by From Ken Zimmerman Bichler and Nitzan get into the details of how “capitalization” is used to deny climate change in their article, ”How to use capitalization to minimize the cost of climate change and win a Nobel for ‘sustainable growth.’” The title says it all. William D. Nordhaus won the Nobel prize in economics for a climate model that minimized the cost of rising global temperatures and undermined the need for urgent action. Nordhaus’ “racket” created low-ball estimates of the costs of future climate change and high-ball estimates of the costs of containing the threat contributed to a lost decade in the fight against climate change, lending intellectual legitimacy to denial and delay. At any time t, the present value (PVt) of future climate change — or, in plain words, the cost
Topics:
Editor considers the following as important: Uncategorized
This could be interesting, too:
John Quiggin writes The war to end war, still going on
Editor writes In search of radical alternatives
Stavros Mavroudeas writes «Οι καταστροφικές επιπτώσεις της ΕΕ στην Ελλάδα και τους εργαζόμενους» – Στ.Μαυρουδέας ΠΡΙΝ 20-21/4/2024
Stavros Mavroudeas writes «Κοινωνικές επιστήμες: είδος υπό εξαφάνιση;» – εκδήλωση Παντειέρα-Attac, 23/4/2024, 5.30μμ Πάντειο
from Ken Zimmerman
Bichler and Nitzan get into the details of how “capitalization” is used to deny climate change in their article, ”How to use capitalization to minimize the cost of climate change and win a Nobel for ‘sustainable growth.’” The title says it all. William D. Nordhaus won the Nobel prize in economics for a climate model that minimized the cost of rising global temperatures and undermined the need for urgent action. Nordhaus’ “racket” created low-ball estimates of the costs of future climate change and high-ball estimates of the costs of containing the threat contributed to a lost decade in the fight against climate change, lending intellectual legitimacy to denial and delay. At any time t, the present value (PVt) of future climate change — or, in plain words, the cost to society if it were to bear the brunt of climate change at time t rather than in the future — involves two separate considerations: (1) the estimated cost to be incurred n periods into the future (Ct+n), and (2) the discount rate at which these costs are to be brought back to present value (r). Nordhaus “monkeyed” with both. Vastly overestimating the costs to manage climate change today and underestimating the future cost of climate change effects with a phony-up discount rate. Nordhaus does not have the credentials to achieve the first and can achieve the second only indirectly through an absurd discount rate of 6%. At this rate the present value of $100 of climate change cost incurred 100 years from the present is less than $0.25. So, why act today? It cost us (the planet of us) little to nothing to wait another 20 or 30 years, or even longer. “The nice thing about these discount-rate ‘adjustments’ is that, unlike the commotion stirred by debates over the actual cost of climate change, here there are no messy quarrels with scientists, no raised eyebrows from journalists and no outcries from the cheated public. Only contented politicians and delighted capitalists. This was it seems Nordhaus’ plan all along. read more