Even if the physics of each of the smaller-scale processes were perfectly understood, the parameters would still be a patchwork with large inherent uncertainties. Even more fundamentally, the physics for some of the feedback effects believed to be most important is not well understood. These models are complicated as compared to simulation models used in some other fields, but they are extremely simplistic as compared to the actual global climate. When evaluating model reliability, the second test — can it predict accurately? We can debate all day about whether a model is complete enough, but if it has correctly predicted major climate changes over and over again, that is pretty good evidence that its predictions should be taken seriously.
Unfortunately, it is notoriously common for simulation models in many fields to fit such holdout samples in historical data well, but then fail to predict the future accurately. So the crucial test is actual prediction , in which a model is run today to forecast the climate for some future time-period, and then is subsequently validated or falsified.
No global climate model has ever demonstrated that it can reliably predict the climate over multiple years or decades — never.
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But in spite of all the table-pounding, the total impact of global temperatures over the next century could plausibly range from negligible to severe. Long-term climate prediction is in its infancy, and improved forecast reliability is crucial to enable useful guidance for policymakers.
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Better science could give us what is most needed in this debate: more light and less heat. I f you believe that human emissions of carbon dioxide create a significant risk of harmful climate change, the solution seems obvious: reduce emissions today to prevent potential problems tomorrow. The IPCC projects that, under fairly reasonable assumptions for world population and economic growth, global temperatures will rise by 2.
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So, it is argued, we should begin right now to reduce emissions of carbon dioxide in order to prevent some or all of these costs. The most frequently discussed methods for doing this are a straightforward tax on carbon and a cap-and-trade system like the Lieberman-Warner legislation — which is essentially just an inefficient, back-door tax on carbon. Now, 1 to 5 percent of global GDP is nothing to sneeze at; it is a huge amount of money, and an ounce of prevention can be worth a pound of cure.
But in the case of global warming, the values may be exactly reversed: Getting most of the carbon out of the energy cycle today would be a very expensive undertaking, and a century is a long time to wait for the payoff from this investment.
Think of it this way: In everyday life, normally I would rather have a dollar today than the promise of a dollar a year from now. The Stern Review — a major report on climate change produced by the British government in — is cited frequently as demonstrating that the world should begin immediate, aggressive abatement of greenhouse-gas emissions. Nordhaus offers a thought experiment to demonstrate just how unrealistic that assumption is: Imagine a scenario in which global warming would lead to zero costs between now and the year , at which point global economic growth would be permanently reduced by 0.
Under this scenario, how much should we be willing to pay today as a lump sum to avoid this cost? Thanks, but no thanks. Why would sophisticated advocates for rapid, aggressive emissions abatement make such an obviously unrealistic assumption?
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Given current global-warming-impact projections and normal economic assumptions, the costs of global warming justify only limited actions for the next several decades — but vocal and growing political constituencies demand action now. In other words, if we simply let global warming happen, the world would generate about 99 percent of the present value of wealth it would otherwise have generated had there been no such thing as global warming.
So, if the IPCC forecasts are correct, the global-warming hysteria is about the opportunity to create a net economic benefit of less than 0. T he carbon tax that Nordhaus endorses is modest relative to some of the others that have been proposed. But any carbon tax, or its equivalent in the form of a cap-and-trade system, would be so politically and administratively impractical as to be, at best, useless.
First, plainly put, a carbon tax would not be politically feasible.
With billions of dollars of assets and tens of thousands of jobs threatened, the political and economic interests that would be hardest hit by a carbon tax would fight it tooth and nail. Those interests would only allow a carbon tax to become law in exchange for huge, economy-distorting side-deals that would likely make the ethanol subsidy look like peanuts. A global, harmonized tax on all significant uses of carbon would require the agreement of — just to take a few examples — the French National Assembly, the Parliament of India, the Brazilian National Congress, the Chinese Politburo, Vladimir Putin, and John Dingell.
Again, imagine all the side deals that would be required to actually negotiate such a binding agreement: they could likely create enough economic drag to more than offset the benefit of that 0. Besides, our track record in closing and implementing such deals as the Kyoto Protocol, or even the current round of the General Agreement on Tariffs and Trade process — which, remember, is supposed to make the signatories richer — inspire no confidence that the theoretical net benefits will outweigh the costs created by the agreement.
Fourth, even if we got to an agreement de jure , we would then actually have to enforce a set of global laws for many decades that would run directly contrary to the narrow self-interest of most people currently alive on the planet. How likely do you think a rural Chinese official would be to enforce the rules on a local coal-fired power plant? These bottom-up pressures would likely render such an agreement a dead letter, or at least make it in effect a tax applicable only to the law-abiding developed countries that represent an ever-shrinking share of global carbon emissions. Therefore, keeping our options open has great value.
What if our economic and climate models are too aggressive, and there is no practical economic justification for emissions reductions for centuries — if ever? What if someone invents a non-point-source scrubber that can remove carbon dioxide from the atmosphere at low cost, so that there is really no reason not to emit carbon dioxide all day long? There are very large potential regrets to a carbon tax.
Suppose we agree to focus only on climate externalities in setting a carbon tax.
In everyday terms, the gasoline tax, for example, would be about 9 cents per gallon through , and would then ramp up to about 25 cents per gallon by To put this in perspective, the typical U. We are not going to transform our economy with such a tax; major changes would really start in the latter half of the upcoming century. The low incremental taxes for the next several decades put into even starker contrast the relative practical risks of implementing a new global tax regime in return for such small immediate changes in tax loadings.
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