The impacts of climate change are to be determined and the projects are very different between the scientific and economic communities. It is important to note that modern technology has allowed humans to live in virtually every climate, which was unheard of two centuries ago. The main theme of this section is to explain why the impact analyses done by non-economists are problematic and become a detrimental foundation to the environmental policies that follow. Many impact analyses has two common themes, no
t considering society’s ability to
mitigate the damage, and overestimating the losses and underestimating (more often ignoring) the gains. For example
Cline’s estimate of impact of global warming on the United States only
includes losses to skiing but ignores any gains from the much larger warm-weather industries such as camping, boating, and swimming (Nordhaus, 2005). When making an environmental
policy with the information presented in Cline’s impact analysis, you would have a false value
on the losses and overspend on reducing emissions. Put simply, a policy would arise that was not cost effective, firms would be polluting less than the socially optimal amount, which is marginal benefit (MB) of emissions = marginal cost (MC) of reduction of emissions. Marginal benefit being the net of the benefit gained from polluting and the present value of the future costs of the pollutant
The impacts of climate change are to be determined and the projects are very different between the scientific and economic communities. It is important to note that modern technology has allowed humans to live in virtually every climate, which was unheard of two centuries ago. The main theme of this section is to explain why the impact analyses done by non-economists are problematic and become a detrimental foundation to the environmental policies that follow. Many impact analyses has two common themes, not considering society’s ability tomitigate the damage, and overestimating the losses and underestimating (more often ignoring) the gains. For exampleCline’s estimate of impact of global warming on the United States onlyincludes losses to skiing but ignores any gains from the much larger warm-weather industries such as camping, boating, and swimming (Nordhaus, 2005). When making an environmental policy with the information presented in Cline’s impact analysis, you would have a false valueon the losses and overspend on reducing emissions. Put simply, a policy would arise that was not cost effective, firms would be polluting less than the socially optimal amount, which is marginal benefit (MB) of emissions = marginal cost (MC) of reduction of emissions. Marginal benefit being the net of the benefit gained from polluting and the present value of the future costs of the pollutant
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