Thu, Dec 05, 2013 - Page 11 News List

Book review: The Climate Casino: Risk, Uncertainty, and Economics for a Warming World

An economist explains that we still have time to walk out of the ‘climate casino’

By Fred AndrewS  /  NY Times News Service

The Climate Casino: Risk, Uncertainty, and Economics for a Warming World, by William Nordhaus.

I’ve long looked at global warming as a worthy topic that I should try to wrap my mind around. Although I knew I needed to dig deeper, I never truly understood why.

Until now. The Climate Casino, by William Nordhaus, provided compelling answers to my unanswered questions in a comprehensive and lucid way. It is a one-stop source on global warming, seen through the prism of a brilliant economist.

Nordhaus, Sterling Professor of Economics at Yale, picks through an impressive tool kit of the latest findings in climate study and economic theory. From these, he pieces together a nuanced argument with rare clarity, feeding the reader enough but not too much. His book, though scholarly and demanding, offers the pleasure of watching an extraordinary mind at work. Even his footnotes are a resource.

Like many other experts, he sees a drastic reduction in the burning of coal as the obvious step in reducing greenhouse gases. He urges that we accomplish that by enacting a tax on carbon dioxide emissions of, say, US$25 a ton for openers — or the equivalent in exchangeable pollution credits in the system known as cap and trade. And, he says, we need to do it right now.

At stage center in these pages is a character named DICE, a computer model devised by Nordhaus and his colleagues. DICE is an “integrated assessment” model, which means that it combines projections of pollution and climate change with projections of global economic growth, and then computes how they can be expected to affect each other. The model drives his findings the way a souped-up engine drives a NASCAR sprint car.

Nordhaus understands that major uncertainties remain about how nature works. Computer models help, but they can disagree. Nevertheless, he says, we have no choice but to make our best guesses and most prudent choices, relying on a “fuzzy telescope.”

The Climate Casino: Risk, Uncertainty, and Economics for a Warming World

By William Nordhaus

392 pages

Yale University Press

Hardback: US


Economic growth produces greenhouse gases, he points out, so if it is assumed that these gases will increase, then economic growth will continue as well. He has confidence in our grandchildren’s ability to adjust to climate change, mainly because they are likely to inhabit a much wealthier world, with better abatement technologies.

“The likelihood that people will be richer in the future is no excuse for ignoring climate change today,” he writes. “But it is also a reminder that we will be leaving our grandchildren a more productive economy alongside a degraded climate.”

DICE informs him that, with a possible increase in temperature of 2.5 degrees Celsius, global warming in 2070 can be expected to inflict economic losses and damage amounting to 1.5 percent of global output. That would not be trivial, but it wouldn’t be devastating either. He estimates that 90 percent of the US economy would be negligibly or only lightly harmed by greater warming. Only 1.2 percent, mainly farming, now a mere sliver, would be hit hard.

That dollar damage would include items like lower crop yields and flooded waterfront properties. But the estimate does not cover the possible destruction of natural wonders like the Upper Amazon or thousands of species. Their loss cannot be captured in dollars, yet we must insist on protecting them when figuring costs and benefits, he says.

He expects that economic damage from climate change will probably be quite small compared with economic growth over the next half-century to century. But he also worries about the “unknown unknowns” — that Mother Nature may play her hand in a way that upends logical forecasts and leads to global disaster.

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