Megan McArdle has a generally sensible post on the main issues, though I disagree on some points as I note in comments, and I still don’t see that this has any bearing on the rights and wrongs of abortion (except relative to the obviously silly position that we are morally obliged to have as many children as possible).
Arnold Kling makes it clear that he doesn’t understand the mathematics of discounting. The first comment, by Michael Sullivan gets it right, but there’s no response or correction so far from Kling. Kling has now corrected his post.
James Annan links to this piece by Paul Baer,. Baer puts the view (with which I have some sympathy) that Stern underestimates the costs of the melting of the Arctic ice cap, which could happen even with stabilisation at 550ppm.
I definitely need to come back to the issue of the costs of global warming. My general view is that, while Stern’s choice of discount rate is at the low end, the Review badly underestimates the social cost of the damage to natural ecosystems that will inevitably arise from global warming.
John Quiggin 
This thinking supports a criticism of discounting approaches in that there may not be an infinite variety of mitigation paths that preserve ‘business-as-usual’ with acceptable social costs. Consider 3 cases
1) mitigate heavily now which preserves recognisable BAU well into the future
2) mitigate lightly which does not preserve BAU eg recession, dislocation, social costs
3) postpone mitigation until a crisis which is unrecoverable
The first may be the only prudent option that wins with zero or positive discounting. As I see the issue is not time preference but finding any currently affordable strategy that works.
I wonder what a decent willingness to pay study would estimate the costs of global climate change at. Probably extraordinarily high.
Wilful, I’m planning a post along these lines. This is the big gap in the literature so far I think.
I just posted a correction. Thanks.
Wilful/John:
There are about 10 published studies on the willingness to pay for climate impacts (Nordhaus, Cline, Fankhauser, Tol, Maddison, Rehdanz). Stern is about an order of magnitude off.
There are about 5 published studies on the willingness to pay for climate policy. Stern is about 2 orders of magnitude off, apart from this one study that was limited to students at Harvard — Stern and Harvard students agree, but Harvard students strongly disagree with the average American. The average American, by the way, also strongly disagrees with the US administration.
As I’ve said before, Nordhaus plucks figures out of the air that are, in my view, way off the mark. For the US, he gives the entire natural environment (including the coastline, harbours and so on, as well as all wild animal and plant species) a capital value of $500 million, so you could wipe out the entire natural environment and it would cost less than a modest recession.
To clarify my point, I don’t think the costs of species extinction have been properly taken into account in the literature so far, including the work of the authors listed by Richard Tol, at least as far as I’ve read it.
As regards US attitudes, it’s worth remembering that the bogus debate over the reality of global warming is still alive there, unlike in Europe – this creates a problem in relying on US estimates.
John:
Nordhaus’ numbers were published in the Economic Journal and in the American Economic Review, and they build on research published in many other peer-reviewed journals. Although weak, it is a bit of stretch to claim that these numbers were “plucked out of the air”. In criticizing his $500 mln number, you are confusing marginals with totals. To suggest that Nordhaus is influenced by the fact that there are more skeptics in the US than in Europe is just nonsense.
Is it not time that you stop complaining about other people’s research and start doing original work yourself — and publish it in a journal rather than on the web?
JQ,
In my view the shortcomings of the WTP metric are wholly exposed wrt to climate change policy and I look forward to post on the subject. For starters WTP is predicated the assumption of full information, which thanks to the FUDs isn’t very likely…
Richard, my current research deals with the impact of climatic uncertainty, including climate change, in the Murray-Darling Basin in Australia. There are a fair number of journal publications arising from this, and more to come. But it’s necessary to be involved in the broader debate over climate change, and blogs provide a useful medium for discussion.
My previous comment had a typo – the total value estimated by Nordhaus was $500 billion, not million. Also, I didn’t intend to imply that Nordhaus was influenced by US skeptics, just that the presence of lots of skeptics would drag down the average WTP in any survey. So, I’d expect to see rising WTP once the impacts are clear and generally accepted.
JQ: There are a fair number of journal publications arising from this, and more to come.
Anybody who can’t get singular and plural to agree as here is as evident throughout this blog unable to get his algebra right.
Tam O’Shanter:
“Anybody who can’t get singular and plural to agree as here is as evident throughout this blog unable to get his algebra right.”
Which means? Grammar, please, not spelling!
Cheers,
marlowe johnson:In my view the shortcomings of the WTP metric are wholly exposed wrt to climate change policy and I look forward to post on the subject.recent post on ourEcological Economics blog that may help a bit: The Stern Report on the costs of climate change still generates much buzz. Some of the buzz echoes methodological concerns we have aired earlier about use and abuse of cost-benefit analysis. (Or, if in a hurry: Top 10 Reasons why CBA fails ….)