Marty Weitzman is one of those people that planners simply do not seem to read, and they should, because his contributions to environmental economics are enormous. Matt Kahn linked to a recent paper from Weitzman available via NBER
From the abstract:
A critical issue in climate-change economics is the specifcation of the so-called
“damages function” and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional quadratic damages function and/or a thin-tailed probability distribution for extreme temperatures. The paper gives some numerical examples of the indirect value of various GHG concentration targets as insurance against catastrophic climate-change temperatures and damages. These numerical examples suggest that we might be underestimating considerably the welfare losses from uncertainty by using a quadratic damages function and/or a thin-tailed temperature distribution. In these examples, the primary reason for keeping GHG levels down is to insure against high-temperature catastrophic climate risks.
Matt Kahn, in response, discusses how the coastal reduction likely from sea change might not be unmanageable given new vertical farming technologies and urban densities:
So we need 424,000 of 52 million or .8% of the earth’s land area to be inhabitable after climate change really kicks in. As of right now, from a spatial portfolio point of view, I certainly think it is possible. If the world’s population shrinks or we reduce our caloric intake, the necessary quantity of viable land would shrink further. Implicit in my forthcoming book Climatopolis is my optimism that there will continue to be “safe” geographical places to settle and build new cities. I would like to know whether any climate change models predict that there are scenarios under which we cannot find 424,000 safe square miles of inhabitable Earth to build anew?
Here is a link to Dr. Kahn’s forthcoming book, which I have pre-ordered (and so should you). 🙂
Whether you can get on board with Weitzman’s argument, it’s nice to have strong technical discussion of the “fat tail” problem rather than the usual straw man arguments from people like Nassim Taleb.