Comments to pages 131 - 138 in Cool it.

This chapter deals with the economics of future climate change. There are two main approaches to this issue.
One approach starts from the assertion that we can define a threshold above which climate change becomes really dangerous. It is customary to say, for instance, that if the manmade temperature increase exceeds 2° C, there is a large risk that we pass some "tipping points" where the climate suddenly enters into a new mode, with incalculable and possibly catastrophic consequences. Therefore, the task before us is to find the most cost-effective way to stay below a 2° C rise.
Another approach is to say that this is a question of optimization. We calculate how the damages rise with increasing carbon emissions, and we calculate how the costs of mitigation increase with increasing reductions of these emissions. Where the two curves meet, we have the optimal rate of mitigation. The adherents of this approach say that up to the level of a 2° C rise, the projected net damages from the warming are quite small; therefore they advocate that we have to go on to a greater degree of warming in order to obtain that the damages from global warming become as great at the costs of mitigation. Lomborg, and several prominent global warming economists, adhere to this view. They demand that economic analyses be carried out as an effort to optimize.
It seems that these two views cannot be reconciled, and that a conflict between them will always persist. One will rely on cost-effectiveness analysis, the other on cost-benefit analysis.
Global warming will cause of series of non-market impacts: the suffering of people that are victims to extreme weather, losses of human life, mass migrations due to shifts of climatic zones, eradication of some ecosystems and species, and loss of cultural heritage sites. In the cost-effectiveness approach, such impacts are considered by setting a limit above which the impacts become larger than we can accept.  In the cost-benefit approach, on the other hand,  such impacts can only be considered by attaching a monetary value to them. For instance, it becomes necessary to put a price on human lives and on endangered species. This opens vast possibililties for manipulation of the damage costs. It is a problem that many possible future damages are omitted from the calculations of costs. For instance, a study may calculate the effect of changes in average precipitation, but not the costs of more variable precipitation where droughts alternate with floods. The most serious flaw is that typically the value of a human life is set ten or even a hundred times higher for lives in a rich country than for lives in a poor country. As the damages will probably mostly hit poor countries, this makes the total cost of damages much smaller than if all lives were given the same price. This in turn may mean that in a cost-benefit analysis, large losses of human lives in poor countries will be accepted before the costs have become so large that mitigation will pay off. Such problematic procedures might give strong ethical arguments in the hands of those who reject cost-benefit analysis, but Lomborg is unaffected by these. In his presentation, everyone who does not accept his version of cost-benefit analysis is denounced.
   George Monbiot´s book "Heat" from 2006 is probably one of the best books on global warming ever written. It has a cost-effectiveness approach. Its point of departure is an overview of the many calamities that arise if manmade global warming exceeds 2° C. It calculates the amount of CO2 that may maximally be emitted by each citizen of the world under the assumption that all citizens would be allowed the same amount.  The result is that people in rich countries must reduce their present emissions by about 90  percent.  This will be very difficult, but Monbiot uses most of his book to show, sector for sector, how this may be done without destroying our standard of living. The only sector where a 90% cut is impossible, is the sector of aviation. On a trip by air from London to New York and back, every passenger produces roughly 1.2 tonnes of CO2, which is the same quantity we will each be allowed to emit in a whole year once a 90 percent cut in emissions has been made. A 90 percent cut in emissions from aviation is only possible by reducing the number of flights by 90%. At this point, a reduction in standard of living is inevitable. In nearly all other sectors, the very concrete and detailed information in Monbiot´s book shows how the reductions are possible, provided that we accept certain controversial methods such as underground carbon storage. Monbiot does not try to evade any difficult questions by being overly pessimistic or optimistic or by neglecting them. He attacks every problem head-on, discussing prices, future technological progress etc.
    Monbiot directly criticises Lomborg. With relevant arguments, he criticises the idea behind the Copenhagen Consensus concept, and he criticises the estimates of global climate damages advanced by Lomborg. Maybe for this reason, Lomborg does everything he can to denounce Monbiot´s book. He uses two pages to do this, painting a picture of Monbiot´s book that is simply a vicious lie, and deliberately using subtle psychological tricks to give the book a bad reputaiton and deprive the audience of any motivation to ever see Monbiots book - thus preventing his lies about the book to be revealed (this is especially so in the British version of Cool it!). As an antidote against this, I will strongly recommend everybody to get a copy of Monbiot´s book and read it.
    Next, Lomborg attacks the Stern Review on the Economics of Climate Change, which was produced on behalf of the British Government and published in October 2006. The Stern Review does not really make a cost-benefit analysis of climate change. The analysis is more like a cost-effectiveness study which, like Monbiot´s book, takes as a point of departure that manmade warming must not exceed 2° C. It deviates from Monbiot´s approach in that it attempts to put money values on non-market impacts - that was part of the commission formulated by the government that it should do so. It includes many damages that are rarely included by other studies, and so its estimates of the total damages incurred by global warming are unusually large, whereas the estimates of mitigation costs are moderate. An important feature is that the Stern Review applies a relatively low rate of discount; this is explained in detail on the Lomborg-errors page on discount rates. The low discount rate causes the estimate of damage costs to be large. This is neither right nor wrong - the choice of discount rate can only be subjective, and within reasonable limits, there are no wrong choices. Altogether, the Stern Review makes a strong case that mitigation is cheaper than letting global warming happen. This is directly contrary to what Lomborg claims, and his criticism of the Stern Review is, as you might anticipate, quite harsh. It is true that the Stern Review has a number of flaws, but it has also many virtues and should not be discarded, as Lomborg wants us to.
    It is ironic that the title of this chapter says "The loss of a sensible dialogue". Nobody does as much to spoil the dialogue as Lomborg - by distorting and misrepresenting the contents of others´ books, insisting that the precise version of cost-benefit analysis that he advances is the only acceptable approach, and denouncing everybody that does not agree with him. Monbiot´s book, on the other hand, shows in a very concrete way what problems we are facing and may make a very good point of departure for discussing and implementing climate mitigation. Stern´s review has led to intensive discussions in the scientific literature and has served to reveal where there are severe flaws in the econonomists´ handling of issues that stretch over very long time periods, thus hopefully paving the way for better approaches in the future (see especially the following issues of World Economics:  2006:  7(2) and 7(4). 2007:  8(1) and 8(2) ).

Flaws on particular pages in Lomborgs text:

(COMMENT)
Page 132:  ". . (IPCC) report at up to 3 percent of GDP by 2030 . . . "  Comment: The source says between 0.2% and 3%.

FLAW
Page 132:  ". . . several commentators said this amount - more than $ 1.5 trillion annually . . - was `negligible´. "  Flaw: No, that is not in full accordance with Lomborg´s source. The source said that GDP growth will be slowed by up to 0.12% a year by 2030, and this is what is called `negligible´.