To touch on a few things

Carbon Taxes

Its not inconsistent to simultaneously believe that the US should have a carbon tax and that it should aggressively pursue the development of fossil fuel resources.

The point of the carbon tax is to make sure that folks account for the cost of climate change when choosing to consume fossil fuels. The point of aggressively pursuing the development of fossil fuels is to lower their real cost.

Lower real costs are better than higher real costs.

So, the blackboard ideal is to include the cost of carbon in the price of fossil fuels and then support market conditions which lower the cost of fossil fuel extraction as much as possible.

The question is what to do in the absence of a carbon tax. One might suggest that, well in that case we should impede development. That, we should stand in the way of pursuing the tar sands or fracking.

If you believe – as Brad Johnson suggests – that the social cost of carbon are so high that if properly priced people few people would consume it then this makes sense. In this case anything less than the choke price is socially inefficient and so choking off production is always a good idea.

However, if you think that properly priced carbon is likely to have little impact on its use then even in the absence of a carbon tax you don’t want to stand in the way of fossil fuel development. Indeed, you still want to streamline the costs, just as you would if there was a carbon tax.

How Big Are the Damages

Key in this question then is what would have been the right price for carbon. This in turn is intimately related to the damages from climate change.

Now it is important to note that climate change being really really awful does not necessarily mean that the social cost of carbon is high. The social cost of carbon depends on how much worse climate change gets from using more carbon.

For example, if you reached the point where almost all of the bad stuff was baked into the cake, then the social cost of carbon would collapse. Bad things would still happen, but additional bad things would not happen.

In any case I think at this point think the consensus is that we are still on the upward slope where ever more carbon means ever more bad stuff. So, the question is – how bad is bad?

This is where strategic adaptation is a big deal. If you look at the damage function attached to most of the old estimates at least, they essentially measure how much harder it would be to continue our civilization the way it is under climate change.

However, one wouldn’t want to continue our civilization the way it is under climate change. Indeed – and this is the key point that I think is missing – one wouldn’t want to continue our civilization as is anyway.

For example, one of the major costs involved in climate change, is mass migration. Sometimes this is framed in terms of climate refugees. This seems like a big problem. But is it?

If you think think that restrictions on urbanization are a major problem one of the things you are saying is that there is not enough mass migration within the United States. If you think that limits on immigration are a major problem one the things you are saying is that there is not enough mass migration between countries.

Another major issue is Agriculture. But, look at the report from the International Food Policy Research Institute. This shows yield changes under various climate scenarios

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For rain fed crops in the developed world you see increases in yields under almost all scenarios and under all scenarios incorporating increased carbon fertilization.

This result is sensible. Much of the developed world is relatively cold and dry. Climate change will tend to make hot and wet. As the authors note when they do their modeling they include no economically driven changes to crop production. They grow crops as they are grown today under simulation of different conditions.

However, of course this is highly unlikely to happen. Increases in yield in the developed world are likely to cause much more intensive farming in the developed would and in part because of technology and capital markets and in part because of the sheer land mass of the developed world, we might expect this to increase total world yields.

It should be noted that right now just about every developed country pays farmers not to farm on currently productive land so as not to let the price of crops fall too low.

A key step in the fight against world hunger is to get first world farmers to stop throwing away production and to make third world inhabitants rich enough to buy that production. The later I argue is preferably done by moving them to the first world.

As always we can and should continue to share information and ideas on this but one of the things that makes the costs of adaptation look higher than they are, is that folks are counting as costs things that are fundamentally good ideas regardless.