Nordhaus dangerous gamble for humanity’s future
from Lars Syll
Nordhaus’s transgressions are immense. His ‘damage function’ which he uses to estimate global warming damage is incorrect and uses data that has nothing to do with climate change. Despite this, the Intergovernmental Panel on Climate Change (IPCC) uses his model to advise governments about the economic impact of global warming.
Nordhaus and other mainstream climate economists certainly have a lot to answer for. Their thinking has seriously delayed action to avert damage done from climate change.
The central problem with Nordhaus’s model is the “damage function”, which is a mathematical fiction that has little to do the real world. Using a spurious method, he calculates that 2°C of warming will only reduce global economic output – GDP – by 0.9 percent, and 4°C would cut GDP by 3.6 percent.
These are trivial changes. If it were true, there would be little to worry about. This is the reason that Nordhaus has repeatedly argued that from the point of view of economic rationality an “optimal” path would be 3.5°C of warming above preindustrial levels.
Climate scientists, meanwhile, are truly panicked about a 2°C increase. They assert that global warming must be kept to 2°C or below, or risk tipping us into a “domino-like cascade that could take the Earth’s system to even higher temperatures”.
Nordhaus’s damage, however, function projects a smooth transition. So it is like describing a canoe trip along a river with a waterfall by saying you will descend seven metres for every kilometre paddled. That would describe the river section of the journey very well, but not the part where you plummet over the waterfall …
Nordhaus it seems has completely failed to understand climate science. The only changes he has made to his research over the years have made it less able to handle tipping points.
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Edward Fullbrook and Jamie Morgan
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Maria Alejandra Madi / Jack Reardon
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Edward Fullbrook and Jamie Morgan
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Real-World Economics Review Blog 
This is a sophisticated form of denial and one that will nurture crude and corporate deniers for years to come. Except that there may not be years to come. It is important that enlightened economist drill down into the assumptions and corroborated data that is used. For example what assumptions/predictions are made about the destruction and replacement of capital due to catastrophic climate events. The reconstruction of Great Abaco Island will see a leap in that micro-economy’s GDP (if it happens).
If you factor for all the effects of global warming over 2 degrees C, global GDP may even increase a lot. Think about the dramatic increase in health expenditures, the huge costs of all palliative and preventive measures, the enormous costs of reconstructing damaged infrastructures, that is, the fantastic increase in all kinds of public investments, etc. It would be an massive global economic big push, to compare (in not only economic terms) to World War II. This speaks about the insanity or stupidity of mainstream economic approaches to global warming. And also about the meaninglessness of GDP in our dire circumstances…
Hence the significance of Fullbrook’s new book on Market-value, pp.70-71.
There is so much wrong with Nordhaus and his “theories,” along with the math he uses and the masters here serves. First, Nordhaus is an economist. He examines things economically. That’s like the wonderful tool economists invented, the cost-benefit study. I’ve read hundreds of these in environmental assessment reports for construction of power plants, transmission towers, oil and gas drilling, pipelines, etc. Consider this example from Oklahoma. There are several grouse resident only to Oklahoma and Alabama that reside near sites that are also prime drilling sites. The environmental assessments all concluded that drilling was the economically valid action to take, since the grouse had no monetary value. This conclusion considers only the needs of oil and gas corporations. Primarily because the studies were performed by engineers trained in economic-engineering. Nordhaus takes this route but on much bigger scale. Second, Nordhaus’ reputation as an “economic scientist” is undermined if he allows anything other than economic impacts of climate change to be considered. Third, Keen is correct that Nordhaus, “has completely failed to understand climate science.” But this was never Nordhaus’ aim. In fact, it was most likely Nordhaus’ aim to ignore climate science as much as possible. Finally, Nordhaus is a prize winning economist. Who put up the money for these prizes and the University professorship Nordhaus was given? It was people like the Koch brothers. In the face of all this, the thing that most impresses me about Nordhaus is his audacity. He makes claims about protecting human life and the health of the planet and fighting climate change that are obviously false. But he refuses to give up the claims. Makes you believe the art of lying is not dying, as Mark Twain suggested.
There is no adequate accounting for non-renewable and non-recyclable waste in main stream economics. Economists continue to prosper, to thrive and to influence our culture and earth with a whole segment of missing information required to understand the system of the earth. Much as I have enjoyed reading this blog, it still seems that the focus is on the entirely inappropriate economics of mankind’s mental justification of the persistence of wealth at the expense of the great majority of humans and the risk to the future of all creatures. Surely, there is a cure for this failure to account for risk beyond the very short term thinking o f economics.
Charlie, the French had a cure for it in 1789. Sharp blade and a 3 meter drop. Want to try that one?
mais oui (humor/irony)
The power of the creative human imagination and ingenuity are one of the main core elements of entrepreneurial innovation. Such human creativity can either be directed into solving humanities pressing human problems (e.g., climate change, eradicating polio and malaria, or creating sanitation for poor countries thereby eliminating needless childhood death from diarrhea due to polluted water, etc.) or towards superficial consumer driven things of no lasting value that contribute to further pollution of air, water, and cultural rot. It really comes down to vision and ethics and ultimately these are rooted in culture.
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Both my wife and I having worked for Bill Gates at Microsoft during the early years know his marriage to Melinda has mellowed him with time, and unleashed his entrepreneurial spirit to solve pressing world problems utilizing the vast resources at his command. To see them work together they do now is inspiring.
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We just watched Inside Bill’s Brain: Decoding Bill Gates. It is an insight into entrepreneurship. From poop (i.e., sanitation) to innovative and safe nuclear energy the Bill & Melinda Gate’s Foundation is using its vast resources and wealth to solve real-world problems, like eradicating Polio and Malaria and bringing sanitation through innovative entrepreneurial startup competitions aimed at creating self-sustaining and energy efficient toilets and new technology waste treatment plants.
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Imagine an entrepreneurial startup that re-engineers nuclear fuel plants taking existing spent nuclear waste and uses it in a nuclear energy plant that can’t blow up (it is not under pressure) or melt down. All that nuclear waste US states are fighting over not having it stored on their land could now be generating energy. Bill Gates actually had US Government permission and China’s Xi Jinping ready to launch the manufacturing of these nuclear fuel plants in China until the political disaster called Trump came on along and started a trade war; no factories will now be built and no manufacturing will take place despite the Nobel worthy existence of transient hypersurfaces to nowhere ;-) Culture literally tRumps useless mathematical and/or theoretical masturbation.
Rob, your view of Bill Gates is sugar coated, deeply sugar coated. Microsoft, which routinely commits very serious crimes, tries to come across as some sort of philanthropy whereas those who share their work with the public (for greater good) are described as erratic, rude and unworthy of respect from corporations (outcasts basically, being deprived of income). Case in point, GNU/Linux. Bill Gates says he is on a “Jihad” Against GNU/Linux, But, at the same time calls GNU/Linux users/developers engaged in self-defense foul-mouthed ‘Microsoft Haters.’ Not the kind of person to whom I would trust the future of hundreds of societies; perhaps the entire world.
Unexpected appeal from the International Monetary Fund, the central stronghold of global neoliberal orthodoxy:
“International institutions and governments must exert their influence to bring about a new mindset—an approach that recognizes and implements a holistic approach toward our own survival, which involves living within the bounds of the natural world.”
From the current issue of the IMF’s official magazine Finance and Development, R. Chami, T. Cosimano, C. Fullenkamp, and S. Oztosun, “Nature’s Solution to Climate Change.”
The IMF always accepted the climate change science. They assumed, however that the rich, including themselves could buy their way out of it consequences. Now they’re frightened their assumption may be incorrect. Fear is a powerful motivator.
Thanks everyone for filling the gaps in for us. I’ve been doing some other tough writing recently (defending Rep. AOC from the Centrists) and it’s good to see you take Nordhaus down a notch or two – or more.