Abstract
There is a widespread sense that a sufficiently stringent climate mitigation policy, that is, a considerable reduction of greenhouse gas emissions to avoid extreme climate change, will come with very high economic costs for society. This is supported by many cost–benefit analyses (CBA) and policy cost assessments of climate policy. All of these, nevertheless, are based on debatable assumptions. This paper will argue instead that safe climate policy is not excessively expensive and is indeed cheaper than suggested by most current studies. To this end, climate CBA and policy cost assessments are critically evaluated, and as a replacement 12 complementary perspectives on the cost of climate policy are offered.
This article is a considerably shortened (about 50 %) version of an article previously published under the terms of the Creative Commons Attribution Noncommercial License (“open access”) as: J.C.J.M. van den Bergh (2010). Safe climate policy is affordable – 12 reasons. Climatic Change (2010) 101:339–385. Original section 3 and many footnotes have been deleted. In addition, Section 2 and 5 (here 4) have been shortened. In addition, references have been updated and text has been rewritten here and there.
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Notes
- 1.
What is disappointing, though, is that after listing an impressive number of uncertainties andmissing elements in existing cost studies and presenting a range of marginal carbon cost estimates as wide as $20–669/tC (Tol 2008b, Table 2), Tol proposes to use a carbon tax in the lower range of $26–50/tC.
- 2.
Notice that application of CBA to acid rain and related SO2 and NOx emissions reduction policies has not received so much attention, even though this problem is more limited in scope than climate change and policy. The economic research on acid rain has been dominated by cost-effectiveness analysis, with RAINS developed at IIASA probably being the best-known study of this type (Alcamo et al. 1990).
- 3.
Several authors have theoretically studied climate policy given economic (investment) irreversibilities. They conclude that there is then a risk of overinvestment in economic capital (manufactured and human) and that current emissions reduction policy should be slightly laxer than without learning (Kolstad 1996; Ulph and Ulph 1997). However, these findings do not suggest a move away from precaution, since climate irreversibility is characterized by much more extended time scales than economic irreversibility, while for climate capital, unlike for economic capital, no substitutes are available. These studies can also be criticized for employing an expected utility approach.
- 4.
The happiness perspective also affects the evaluation of other types of policies. Frank (1985), Ireland (2001) and Layard (2005) illustrate specific findings of happiness research as applied to economic policy: (extra) taxation of working overtime, (extra) taxes on status goods, limiting commercial advertising, and restricting flexible labor contracts. Although from a traditional economic growth perspective these look like bad measures, they are positively evaluated from a real welfare or happiness perspective.
- 5.
I am grateful to Frank Geels for suggesting these examples.
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Acknowledgements
Wouter Botzen, Laurens Bouwer, Frank Geels, John Gowdy, Stijn van den Heuvel, Richard Tol and two anonymous reviewers provided useful suggestions on the original, longer article.
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van den Bergh, J.C.J.M. (2017). A Precauctionary Strategy to Avoid Dangerous Climate Change is Affordable: 12 Reasons. In: Shmelev, S. (eds) Green Economy Reader. Studies in Ecological Economics, vol 6. Springer, Cham. https://doi.org/10.1007/978-3-319-38919-6_12
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