ABSTRACT
Economists have made many attempts to compare the costs of reducing greenhouse gas emissions with the expected benefits of limiting damage from climate change in the long run. This kind of ‘cost-benefit analysis’ generally assumes only relatively minor monetary costs of warming (a few per cent of GDP), in a much richer – and far distant – future, and claims that more conventional investment yields greater benefits to future generations than major mitigation efforts today. Thus American economist William Nordhaus, one of the first to use cost-benefit analysis in a climate change context, recommends a slowly rising carbon tax starting at about $30 per tonne of carbon, adding only three per cent to an oil price of around $100 per barrel (which was the average price in 2008). This is very little compared to oil prices that have risen several times over in recent years, and thus amounts essentially to ‘do nothing now’ (the global recession in 2008 brought collapsing prices, but the upward trend will probably continue when the economy recovers).
