The economics of long-term global climate change

Abstract

This report is intended to provide an overview of economic issues and research relevant to possible, long-term global climate change. It is primarily a critical survey, not a statement of Administration or Department policy. This report should serve to indicate that economic analysis of global change is in its infancy few assertions about costs or benefits can be made with confidence. The state of the literature precludes any attempt to produce anything like a comprehensive benefit-cost analysis. Moreover, almost all the quantitative estimates regarding physical and economic effects in this report, as well as many of the qualitative assertions, are controversial. Section I provides background on greenhouse gas emissions and their likely climatic effects and on available policy instruments. Section II considers the costs of living with global change, assuming no substantial efforts to reduce greenhouse gas emissions. Section III considers costs of reducing these emissions, though the available literature does not contain estimates of the costs of policies that would, on the assumptions of current climate models, prevent climate change altogether. The individual sections are not entirely compartmentalized, but can be read independently if necessary.