Economists have illusory views of climate change

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conomists tend to see climate change as a big optimization problem: Weigh the potential costs of future disasters against the benefits of fossil-fueled economic growth, and find a price of carbon that will balance the two. Unfortunately, it's an illusory goal.

Consider, for example, a recent study by Yale University's Kenneth Gillingham and colleagues. Using a collection of so-called "integrated" models of climate and the economy, they seek to get a better handle on how various uncertainties -- in weather, population growth and technological development -- might affect the price that policy makers should put on carbon. Their conclusion: No matter what happens, the optimal price in 2020 would probably be no more than about $50 per ton.

Read Mark Buchanan’s Bloomberg View story - “What Economists Don't Get About Climate Change.”