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Updated
12 October, 2003
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The
Economics of Climate Change Impacts and Mitigation: The Importance of
Values and Assumptions USGCRP Seminar, 9 December 1996  |
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What is the
basis of cost/benefit analyses of projected climate change impacts and
mitigation options? What are the values and assumptions that have gone
into these analyses? How significantly do cost/benefit analyses change
in instances where one makes different assumptions and value judgments?
INTRODUCTION:
The Honorable Mark Chupka
SPEAKERS:
Dr. Richard B. Norgaard
OVERVIEW
As we move from a world
that was relatively empty of humans and their influences on the environment
to one that is relatively full, interactions between the ecological
life support system and the economic subsystem become increasingly important.
Of particular importance is the integration of the three broad goals
of ecological sustainability, social fairness, and allocative efficiency.
The potential for global change to damage irreversibly the ecological
life support system and reduce the well-being of our descendants is
a key concern in this context.
To address the complex
set of issues that arise, improved methods are needed for: the valuation
of natural capital, national income and welfare accounting, integrated
modeling and assessment, dealing with uncertainty, and the intertemporal
allocation of resources. To address these issues, and their implications
for global change in an integrated way requires moving beyond the standard
approaches in both ecology and economics (while not discarding the best
elements of each). "Ecological economics," is helping to develop a new
"habit of mind" that can provide the basis for understanding and managing
the planet in a sustainable way.
Within this broad framework,
a number of important issues are being considered. These include: 1)
the advantages and disadvantages of an early response to predicted climate
change; 2) the value of reducing the uncertainties surrounding the environmental
processes, ecological impacts, and economic consequences of climate
change; 3) the mix of mitigation and adaptation that may ultimately
prove the best strategy; and 4) the augmented benefits of mitigation
that result from the environmental gains that can be captured through
decreased greenhouse gas emissions and increased protection of forests
and other biomass sources.
Findings from approaches
based on ecological economics generally suggest the need for earlier
action than do economic studies that do not consider ecological perspectives.
These findings are based on studies that focus on system limits, thresholds,
and dynamic complexities. When considering ecological connections, the
Index of Social and Economic Welfare (also called the Genuine Progress
Indicator) suggests, for example, that the increases in GDP per capita
over the past quarter century are largely illusory. Economic models
that do not fully include consideration of the complexity of our environment
then tend to extrapolate these illusory gains for future generations
and improperly weight these against the real benefits of investing in
climate change mitigation. Analyzing the societal impacts of climate
change also highlights the importance of considering equity along with
efficiency in reaching an appropriate solution. What is efficient for
this generation is not necessarily equitable for the next and doing
what is efficient for the industrialized countries may have major adverse
impacts on poor countries and on global stability in the longer run.
Ecological economics also allows for a coupling of climate change to
related issues such as biodiversity loss and the local and regional
problems of environmental quality.
Improving understanding
of and capabilities for considering environmental complexity in association
with economic efficiency is thus an essential research task needed to
support policy development.
Dr. Richard B. Norgaard
is Professor of Energy and Resources, University of California at Berkeley.
He received his Ph.D. in Economics from the University of Chicago in
1971, assisted in the creation of the Energy and Resources Group as
a Professor of Agricultural and Resource Economics at Berkeley, and
joined the core faculty of the Energy and Resources Group in 1987. Dr.
Dr. Norgaard helped found and is currently President-elect of the International Society for Ecological Economics. He is a member of the U.S. Committee of the Scientific Committee on Problems of the Environment (SCOPE) hosted in the U.S. by the National Research Council. He participated in the founding and serves as chairman of the board of Redefining Progress, an NGO based in San Francisco engaged in research and public education on greening the system of national accounts and on resource and environmental taxation.
Dr. Robert Costanza is director of the University of Maryland Institute for Ecological Economics, and a professor in the Center for Environmental and Estuarine Studies at Solomons, MD, and in the Zoology Department at College Park, MD. His academic research has focused on the interface between ecological and economic systems, particularly at larger temporal and spatial scales. This includes landscape level spatial simulation modeling, analysis of energy flows through economic and ecological systems, valuation of ecosystem services and natural capital, and analysis of dysfunctional incentive systems and ways to correct them. He is the author or co-author of over 200 scientific papers and 11 books. Dr. Costanza is co-founder and president of the International Society for Ecological Economics (ISEE) and chief editor of the society's journal: "Ecological Economics." He serves on the editorial board of five other international academic journals. He is also vice president of the newly formed International Society for Ecosystem Health. In 1982 he was selected as a Kellogg National Fellow; in 1992 he was awarded the Society for Conservation Biology Distinguished Achievement Award; and in 1993 he was selected as a Pew Scholar in Conservation and the Environment. He has served on the EPA National Advisory Council for Environmental Policy and Technology (NACEPT); the National Research Council's Board on Sustainable Development, Committee on Global Change Research; the National Research Council's Board on Global Change; and the U.S. National Committee for the Man and the Biosphere Program. Dr. Costanza received his Ph.D. from the University of Florida in 1979 in systems ecology with a minor in economics. He also has a masters degree in Architecture and Urban and Regional Planning, also from the University of Florida. Before coming to Maryland in 1988, he was on the faculty at the Coastal Ecology Institute and the Department of Marine Sciences at Louisiana State University in Baton Rouge, Louisiana.
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Norgaard
has contributed to the economic theory of intergenerational equity and
the economics of energy development, climate change, and biodiversity
loss. He also writes on how environmental complexity has modified our
understanding of how science works. He has over one hundred publications
including a book that provides an epistemological explanation of our
environmental crisis and explores how a coevolutionary understanding
of process can be used to envision a more sustainable future ("Development
Betrayed: The End of Progress and a Coevolutionary Revisioning of the
Future", Routledge, London and New York, 1994).
