14 December 2007

Climate change and discount rates

A not-too-technical discussion on the discount rate to be applied to the dmaage caused by climate change is here. As I say in my comment there, I can't help thinking that the cost-benefit method, in being applied to climate change has little relevance or meaning. For one thing, it's being applied to the so-called costs of mitigation, but the uncertainties extend to the relationship between gas emissions and climate change. I'd prefer to see climate change tackled directly and in fact targeting climate stability, rather than gas emissions, and subordinating policy to that would make life much easier. I suggest agreeing on a target for climate stability, and contracting out the achievement of a stable climate to the market. This means no prejudging of how best to achieve the goal: mitigation might be necessary, but there will other, possibly more efficient solutions, as yet unthought of by those who would commit us to gas reductions and only gas reductions.

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