 Wysłany: Czw 16:40, 23 Sty 2014 Temat postu: 'Discounting' the future cost of climate change |
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| 'Discounting' the future cost of climate change
Economists don't recognize the "Tragedy of the Commons", where it is the Commons that is exploited for individual profit. The players that are willing to sacrifice the future for present profit are capitalists who can get rich NOW. The ONLY solution to the Tragedy of the Commons is the "rule of law". With the Commons controlled by Law, the vast majority will not know the "costs". But those that can't make the big profit will spin it as if we all must sacrifice whereas it is they that get controlled. The movie "The Corporation" described that this aspect of our culture acts fully like a Sociopath. The question about stopping global warming is a question about whether we can bring the Rule of Law to control our sociopathic Corporations, when they control the media spin. Don Jewett 1. Projections of future economic growth. A big part of discounting is the assumption that we will be richer in the future than now. How long historical trends of economic growth continue is anyone's guess but bear in mind this quote from a Nobel prize winning economist "only fools and economists think that exponentials can continue forever". 2. Fungibility, or the notion that everything can be exchanged (now or in the future] for money. But if we wreck the planet, it will probably be beyond human capacity to fix it quickly, however much money we throw at the problem. Murder is a moral issue, not an economic one. Should we consider our impact on the environment to be a purely economic issue? It will be an issue for future economies, but when we are talking about the future of the entire planet, it surely is not just an economic issue. (3) Questionable averaging of future climate change impacts: An oversimplified calculation: Lets say the future cost of climate change is either going to be a reduction of growth of 1%/annum for the next 100 years, or else 5%/annum for the next 100 years (with equal chances of each). It is tempting to apply a numerical average and say the expected rate is 3%. That would be wrong, if you work out the numbers: 1% for 100 years is a factor of 2.7,[url=http://www.floware.fr]michael kors femmes[/url], 5% for 100 years is a factor of 131.5, the expectation is a factor of 67.1 which corresponds to 4.3% compounded. The assumption of compounding amplifies the more extreme impacts. If we are going to account future spending on fixing climate change with a compounded discount rate, then the appropriate "expected" climate change impact to consider is much closer to the worst case than to the most likely case and that makes a huge difference. As a footnote, whenever I read ecomonics, I am always struck by the fact that economists use the word "rational" where physicists or mathematicians would use the word "naive". |
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