The Cost of Global Warming

According to this article, the cost of global warming is going to be 5 trillion dollars.

Estimates indicate that the total cost of global warming will be about $5 trillion (?2.8 trillion). This calculation is unavoidably uncertain, but is based on models designed to assess the impact on areas such as forestry, fisheries, energy, water supply, infrastructure, hurricane damage, drought damage, coast protection, land loss caused by a rise in sea level, loss of wetlands, forest loss, loss of species, loss of human life, pollution and migration.

Ignoring the fact that the majority of these items are not economic goods at all, and contribute little or nothing to the measurable economy, no matter how much more pleasant they may make the planet, what is meant by assigning a cost to global warming?

If we assume that releasing N million tons of additional CO2 to the atmosphere over a century causes some measure of global temperature to rise by 3°C, is it not fair to assume that if our industrial and transportation technology happened to instead consume N million tons of CO2 over a century, there would be a fall in global temperature of, if not 3°C, then some other amount not all that different?

Would this fall in global temperature produce a gain of 5 trillion dollars? Of course not. Any real cost is likely to be the result of having to adapt to changing conditions, in either direction. The cost comes from the requirement of creating new capital and destroying old capital. But this is exactly what happens every day even if the amount of CO2 were constant. Over a long enough term, all existing capital will be destroyed or at least transformed. This means that it will be very easy to make the mistake of assigning the costs of capital destruction to global warning even though a good part of it would have been destroyed in any case.

It seems likely that the majority of costs that are the result of global warming, even if completely real, will come from misguided centrally-planned attempts to roll back the tide.

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All of those items are

All of those items are economic goods; they are scarce and people value them. They might not be market goods, but they are certainly economic goods. The fact that they do not contribute to the measurable economy is not a detriment to those goods but a detriment to the form of measurement.

See this Economist article

See this Economist article which gives some detail (and refernces more detail) about careful economic forecasting related to climate change. To think usefully you must consider both costs and benefits and select a discount rate appropriate to futures.

Micha, When someone values


When someone values something by deciding what price that they are willing to have someone else pay, it is a qualitatively different sort of valuation than the price that he himself would be willing to pay.

Economic scarcity is the relationship that obtains between an economic entity and an economic good. To be an economic good and have economic value the economic entity must not command a larger quantity of the good than it can beneficially apply to desired ends. This beneficial application includes the possibility of exchange, but exchange is not always beneficial, as in the case of monopoly supply, and is not always possible, as in the case of legal restrictions.

Regards, Don

I still don't follow you. If

I still don't follow you. If the government completely socialized the health care industry overnight, health care would no longer be considered a market good, but it would still be be an economic good. I'm not familiar with the term "economic entity" and I don't see how it differs from the term "economic good."

People often do pay for nonmarket environmental goods, albeit indirectly. One's choice of residence includes a collection of many factors, one of which is the quality of the environment, which, all else being equal, is more or less expensive depending on its cleanliness. One's choice of certain market goods--bottled water, for instance--can represent substitute goods for what would otherwise be non-market goods--publicly available water from a commons.

Micha, economic entity ==


economic entity == acting economic entity

A supposed total global cost of 5 trillion dollars over 100 years and an increase of 3 degrees C would be mere course adjustments for a free market economy, but a cost of only 1 million dollars would be cataclysmic if it were associated with the kind of expansion of the command and control economy that the global warming alarmists would prefer.

If environmentalists want to spend their own money creating air-conditioned bird housing projects so that birds do not have to adjust their migratory patterns 200 miles to the North, this can't be considered a cost of global warming, but merely a shift in their allocation of entertainment dollars as they satisfy their own subjective preferences.

Regards, Don

Check your assumptions. The

Check your assumptions. The basic science behind "global warming" is fatally flawed -- mainly because it has been falsified by not warming to the predicted levels and instead seeming to be part of a natural cyclical phenomenon.