سیاست مطلوب آب و هوایی یک مدینه فاضله است: از تجزیه و تحلیل - هزینه فایده کمی تا تجزیه و تحلیل هزینه - فایده کیفی

The dominance of quantitative cost-benefit analysis (CBA) and optimality concepts in the economic analysis of climate policy is criticised. Among others, it is argued to be based in a misplaced interpretation of policy for a complex climate–economy system as being analogous to individual inter-temporal welfare optimisation. The transfer of quantitative CBA and optimality concepts reflects an overly ambitious approach that does more harm than good. An alternative approach is to focus the attention on extreme events, structural change and complexity. It is argued that a qualitative rather than a quantitative CBA that takes account of these aspects can support the adoption of a minimax regret approach or precautionary principle in climate policy. This means: implement stringent GHG reduction policies as soon as possible.

The economic analysis of climate policy is dominated by the technique of quantitative cost-benefit analysis (CBA) and the notion of ‘optimal policy’, elaborated with optimal growth theory.1 This article presents a fundamental critique of these approaches. The intention is not to denounce all current research on climate policy instruments. For example, the evaluation of taxes, permits and joint implementation on the basis of cost-effectiveness, given a fixed reduction objective, is certainly fruitful. It will be argued, however, that an overall quantitative CBA evaluation and comparison of policy options that aim to reach distinct reduction percentages, as well as a choice of optimal climate policy based on models of optimal growth, are overly ambitious. The best that can then be hoped for is a qualitative empirical analysis, in particular a qualitative trade-off of costs and benefits—i.e. a sort of qualitative CBA. This is consistent with what common sense tell us, namely that in the face of extreme uncertainty quantitative analysis has difficulty to outperform qualitative analysis, because quantitative information is either lacking or unreliable. The latter is characteristic of potential climatic change during the next hundred years. This reasoning may seem disappointing to, and is in fact strongly opposed by, economists who think that a complete quantified analysis is the only worthwhile method in the economic analysis of climate issues. It is indeed very tempting to employ all the traditional formal tools available to economists in dealing with what is perhaps the most complex issue of humanity—climate change. Fortunately, the alternative approach presented here turns out to provide both very concrete and far-reaching implications for climate policy. Perhaps this is comforting to those that are skeptical of qualitative analysis. The structure of this paper is as follows. Section 2 identifies four fundamental problems associated with applying quantitative CBA to climate change and policy. Section 3 discusses additional problems associated with the application of optimal growth theory to climate change. Section 4 pays particular attention to the meaning of a combination of extreme uncertainty and potential climate catastrophes for economic modelling and analysis. Section 5 presents an alternative approach to climate economics, based on taking into account extreme events, complexity and structural change via a qualitative CBA, and examines its policy implications. Section 6 concludes.

Taking into account all fundamental and pragmatic points of the critique presented here, implies that economists need to be more careful in applying traditional theories and methods of economic analysis for the purpose of climate policy. The application of quantitative—stochastic or expected—CBA to scenarios of climate change and policy is not just indefensible on academic grounds, it can even provide the wrong incentives for international climate negotiations. Notably, the suggestion that a choice among alternative options—complete, partial or no reduction—can be supported by quantitative CBA, has been grist to the mill of the principal opponents of a serious climate policy. As a result, current climate economics contains an implicit bias towards supporting the status quo. A methodologically relevant general point is that in the face of extreme uncertainty a quantitative analysis is often unable to offer more informative insight than a qualitative analysis. The reason is that the extreme uncertainty does not disappear by adding more quantitative sophistication to the method of analysis. Since quantification requires the adoption of a number of assumptions, it can even lead to incorrect insights, and thus do more harm than good. All economic studies, also the ones that on first sight seem to address catastrophes and extreme uncertainty, somehow limit the extent of both, which can be explained by the desire to stick to the optimization framework. It has been proposed here that complexity and extreme events related to climate change imply that a qualitative CBA is more credible than a quantitative CBA. In addition, it has been argued, on the basis of theoretical and empirical considerations, that a qualitative CBA supports the use of a minimax regret approach or precautionary principle in climate policy: implement stringent GHG reduction policies as soon as possible. The relevance of adding extreme events to the analysis is almost trivial: our serious worry about climate change is entirely based upon their possible occurrence. Therefore, it seems fair to conclude that economic analyses which have neglected them should not be taken very seriously.