Can a study of the economics of climate change that was only released in October already be evaluated for its "legacy"? Apparently so, according to three economists who just published "On Setting Near-term Climate Policy While the Dust Begins to Settle: The Legacy of the Stern Review." (Thanks to Globalization and the Environment for the link.)
Granted, the Stern Review on the economics of climate change did made a big splash on arrival, marking what in retrospect appears to be a clear turning point in political attitudes toward global warming. As dense 600-page economic treatises go, former World Bank chief economist Nicholas Stern's investigation of what the costs of doing nothing about climate change would be compared to the costs of doing something received an unprecedented amount of media attention. The authors of "The Legacy of the Stern Review," Gary Yohe, Richard S.J. Tol and Dean Murphy, make some droll observations on this unusual development.
Indeed, its release in October of 2006 amounted to a full employment act for economists who know something about climate and some who do not. Its release also inspired some scientists and others who don't know much economics to enter the fray, but that is fine, too. Blogs have been filled with discussions of discounting schemes, damage estimates and the like. The popular press has been littered with coverage and commentary, and the academy has broken all records in moving "reviews of the Review" through the peer review process and into print.
"The Legacy of the Stern Review" makes for a useful read. If you're looking for a concise summary of the various critiques economists have leveled against Stern's calculations, along with a good explanation of why a carbon tax, instituted now, is the obvious smart way to start tackling climate change, the "Legacy" is an appropriate place to begin. Sure, the second section, in which the authors discuss the key points of disagreement that economists have vis-à-vis Stern's calculations, gets a bit technical, but that's OK -- you can skip that part. The authors themselves warn that it would be a mistake to dwell too long on Stern's errors, because his basic message is correct, and demands immediate action. Climate change is happening, humans are causing it, and the sooner we act to mitigate the problem, the cheaper the overall cost will be.
The economics of climate policy do support the conclusion that it is time to act -- not because the underlying science of impacts born of anthropogenic sources is not fraught with uncertainty, but because claims that the climate is not changing are now indefensible. Greenhouse gas emissions should be reduced as a hedge against the possibility of significant climate impacts and against the risk of expensive policy adjustments if nothing is done immediately.
But there's also a little bit of a back story here.
The authors write:
The numerical results reported in the Review are controversial and value-laden, but that is the nature of the economic science. In some instances, the controversy has been created by people who want to undermine confidence in the Review's fundamental conclusion -- the economics of climate policy tells us unambiguously that it is time to act. In other instances, the controversy can be attributed to economists being economists -- arguing over every point to make sure that this fundamental conclusion is built on solid analytical and empirical ground. In both cases, unusually harsh words have been said about the Stern Review.
The italics are mine. I found this sentence striking because I recalled what one of the paper's co-authors, environmental economist Richard Tol, said to the BBC regarding the Stern Review in January.
If a student of mine were to hand in this report as a Masters thesis, perhaps if I were in a good mood I would give him a "D" for diligence; but more likely I would give him an "F" for fail.
"There is a whole range of very basic economics mistakes that somebody who claims to be a Professor of Economics simply should not make," he told The Investigation on BBC Radio 4.
Not unsurprisingly, the Neanderthal wing of the conservative blogosphere -- those soon-to-be-extinct primates who are convinced that "environmentalist" is just a code-word for "Stalinist revolutionary" and that "global warming" is a diabolical communist plot -- seized upon those quotes with paroxysms of glee.
That's not entirely Tol's fault, though perhaps he expressed himself a little more cavalierly than your typical economist is wont to do. Tol and his co-authors pin the bulk of the blame for the conservative co-optation of their critique on Stern. If he had done his homework a little better, he could have avoided handing his enemies a club to bludgeon himself with.
The Review can even be used as a weapon by those who want to claim that the climate is not changing (or at least that humans are not to blame). Moreover, its shortcomings have forced Stern's colleagues to publicly defend the integrity and competence of the economics profession and the application of economic analysis to the climate problem.
My. That still seems a little harsh. But know this: The next time you hear or read someone saying that Stern's bungling of the "discount rate" in the Stern Review is proof that we don't need to get our asses in gear on the climate change mitigation front, feel free to chuckle dismissively. His toughest critics agree: Even when he's wrong, he's right.