Mark Thoma Points Us to Partha Dasgupta's Critique of Bjorn Lomborg

The extremely thoughtful and smart Partha Dasgupta does not think Bjorn Lomborg is playing with a full deck. Mark Thoma:

Economist's View: "If The Uncertainties Are Not Small, Standard Cost–Benefit Analysis As Applied To The Economics Of Climate Change Becomes Incoherent": Partha Dasgupta reviews Cool It: The Skeptical Environmentalist's Guide to Global Warming, by Bjorn Lomborg (via email):

Bjorn Lomborg's _The Skeptical Environmentalist{ created a sensation six years ago. The author offered figures to dismiss claims that the ecological-resource base in many parts of the world is deteriorating, and argued that the costs of reducing ecological losses are usually higher than the benefits.... [P]rominent publications such as The Economist promoted the book vigorously... People learning of my own work in developing ecological economics would ask, "And have you read Lomborg?" — implying, "Why have you thrown away so much of your working life?"

Things have changed over the past year... many now regard global warming to be the central problem facing humanity. Lomborg's latest book, Cool It doesn't question the science... he questions whether we should do much about it....

The book is a series of exercises in cost–benefit analysis, interspersed with quotes on climate change from the writings of famous people who should know better than to speak in hyperbole.... whereas the smart strategies he outlines... would cost a mere $52 billion a year. By his reckoning, those strategies would limit the rise in concentration of carbon dioxide to 560 parts per million (p.p.m.) and the accompanying temperature rise to 4.7 °C. Smart strategies would cost far less than Kyoto, deliver higher economic growth worldwide, and markedly reduce poverty. From the vantage point of Kyoto, there is a free lunch to be had wherever you look....

Unfortunately, Lomborg's thesis is built on a deep misconception of Earth's system and of economics when applied to that system. The concentration of CO2 in the atmosphere is now 380 p.p.m., a figure... in excess of the maximum reached during the past 600,000 years. If there is one truth about Earth we all should know, it's that the system is driven by interlocking, nonlinear processes running at different speeds... an unknown number of tipping points.... We have no data on the consequences if Earth were to cross those tipping points. They could be good, or they could be disastrous. Even if we did have data, they would probably be of little value because nature's processes are irreversible. One implication of the Earth system's deep nonlinearities is that estimates of climatic parameters based on observations from the recent past are unreliable for making forecasts about the state of the world at CO2 concentrations of 560 p.p.m. or higher....

These truths seem to escape Lomborg. His cost–benefit analysis involves only point estimates of variables... implying that he believes we shouldn't buy insurance against potentially enormous losses resulting from climate change....

[E]ven a small amount of uncertainty — when allied to only a moderate aversion to uncertainty — would imply that humanity should spend substantial amounts on insurance, even more than the 1–2% of world output that has been advocated. If the uncertainties are not small, standard cost–benefit analysis as applied to the economics of climate change becomes incoherent, even if those uncertainties are judged to be thin-tailed (gaussian, for example); this is because the analysis would say that no matter how much humanity chooses to invest in protecting Earth from passing through those later tipping points, we should invest still more.

Economics helps us to realize what we are able to say about matters that will reveal themselves only in the distant future. Simultaneously, it helps us to realize the limits of what we are able to say. That, too, is worth knowing, for limits on what we are able to say are not a reason for inaction. Lomborg's seemingly persuasive economic calculations are a case of muddled concreteness.

Comments

[anne]

What has puzzled me is why the Danish government has supported Bjorn Lomborg for several years. I know there was a turn to a conservative government, but did this turn mean that Denmark has turned from being environmentally conscious? Though I suspect so, please explain what has happened in Denmark that makes it so different in government policy from Norway or Finland or Sweden.

[STS]

"muddled concreteness"? That sounds like an novice attempt at a mob hit involving cement shoes.

"spurious precision" is the usual term for this type of error I think.

Another useful reply to critics (although directed to Freeman Dyson's critique rather than Lomborg's) is available here:

http://edge.org/3rd_culture/anderson07/anderson07_index.html

A great line right near the top of the article:

"...Dyson's line that the models aren't so good and 'the fuss is exaggerated'. Scarily, the truth is the other way around. The ice is melting faster than the grimmest of the scientist's predictions, and the predictions keep getting grimmer. "

[NeilS]

There is no substance to Thoma's argument (at least the part taht you have presented).

Saying that there are nonlinearities in the Earth System does not lead to any specific conclusion that Lomborg is wrong. He may be, but Thoma has not proved it.

[shah8]

Heh, and I spent a large part of my time trying to convince feminists that one does not insure ourselves by decreasing population...We had to insure ourselves by acting on population presssures, or actions.

It's much harder than I expected to tell other people that there is a difference between population and what a population does.

It's also more difficult than expected to get people to understand ambiguities of cause and effect in a nonlinear system. That even if you insure for an event, that event might still happen regardless of what you do. That it is best to use policies that you know and understand well to insure against large scale events instead of attempting a large scale intervention with unknowable side effects to match the size of the problem.

That being said, we sure need some more people out there giving a better explanation of why Malthus and Erlich were wrong. Not that we couldn't be far past our carrying mean or that fossil fuels haven't saved us, but why, specifically, they were wrong without becoming all starry-eyed techno-cornucopian.

It's actually pretty important to do so. One of the big common themes of conflict in history is when one group says that the Earth isn't big enough for the both of us and decides on a path of lebensraum. Making overpopulation an unviable excuse to do something is an important anti-genocide measure, in my mind.

[kharris]

Neil,

It is not Thoma's argument. It is Dasgupta's argument. And I think you have misunderstood Dasgupta's argument.

The argument is not that Lomborg's estimates are wrong. It is that the solutions that Lomborg proposes based on point estimates, absent an appreciation of the fragility of those estimates, are insupportable. Dasgupta argues that Lomborg is underestimating the appropriate amount of insurance because he does not appreciate the odds that his point estimates will turn out to be wrong.

[Barkley Rosser]

Partha Dasgupta has done more than any other single individual to undermine and drive out heterodox economic thinking at Cambridge University. However, his thoughts here are very wise indeed (as an old student of nonlinear dynamics who has published papers on complex dynamics in the global ecologic-economic system).

Particularly to the point is the one buried in the remark about Gaussian distributions. There is every reason, given the various interlinked nonlinearities and potential tipping points, to worry that the underlying distribution is not Gaussian, that it is fat-tailed, with considerably higher probabilities of more extreme outcomes than we would expect assuming Guassianity. This is parallel to what we see in financial markets, where most asset returns are fat-tailed, even as textbook models assume normality. This is the theme of the flawed, but still interesting, Black Swan book by Taleb.

[Maynard Handley]

Come on, we don't need this complicated stuff about risk/reward profiles. The issue is very simple:

- could we increase global welfare by bashing Donald Trump over the head and giving all his money to the poor? I assume Lomborg doesn't agree with this action, because he thinks it is wrong to deprive people of their property.

- roll on climate change. Now we have a large scale deprivation of people of their property. Lomborg wants to justify this by the same argument that he just rejected in the previous paragraph. IF all those who suffer from the negative externalities of climate change are compensated by those who win, then we can start playing these games about whether the net outcomes are positive or negative.
But we all know they are not going to be compensated, just like the losers after trade agreements do not get compensated, in spite of all the rhetoric to the contrary before the agreement is signed.

So the bottom line is simple. Bjorn Lomborg is in favor of the mother of all Kelo actions. Screw this property rights nonsense --- if it's for the public benefit, take what you want, and don't even bother with any compensation.

[anne]

http://www.eurekalert.org/pub_releases/2007-09/esa-swl091407.php

September 14, 2007

Satellites witness lowest Arctic ice coverage in history

The area covered by sea ice in the Arctic has shrunk to its lowest level this week since satellite measurements began nearly 30 years ago, opening up the Northwest Passage – a long-sought short cut between Europe and Asia that has been historically impassable....

Leif Toudal Pedersen from the Danish National Space Centre said: "We have seen the ice-covered area drop to just around 3 million sq km which is about 1 million sq km less than the previous minima of 2005 and 2006. There has been a reduction of the ice cover over the last 10 years of about 100 000 sq km per year on average, so a drop of 1 million sq km in just one year is extreme.

"The strong reduction in just one year certainly raises flags that the ice (in summer) may disappear much sooner than expected and that we urgently need to understand better the processes involved." ...

[Oops.]

[anne]

I can now claim to have discovered the Northwest Passage. Immortality is mine, and I am worth immortality.

[anne]

Ah, we have found ourselves a malicious troll. Troll are actually designed to be malicious, so I am being redundant. We have though a troll, several really, who are offended by science and scientists in the finest trollish way. What is it though about caring for the enviornment that bring out such trollish craziness. Yes; trolls are crazy also.

[bigTom]

anne: If this piece in sciencedaily is correct Alfred Wegener Polar Institute says average sea ice thickness is half what it was in 2001 (1M).
http://www.sciencedaily.com/releases/2007/09/070913133001.htm
So if that is true, the remaining ice is primed for very rapid melting next summer. If we take volume of sea ice -not area as the metric, we are down to perhaps a third of what we had just afew years ago...

I strongly believe that the economists are hugely overestimating the probable cost of switching away from fossil fuels. Why would I say that? Because I think once we get serious about it, we will discover ever more efficient renewable energy technologies. Already we have lots of solar companies whose technology development plans are to become competitive with fossil fuel energy. Most hope to be there within five years. Getting serious would of course multiply these sorts of efforts manyfold.
Similarly for the efficiency with which we use energy. Once we decide to seriously pursue it, I think lots of benefits will accrue. Whats been lacking is the motivation, and financial resources.

On the transportation front, a bevy of exciting future products have been announced. The most exciting are the Opel Flextreme, the Volvo Recharge, and the Chevy Volt. All of these are promised to be plug-in hybrids, which under normal intended use will use no (automotive) fuel. Clearly with a liitlle bit of buyer motivation we can start the transition away form oil within the next five years (note that is the start of the transition not the end).

So we have got to avoid being afraid of the worst case cost, and make a big push to have the needed technologies available, so that we can transition to a high-tech low-carbon world. This will happen anyway, the only question is how quickly it will happen, and who will own the technologies.