difficult it is for people to admit that they made a mistake. So, the saga will unwind slowly - years....

  7. Well, in the case of "snake oil", least a poor snake sacrificed its life; in the case of the E-Cat, it is not even a question of snakes. It is all done with mirrors.....

  8. Ugo, in any case, NOW we are saved ;-)

    The LED produces 69 picowatts of light using 30 picowatts of power, giving it an efficiency of 230 percent. That means it operates above "unity efficiency" -- putting it into a category normally occupied by perpetual motion machines.

    However, while MIT's diode puts out more than twice as much energy in photons as it's fed in electrons, it doesn't violate the conservation of energy because it appears to draw in heat energy from its surroundings instead. When it gets more than 100 percent electrically-efficient, it begins to cool down, stealing energy from its environment to convert into more photons.



    1. Yes, Alex, it is true. It is a nice trick and it has excited some freeenergyists. But it is just the same as when a liquid evaporates. It cools down; but the laws of thermodynamics are still valid!

    2. Sure,

      people are happy to forget true termodynamics, if our own survival is at stake!