Paul Krugman- Gambling with Civilization
Forty years ago a brilliant young Yale economist named William Nordhaus published a landmark paper, The Allocation of Energy Resources, that opened new frontiers in economic analysis.1 Nordhaus argued that to think clearly about the economics of exhaustible resources like oil and coal, it was necessary to look far into the future, to assess their value as they become more scarceand that this look into the future necessarily involved considering not just available resources and expected future economic growth, but likely future technologies as well. Moreover, he developed a method for incorporating all of this informationresource estimates, long-run economic forecasts, and engineers best guesses about the costs of future technologiesinto a quantitative model of energy prices over the long term.
Stanley Greene/NOOR/Redux
Greenland, photographed from a boat navigating the melt where dog sleds used to travel across the ice, October 2009
The resource and engineering data for Nordhauss paper were for the most part compiled by his research assistant, a twenty-year-old undergraduate, who spent long hours immured in Yales Geology Library, poring over Bureau of Mines circulars and the like. It was an invaluable apprenticeship. My reasons for bringing up this bit of intellectual history, however, go beyond personal disclosurealthough readers of this review should know that Bill Nordhaus was my first professional mentor. For if one looks back at The Allocation of Energy Resources, one learns two crucial lessons. First, predictions are hard, especially about the distant future. Second, sometimes such predictions must be made nonetheless.
Looking back at Allocation after four decades, whats striking is how wrong the technical experts were about future technologies. For many years all their errors seemed to have been on the side of overoptimism, especially on oil production and nuclear power. More recently, the surprises have come on the other side, with fracking having the biggest immediate impact on markets, but with the growing competitiveness of wind and solar powerneither of which figured in Allocation at allperhaps the more fundamental news. For what its worth, current oil prices, adjusted for overall inflation, are about twice Nordhauss prediction, while coal and especially natural gas prices are well below his baseline.
So the future is uncertain, a reality acknowledged in the title of Nordhauss new book, The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yet decisions must be made taking the futureand sometimes the very long-term futureinto account. This is true when it comes to exhaustible resources, where every barrel of oil we burn today is a barrel that wont be available for future generations. It is all the more true for global warming, where every ton of carbon dioxide we emit today will remain in the atmosphere, changing the worlds climate, for generations to come. And as Nordhaus emphasizes, although perhaps not as strongly as some would like, when it comes to climate change uncertainty strengthens, not weakens, the case for action now.
more
http://www.nybooks.com/articles/archives/2013/nov/07/climate-change-gambling-civilization/
Laelth
(32,017 posts)-Laelth
n/t
Doctor_J
(36,392 posts)that's how bone ignorant they are. There is absolutely no way to get people like that to believe the truth. that's really what the sane world is up against.