The latest unguided missile IPCC report came out of a South Korea meeting, and surprisingly the first media response was silence. Could it be some of them actually considered that these new claims and demands are so over the top that their audiences will guffaw and break with their media masters once and for all?

The graph illustrates the problem very clearly. Since 1992, the UN Framework Convention on Climate Change has met 23 times. These UNFCCC discussions have utterly failed to reduce CO2 emissions. Yet from 2020, emissions have to drop dramatically, if we are to stand a chance of keeping global warming below 1.5°C.

According to IPCC SR15 this will require an annual average investment of around US$2.4 trillion (at 2010 prices) between 2016 and 2035, representing approximately 2.5% of global gross domestic product (GDP). The cost of inaction and delay, however, will be many times greater. (sic).  Note:  This is referring to increasing investments in renewable energy from current US$335B per year to $2.4T.  Present global spending on Climate Crisis Inc. is estimated at nearly US$2T, not limited to renewables.  So this would double the money wasted spent on this hypothetical problem.

After their initial shock, like the lemmings they are, the news and opinion makers filled their pages and screens with end of the world proclamations, and continue to do so.

Elsewhere I have posted on the disconnect between reality and the IPCC scientific claims. The focus in this post is on the appalling economics piled on top. At IER Robert Murphy writes The IPCC Should Heed the Work of Nobel Laureate William Nordhaus. Excerpts in italics with my bolds.

One of the recurring themes of my work on the economics of climate change is that the very people who lecture the world on the dangers of “science denial” don’t actually follow their own advice. The recent announcement of the Nobel Prize in Economics, along with the release of the UN’s latest IPCC (Intergovernmental Panel on Climate Change) report, illustrates my claim perfectly. Specifically, William Nordhaus just won the Nobel for his work on basically inventing the economics of climate change. But while Nordhaus’ model shows that even a ceiling of 2° Celsius is too aggressive—with the costs outweighing the benefits—the media breathlessly tells the world that the latest “science” from the IPCC shows humanity that we have about a decade to implement draconian measures if we are going to achieve the goal of limiting warming to 1.5°Celsius.

The Media Announcements

From the Guardian:  We have 12 years to limit climate change catastrophe, warns UN
Urgent changes needed to cut risk of extreme heat, drought, floods and poverty, says IPCC

The following quotation comes from the New York Times article announcing this year’s joint winners of the Nobel (Memorial) Prize in Economics, namely William Nordhaus and Paul Romer. Note how the piece ties Nordhaus to the virtually simultaneous release of the latest IPCC report:

The 2018 Nobel Memorial Prize in Economic Science was awarded on Monday to the American economists William D. Nordhaus and Paul M. Romer for reshaping the understanding of the long-term determinants of economic growth.

Mr. Nordhaus was cited for his work on the implications of environmental factors, including climate change. Mr. Romer was cited for his work on the importance of technological change.

Mr. Nordhaus, a professor of economics at Yale University, pioneered the economic analysis of climate change. He is also a leading proponent of the use of carbon taxation to reduce emissions, a policy approach preferred by many economists.

The announcement of the award came the same day that a United Nations panel on climate change released a report warning of dire consequences from climate change and urging governments to respond to the problem with greater urgency. The report builds on and cites Mr. Nordhaus’s work. [New York Times, bold added.]

Now, any normal citizen reading the above two samples from our major media—who ostensibly are all up-to-speed on the “consensus” and would never dream of letting ideology get in the way of the empirical evidence—would be quite certain that William Nordhaus’ work supports the IPCC’s call to limit global warming to 1.5°C. And yet, as I’ll show in the next section, this is utterly false. Nordhaus’ work shows that such an ambitious climate change goal is far too aggressive.

Nordhaus on Proper Climate Policy

Now to be clear, I am a critic of Nordhaus’ work on climate change economics. Back in 2009 I wrote a peer-reviewed article criticizing his “DICE” model, and here at IER I’ve written articles (such as this one) arguing that Nordhaus misled the public in one of his popular articles on climate “skeptics.”

However, what I want to do in the current post is simply show that the guy who just won the Nobel Prize for his work on climate change economics does NOT support anything close to the IPCC’s latest announcement. This should show that, far from being “settled science,” the ever-increasing stridency of the calls for global action to combat climate change are more and more based on ideology and/or arbitrary decisions not tied to reasoned analysis.

For starters (and I thank David R. Henderson for reminding me of this salient point), as of DICE-2007 (i.e., Nordhaus’ model back in 2007), the climate goal of limiting global warming to 1.5°C was a horrible policy, which would make humanity $14 trillion (in present-value terms, in 2005 US$) poorer than doing nothing at all. (See Table 4 of my article to see the details.)

Now it’s true that the numbers have changed since 2007, and Nordhaus’ model would no longer give such a pessimistic assessment. However, back in 2013 Nordhaus argued in his then-new book on climate change that the optimal policy (depending on assumptions regarding participation among the world’s governments, etc.) would limit global warming from 2.3°C up to nearly 4°C, as Paul Krugman admits in his review of the book.

Please re-read my last sentence: As of 2013, William Nordhaus—who just won the Nobel Prize for his work on the economics of climate change—was saying the optimal path of global warming would allow for temperature increases of at least 2.3°C and possibly close to 4°C. Yet the IPCC’s media people are telling the world that we should really shoot for 1.5°C of warming to avoid catastrophe, and that the difference between 1.5°C versus 2.0°C is huge.

Conclusion

I have serious reservations about the work of William Nordhaus and the other creators of so-called Integrated Assessment Models (IAMs), which are used to calculate the “social cost of carbon.” Yet to the extent that we are going to take IAMs at face value—and the major media touting Nordhaus’ Nobel certainly do—then they should give pause to those clamoring for aggressive government action. Although Nordhaus favors a carbon tax, his work shows that the recent goals announced by the IPCC are ludicrously aggressive, and would likely cause far more damage to economic growth than they would alleviate in terms of climate change.

Footnote:  Robert Murphy has a follow up article with additional analyses at MISES William Nordhaus vs. the U.N. on Climate Change Policy

In this article I will provide more details of just how Orwellian it is, that some pundits and reporters are linking Nordhaus with the IPCC’s latest announcement. More generally, this whole episode underscores the farce of the “social cost of carbon” (SCC) concept. The Obama Administration and academics like Nordhaus go through all of this work to generate estimates of the quantitative damage caused by carbon dioxide emissions, and then the United Nations goes ahead and recommends policies that aren’t even in the same ZIP code as what those “scientific” estimates entail. If anybody in this debate is a “denier,” it is the people claiming the IPCC’s latest pronouncements have anything to do with the peer-reviewed economics literature.

Robert Murphy also has this video clip of a presentation on climate economics (H/T Jim Rose)