Calibrating the Science and Economics Of Climate Policy

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In deliberations over actions to stabilize atmospheric concentrations of greenhouse gases, policymakers have yet to build in an evaluation process with data and tools to address the following questions: Is it working; is the climate getting healthier; and, at what price? The answers matter because stabilizing concentrations takes more than a fiscal year. It will take decades, necessitating periodic, science-based assessment to ascertain, in fact, whether climate is improving. And subsequent actions will need balancing against their costs.

The recent congressional proposals establish a National Academy of Sciences review of concentrations at four-year intervals. But no provision is made for the science and economic data to inform such a review. The nation’s suite of planned Earth science instruments do not constitute the observing infrastructure we will need. They were not designed with this task in mind. Efforts are under way to coordinate our observing systems with those of other countries, but these efforts remain incomplete and gaps remain in basic capability. None of the efforts include a process for economists, energy and transportation leaders, state and local authorities, or other experts to be at the table for the “true up” of climate science and economics over decades. 

Why science plus economics?

Consider the estimated cost to the U.S. economy of major reductions in greenhouse gas concentrations and the sensitivity of cost to the science. Two commonly cited targets for stabilizing carbon dioxide concentrations are 550 parts per million (ppm) and 450 ppm. Estimates prepared for the U.S. Climate Change Science Program project the cost of the 550 ppm target at between $100 billion and $3 trillion. The estimate for the more stringent target of 450 ppm is between $2 trillion and $11 trillion. Note also that the estimates are over the very long time period required to begin to stabilize: 2010 to 2050 (the costs cited are in present discounted value).

Many complications underlie these estimates — and in fact, their wide range itself bespeaks the challenge of blending science and economics. But comparing just the difference in the costs is instructive. It is at least three times and possibly 20 times more expensive to reach the tighter goal than the less stringent one.

The example shows what is at stake. We don’t want to incur the higher costs of tighter controls needlessly. Nor do we want too lax a policy, failing to increase our efforts if climate diagnostics suggest we aren’t doing enough. Picking a target and then systematically calibrating actions to ramp up or down — over decades — requires long-term integration of science and economics. In short, no provision is made for tools, people and institutions for a permanent and integrated information infrastructure required for sound climate policy, even though a lot of money is at stake.

Do we know our data priorities?

When we include the economics, our priorities for what data we most need can shift. Most scientists focus on what they call “essential climate variables.” These characterize Earth’s atmosphere, oceans, terrestrial processes and their interactions, including precipitation, sea surface temperature and salinity, water vapor, and so forth. These data are used in global climate mod

els, in turn advancing understanding of how climate works and ultimately our choice of stabilization targets.

Usually the observations about ice, sea level and precipitation make the headlines. Of course these matter. But other variables also have large potential economic impact. These include observations about how we use land. Long before “climate” made headlines, Landsat provided observations of land use and related changes in forests and agricultural practices. These data have renewed importance now. The reason is because soil and trees absorb carbon and are a natural “sink” by which to offset carbon emissions.

Projections of stabilization costs show that if we fail to manage forests and agricultural practices, costs could be 30 percent larger. Yet experts have found that data about forests and how they change over time are too imprecisely measured and unevenly monitored across countries for the quality we need. And, of course, funding for continuing and upgrading Landsat is tenuous. We thus need to improve the integration of climate and land observing, exploit synergies and choose priorities, particularly given the historically large costs of satellite systems. Yet we’ve not even begun the inventory.

Who should pay?

Obviously the public bears the costs of managing climate, with the hope that government agencies act wisely on our behalf. But lacking something like the Bureau of the Census or the Bureau of Labor Statistics, responsibility for climate data and policy analyses fall through the cracks with no line item in the budget and no agency in charge.

Some might expect NASA to fill the gap; others might point to the National Oceanic and Atmospheric Administration and the U.S. Geological Survey (responsible for Landsat) or to international partners with Earth observing systems.

But none of these candidates has prepped for the job — no surprise, since there is no budget and no accountable person who will get blame for failure or credit for success.

A first step is to seize the opportunity for logically self-financing climate data, science and policy evaluation. A portion of the auction revenue generated in the cap and trade system favored by President Barack Obama and proposed by the House of Representatives in the American Clean Energy and Security Act of 2009 could be directed toward climate policy infrastructure. Or if a traditional regulatory approach by the Environmental Protection Agency is chosen instead of cap and trade, a fee could be levied on regulated entities. Such an approach to funding would appropriately link the costs with the benefits of the required information necessary for good policy.

With money, the job of finding leadership to prioritize which data, build in the economics and frame a long-term capacity to true up climate policy may be easier. That job looms ahead, with our quality of life and its pricetag on the line.

 

Molly K. Macauley is a senior fellow and director of academic programs at Resources for the Future in Washington.