Environmental Valuation & Cost-Benefit News

Link: http://policyintegrity.org/publications/documents/EconomistsandClimateChange.pdf

Executive Summary:
The Institute for Policy Integrity surveyed a group of the top economic experts on climate change to solicit their views on several key questions that affect climate change policy. The pool of economists was selected by searching the top twenty‐five economics journals over the past fifteen years and identifying all articles related to climate change. The roughly 300 authors of those articles were contacted and sent a survey, and more than half replied. The results showed surprising consensus on some questions, but continued debate on others.
The results were:
* 84% of respondents agreed or strongly agreed that “the environmental effects of greenhouse gas emissions, as described by leading scientific experts, create significant risks to important sectors of the United States and global economies.”
* 75% agreed or strongly agreed that “uncertainty associated with the environmental and economic effects of greenhouse gas emissions increases the value of emission controls, assuming some level of risk aversion.”
* Agriculture was the domestic economic sector most identified as “likely to be negatively affected by climate change,” with 86% of respondents selecting this sector.
* 91.6% preferred or strongly preferred “market mechanisms, such as a carbon tax or cap and trade system” over command and control regulation to reduce greenhouse
gas emissions.
* 80.6% preferred auctioning carbon allowances rather than freely distributing allowances.
* 97.9% agreed or strongly agreed that “placing a ‘price on carbon’ through a tax or cap and trade system will increase incentives for energy efficiency and the development of lower carbon energy production.”
* 57% agreed that the U.S. government should commit to greenhouse gas reductions “regardless of the actions of other countries,” while an additional 15.5% agreed that it should do so “if it can enter a multilateral emissions reduction treaty with some countries,” and 21.8% agreed the U.S. should move forward “if other major emitters commit to reducing emissions through a global.” Only 0.7% would wait until all countries commit to action, and 2.1% thought the U.S. should not act regardless of the actions of other countries.
* 92.3% agreed or strongly agreed that “most of the environmental and economic effects of greenhouse gas emissions will be felt by future generations.”
* 37.5% responded that “benefits to future generations” should be evaluated “by discounting them at a constant discount rate,” while 36.8% stated that they should be evaluated “by using alternative discounting methodologies (such as hyperbolic discounting),” and 16.7% stated that they should be evaluated “by reference to moral inquiries unrelated to discounting.”
* The median value for a discount rate used to evaluate impacts on future generations, if discounting was to be used, was 2.4%, but there was wide variation, suggesting that there is no clear consensus.
* The median social cost of carbon estimate was $50, but there was very wide variation, suggesting that there is no clear consensus on the exact extent of the harm created by each unit of greenhouse gas emissions.

by J. Scott Holladay, Jonathan Horne and Jason A Schwartz
The New York University School of Law Institute for Policy Integrity http://policyintegrity.org
Policy Brief No. 5; November, 2009