[OPE-L] New Research on Climate Economics

From: glevy@PRATT.EDU
Date: Mon Sep 24 2007 - 21:08:43 EDT

>From: GDAE Announce <GDAEannounce@tufts.edu>
>Subject: New Research on Climate Economics
>Date: Mon, 24 Sep 2007 15:38:25 -0400
>It was a busy summer for climate economics research at GDAE, with several
>new publications released.
>Debating Climate Economics: The Stern Review vs. Its Critics
><http://www.ase.tufts.edu/gdae/Pubs/rp/SternDebateReport.pdf> /*a report to
>Friends of the Earth-UK, by Frank Ackerman.
>British economist Nicholas Stern, in a report to the UK government released
>in late 2006, found that the benefits of immediate, active climate
>mitigation measures would be several times as great as their costs. Other
>economists, many of whom have come to different conclusions, were quick to
>criticize Stern's conclusions. In this report, Frank Ackerman reviews the
>debate around the Stern Review, examining the range of economists' views of
>the appropriate discount rate, the treatment of uncertainty, and the
>calculations of costs and benefits. The Stern Review gets many things
>right, and reaches a more believable conclusion than many of its critics.
>It may understate the importance of uncertainty, and exaggerate the
>completeness and significance of cost-benefit analysis - but it pushes the
>world in the right direction.
>*Law and Economics for a Warming World*,
><http://www.ase.tufts.edu/gdae/policy_research/WarmingWorld.html> by Lisa
>Heinzerling and Frank Ackerman, /Harvard Law and Policy Review/ volume 1,
>no. 2, pp.331-362.
>Both law and economics offer frameworks for understanding public policy -
>and both require changes in order to respond effectively to the challenge
>of climate change. Contrary to implicit conservative assumptions,
>maintaining the status quo is not an option; "business as usual" will lead
>to rapidly worsening results as greenhouse gas emissions continue to rise.
>The causal links between actions and impacts extend across centuries; the
>most important effects of our actions occur long after our lifetimes. The
>consequences, and probabilities of damages, from climate change are
>incalculable in detail, although worsening in general. Each of these
>problems compels a rethinking of aspects of both law and economics, as Lisa
>Heinzerling and Frank Ackerman explain in this article.
>The Carbon Content of Japan-US Trade*,
><http://www.ase.tufts.edu/gdae/policy_research/CarbonContent.html> by Frank
>Ackerman, Masanobu Ishikawa, and Mikio Suga, /Energy Policy/, volume 35 no.
>9, September 2007, pp.4455-4462.
>How much carbon is "embodied" in world trade? If one country imports
>carbon-intensive products from another, should the production emissions be
>attributed to the consuming nation rather than the producer? A growing
>empirical research literature addresses these questions. In the first study
>to examine the carbon content of trade between the world's two largest
>industrial economies, Ackerman, Ishikawa, and Suga find that the US, on
>balance, is a small net importer of carbon from Japan - and that both
>countries are large net carbon importers from the rest of the world. In
>Japan-US trade, carbon-intensity of production has a weak but significantly
>positive correlation with comparative advantage. This article is the final
>product of a two-year research project, supported by the Japan
>Foundation/Center for Global Partnership, and co-directed by Professor
>Masanobu Ishikawa, of the economics department at Kobe University in Japan,
>and by Frank Ackerman.
>The Economics of Inaction on Climate Change: A Sensitivity Analysis*,
><http://www.ase.tufts.edu/gdae/policy_research/EconomicsofInaction.html> by
>Frank Ackerman and Ian Finlayson, /Climate Policy/, volume 6 no. 5 (2006),
>pp.509-526. (Despite the nominal publication date, this first appeared in
>print in mid-2007.)
>Why do economic models of climate change so often find that the "optimal"
>policy is to do very little about this serious global threat? Frank
>Ackerman and Ian Finlayson examine the widely used DICE model, focusing on
>its choice of a discount rate, its somewhat dated science [in the 1999
>version, the latest available when the article was written], and its
>curious assumption of global net benefits from moderate warming.
>Alternatives to these three assumptions cause significant changes in the
>model's optimal policy, resulting in a high and rising carbon tax which
>would stimulate immediate, large-scale mitigation. In view of the
>ambiguities of such cost-benefit calculations, it would be preferable to
>pursue a cost-effectiveness analysis of the least-cost strategies for
>achieving safe levels of atmospheric CO_2 . (Previously circulated as a
>working paper, this article finally survived the struggle into
>peer-reviewed publication!)
>/Read more about GDAE's work on the Economics of Climate Change /

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