Economists and climate change: Building castles in the sky

The problem with Nordhaus’ thinking (and that of many others like him) is that he cannot conceive of abrupt discontinuities in the workings of the planet or the workings of human society. In short, he cannot conceive that climate change could alter our environment so thoroughly and disrupt our agriculture so completely that it would lead to catastrophic results.

It is for this failure of imagination that economist Steven Keen recently took Nordhaus to task, showing through a careful critique of Nordhaus’ equations, that even those equations demonstrate catastrophe ahead when provisioned with the proper numbers and understanding. When Keen adds in what we know about tipping points in the climate system, he finds that Nordhaus’ own equations reveal that “[a]t 3 degrees, damages are 8 times as high. At 4 degrees, the ratio doesn’t matter, because the tipping point function says there would be no economy.” What a difference understanding the nonlinearity of the climate system makes!

Economists and climate change: Building castles in the sky – Resilience

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