Nordhaus (leading environmental economist) points out:

Suppose that scientists discover that a wrinkle in the climatic system will cause damages equal to 0.01 percent of [global] output starting in 2200 and continuing at that rate thereafter. How large a one-time investment would be justified today to remove the wrinkle starting after two centuries? The answer is that a payment of 15 percent of [the] world’s consumption today (approximately $7 trillion) would pass the [Stern] Review’s cost-benefit test. This seems completely absurd.

The larger problem with the Stern report though is that it is internally inconsistent. He chooses to weight the income of those living today about equally with those living 100 years from now. BUT, he also weighs the welfare of those living in Bangladesh more heavily than those living in the US. This is quite reasonable. It makes perfect sense to think that a $1 is much more valuable to a Bangladeshi than to an American because Americans are much wealthier. BUT, the same is also true when comparing with people today and people in 2100. The people in 2100 (assuming a 4% gdp growth rate) would be 64 times wealthier than us. Losing a $1 for them is a lot less than losing a $1 for us.

Yes, choosing a discount rate is a matter of ethics, but even if we weight the future equally with today, you still wouldn’t use Stern’s discount rate (if you properly account for inequality). If you add in uncertainty, Stern’s estimate becomes even less tenable.

Again, you can choose to believe the Stern report, just like some people choose to believe the few scientists out there that maintain global warming does not exist. Both are reasonable opinions. But they are both out of line with the consensus.

Also, on a technical note, while a linear adjustment may be reasonable, it also might not. Depends how those numbers were calculated, as there are many non-linearities in the macro-economy.

In addition, the choice of a high or low discount rate is an ethical, perhaps even moral, decision, as discussed in this article in Scientific American (excellent read, BTW). Economists who value their own and their children’s personal prosperity higher than some hypothetical future grandchild’s prosperity will choose a high discount rate, while economists who value their hypothetical grand children’s prosperity higher will choose a lower discount rate. In other words, it’s not a question of debunking, it’s a question of ethics, and seeing as ethical considerations are dramatically more subjective than mathematical, scientific considerations, they’re arguably impossible to “debunk” as such.

As for my numbers, page 9 of the lower Stern link has the cost per ton of equivalent CO2 (tCO2e) as $30 assuming a cost o 1% of global GDP (the Stern Review’s original estimate of what it would cost to address global heating if we started in 2005). Stern himself is now estimating that, with two more years of scientific data, the cost today is more like 2% of GDP, or $60/tCO2e. It’s still not $68 like I said, so I’ll need to correct my spreadsheet tonight when I get home – I must have found a different number somewhere and lost track of where.

How I got the $170 and $680/tCO2e was I assumed a linear relationship between $/tCO2e and percentage of global GDP required to fix the problem. So if Stern’s original estimate was $30/tCO2e for 1%, then that would be $150/tCO2e for 5% or $600/tCO2e for a 20% reduction in global GDP. I’ll add a better explanation of my math tonight as well.

I was just rambling on about what my initial thoughts tend towards when i hear numbers like that come from a study like that.

Even using the Hahn/Passel assumptions, i question it. How many years would that $1.7T be spread over? Sure, that’s a bundle of money, but if it takes 10, 15, or 20 years to come out then it will be in much more easily squandered increments.

Or we could look at as less than five years of military expenditures (and that’s using official budgetary figures that don’t count multiple theaters of engagement or all the other places that the DoD hides its money)

I realize that they’re trying to make the numbers look so good that only a fool would say “no”, but i worry that most people won’t realize how hard they are trying to make the numbers look big. This, of course, is before we even start dissecting how small they attempt to make the costs look.