Paul Collier, an economist, has an article in Guardian UK today that makes a case for climate change. It’s not what you might think. The headline says enough to draw my attention:
I don’t buy economists’ case for fighting climate change- the orthodox rationale fails to chime with most people’s ethical motivation for action to save the environment
He starts off with a nasty slider.
The 2006 Stern report brought the legitimising power of orthodox economics to the emotive battleground of global warming. In his Review on the Economics of Climate Change – widely regarded as the most important and comprehensive analysis of global warming to date – Lord Stern argued that in cold cost-benefit terms, it made sense for the present generation to make sacrifices because the benefits to future generations would be so substantial.
That’s two uses of the word orthodox, and we’re just getting started. Collier’s main beef, though he does not state it in techincal terms, is rooted in the discount rate, the percentage at which we devalue the future. There has been a lot of debate about the discount rate.
Personally, I doubt whether the utilitarian calculus is the right ethical framework in which to think about global warming. It gives us numerical answers, but it just does not feel as though the calculus captures my concerns. Take the valuation of the future: are we radically undervaluing the interests of future people?
The problem is that, in cost-benefit analysis, economists tend to put a floor on the discount rate, even though conceivably we could put it at zero. Thus, Collier seems to call for a different framework to view the problem, an ethical one (god forbid).
Ultimately, in a democracy our policy decision rules must rest on ethical principles that are widely shared by citizens. I suspect that most people feel that they should reduce carbon emissions, but the key issue is why? Is their motivation better captured by the utilitarian calculus used by economists, or by a sense of custodial obligation towards our natural legacy, of which carbon is but one instance?
I agree whole-heartedly.
Open Economics 
