Guest Post by Willis Eschenbach
A few months ago [2012] in the New York Times Green Blog they talked about “monetizing” the “social cost” of carbon. The article said:
In 2010, 12 government agencies working in conjunction with economists, lawyers and scientists, agreed to work out what they considered a coherent standard for establishing the social cost of carbon. The idea was that, in calculating the costs and benefits of pending policies and regulations, the Department of Transportation could not assume that a ton of emitted carbon dioxide imposed a $2 cost on society while the Environmental Protection Agency plugged 10 times that amount into its equations.
How does one “monetize” something, and what is a “social cost” when it is in its native habitat?
First, the easy one. A “social cost” is generally some estimated or inferred cost to society from something, in particular a cost that is not reflected in the price of the item itself. For example, alcohol has a social cost in the form of a variety of societal problems. That cost is not included in the raw ex-factory price of alcoholic beverages.
Next, to “monetize” a social cost means 1) to attach some monetary value to that social cost, and then 2) to attach that monetary value to the retail cost of the product in the form of an increased price. In the case of alcohol, that is usually done through government taxes. Sometimes, the revenue from these taxes is dedicated to ameliorating that social cost. In the case of alcohol, that might be in the form of alcohol dependence programs or clinics. Other times the income goes into the general fund.
This is generally not a problem as long as there is widespread agreement about the existence of the social costs. In the case of carbon emissions, however, no such agreement exists. There is no evidence of current costs or damages, only models of possible imagined future damages. Accordingly, even among those who agree that there is a social cost to carbon emissions, there is wide disagreement about the size of those costs.
However, despite the differences, and despite the lack of evidence of any demonstrable costs, the attempt to “monetize” the imagined future damages from carbon emissions continue apace. As you might imagine, I object to the whole process. Oddly, they didn’t listen to me, and the article in the NY Times say that they have settled on a value of $21 per tonne of carbon. The article said one government agency was using $2 a ton and another was using ten times that, or $20 a ton. So I guess they took the average of the two and used that average of $21 per ton for all government calculations … but again I digress.
Over-riding everything in this question is the unthinking, un-acknowledged destruction from jacking up energy prices. This always hits the poor hardest, as I have discussed elsewhere. Energy taxes, including carbon taxes and “monetizations” are the most regressive tax of all. But I digress … I was discussing monetization of carbon.
Let me recapitulate my two main objections to carbon monetization. The first is that for many issues, including carbon, there is no agreed upon way to establish the monetary values. In the case of CO2 there are questions about the very existence of such costs, much less their value. As the NYT article points out, there is great disagreement over the $21 figure even among those who agree that there is some social cost to CO2. Since there is no actual evidence of any actual costs, this is all merely claims and counterclaims, even between adherents. There is no objective way to settle the disagreements.
My second objection is that while people are often in a hurry to monetize the social costs of something, they rarely take the necessary other step. They rarely are in a hurry to monetize the social benefits of something. But if you do one, you have to do the other. After all, this is why it’s called a “cost/benefit” analysis …
I have even had someone seriously argue that there is no need to monetize the social benefits, because they were already included in the market price. After all, he argued, the reason we buy something is because of the perceived benefits. So they are already included in the price.
I find this argument singularly unconvincing. Some benefits are already included in the price, and some aren’t. Since a single counter-example will serve to disprove the general theorem, let me take a social benefit of CO2 as an example. This is the known effect of atmospheric CO2 levels on plants, which is that they increase their production with increasing atmospheric CO2. Obviously, nobody goes out and buys gasoline for their car in order to help the plants, so it is not included in the market price. However, increased plant growth is an undoubted social benefit, a huge one that affects the whole world. Therefore, it is an un-accounted for social benefit, one which does not get included in the price.
Accordingly, let’s take a look at monetizing this un-accounted social benefit. Curiously, the value of increased plant production is both easier and less contentious to calculate than are the claimed social costs of CO2. Why?
Well, it’s because the claimed costs of CO2 are future, imaginary costs that cannot be measured, where the increased plant production is both real and measurable. But I digress.
The folks over at CO2 Science have looked at the experimentally measured increase in plant biomass due to a 300 ppmv increase in atmospheric CO2. The figures are here, in Table 2. The changes are different for each plant, ranging from about 30% to 60%. So let’s be conservative and use the bottom end, an average 30% increase from a 300 ppmv increase. CO2 levels have gone up about 115 ppmv since pre-industrial times. This means that there has been on the order of a 10% increase in the annual production due to CO2.
Now, how much is this 10% increase in global plant production worth? Well, the marvelous FAO database called FAOSTAT puts the value of the annual plant production at ten trillion dollars annually, so lets assume a third of that, say $3.3 trillion dollars. Is $3.3 correct? There you have the problem with monetization … no way to know. But assuming that a 10% increase from some smaller value is due to increased CO2, that puts the annual value of this one single solitary social benefit of CO2 at over $300 billion dollars.
How does that compare to the proposed $21 per tonne social cost? Well, at present we’re emitting about 9.5 gigatonnes of carbon annually. That would mean that the total monetized social cost would be $21 times that number of tonnes emitted, which gives us about $200 billion dollars per year.
So here’s the balance—we have a verified, measurable social benefit to the planet of $300 billion annually, and an unverified, unmeasurable estimated social cost of $200 billion annually. Which leaves me with just one burning question …
When do I get my check for the social benefits I’m providing? The US has provided somewhere around a third of the CO2 responsible for that social benefit, that’s $100 billion per year in benefits … three hundred million Americans, that’s about $333 per American per year …
w.
PS—What’s that I hear you saying? You think I calculated the benefits wrong?
Well, certainly, perhaps I did. After all, it was just a rough cut. But all that does is bring us back to my first objection to “monetizing” CO2 … it’s very hard to get agreement on the actual values.
PPS—Note that I’ve only considered one single social benefit, the increase in plant production. Since their claimed costs relate to claimed future temperature rises, how about the benefit of increased ice-free days at the northern ports if temperatures do rise? And the longer growing seasons if temperatures increase? How much are they worth worldwide? They likely have included the extra costs from air-conditioning to fight the fabled future heat, but have they included the reduction in winter heating? I could go on, but I’m sure you get the point. The whole thing is an exercise in fantasy, shifting sands with no clear answers.
Climate Ace,
Let me put it in terms you can understand:
At current and projected levels, CO2 is harmless, and beneficial to the biosphere.
That is a testable hypothesis. Try to falsify it, per the scientific method.
@trafamadore:
No name calling needed. Concerning droughts:
http://www.c3headlines.com/2010/03/another-failed-agw-prediction-global-warming-impact-on-s-korea-droughts-floods-is-nada.html
http://www.eoearth.org/article/Hydrological_Variability_and_Change?topic=49491
http://news.nationalgeographic.com/news/2009/07/090731-green-sahara.html
And even the IPCC is changing their mind about this, it seems:
http://climatedepot.com/a/18800/Prof-Pielke-Jr-Analysis-of-UN-IPCC-Draft-report–IPCC-shows-almost-complete-reversal-from-AR4-on-trends-in-drought-hurricanes-floods
davidmhoffer, yes, I will stop. It was a funny premise that growing more corn could offset climate change impacts, so I gave my reaction to that, and that is sufficient.
D Böehm Stealey says:
January 12, 2013 at 5:41 pm
Climate Ace,
Let me put it in terms you can understand:
At current and projected levels, CO2 is harmless, and beneficial to the biosphere.
That is a testable hypothesis. Try to falsify it, per the scientific method.
I prefer the BAU approach of continuing with our once only experiment with the planet and the future of humanity. You know it makes sense.
BTW, did you really mean what your statement implies, that CO2 is ‘beneficial’ in all cases and in all circumstances? Or was that a bit of an over-generalisation?
Jim D says:
January 12, 2013 at 6:02 pm
davidmhoffer, yes, I will stop. It was a funny premise that growing more corn could offset climate change impacts, so I gave my reaction to that, and that is sufficient.
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That wasn’t even the premise. Your reaction was to something rattling around inside of your head. Go back and read the thing from the beginning. Seriously. This time pay attention to what is being said instead of what you presume is being said. If you work hard at it, you may be able to overcome the reading comprehension issues you have thus far demonstrated.
@ur momisugly Climate Ace: 5:35 pm
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mpainter:The warmer the world, the higher the food production. This is an indisputable fact.
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Climate Ace says: Who said anything about acidification? Not me. Stop pretending that I did.
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mpainter: then why don’t explain your statement concerning pterapods, if you did not mean to refer to the standard context of ocean acidification.
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Climate Ace says: “Many pollutants (as well as poisons) are beneficial within certain parameters”
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mpainter: CO2 is not “many pollutants(as well as poisons)”. CO2 is entirely beneficial and atm CO2 forms the basis of life. The idea that CO2 is harmful is an unsustainable myth.
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Climate Ace: I see that you are avoiding the issues of threshold events, non-linearity and the lack of a time frame for economic discussions.
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mpainter: I never respond to pseudo-scientific gobbledegoop.
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Climate Ace: BTW, I notice that you ignored the fact that the Coalition has as a policy the spending of $10 billion of taxpayers’s funds to reduce Australia’s CO2 emissions by 5% by 2020.
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What do you expect me to do about that? Poor Australia.
S. Meyer says: “Concerning droughts”
Thank you for your effort S. Meyer, but you found internet opinion pieces not published articles. And even in them the word “maybe” was everywhere.
I was a leading Q from me because I know there is no published data saying that there will be more or less droughts with AGW; we really dont know. All people can guess with regard to drought is that some places (Texas) might be loosers and some places (Canada) might be winners, but those are only guesses.
But no name calling, agreed.
Climate Ace;
BTW, did you really mean what your statement implies, that CO2 is ‘beneficial’ in all cases and in all circumstances?
>>>>>>>>>>>>
Well since Stealey was rather specific, saying “At current and projected levels” it seems that you suffer from the same reading comprehension problem as Jim D. btw, your complaint about ignoring your whining about threshold events is interesting. Are you ignoring my response to you, failing to understand it due to reading comprehension issues, or just hoping that by complaining you can distract attention from the fact that someone else responded to you and made you look rather foolish?
mpainter says:
January 12, 2013 at 6:20 pm
@ur momisugly Climate Ace: 5:35 pm
mpainter:The warmer the world, the higher the food production. This is an indisputable fact.
How much warmer?
Climate Ace says: Who said anything about acidification? Not me. Stop pretending that I did.
mpainter: then why don’t explain your statement concerning pterapods, if you did not mean to refer to the standard context of ocean acidification.
You are verballing me. I did not mention ‘acidification’. Stop pretending I did.
Climate Ace says: “Many pollutants (as well as poisons) are beneficial within certain parameters”
mpainter: CO2 is not “many pollutants(as well as poisons)”. CO2 is entirely beneficial and atm CO2 forms the basis of life. The idea that CO2 is harmful is an unsustainable myth.
Arguing that any substance must always be either beneficial or harmful fails the pub test.
Climate Ace,
So you are unable to falsify my hypothesis spelled out @5:41 pm above. Don’t feel too bad, no one else has been able to falsify it, either.
You ask: “…did you really mean what your statement implies, that CO2 is ‘beneficial’ in all cases and in all circumstances?”
Don’t be silly. In science as in life, nothing is 100%. But the benefit of more CO2 comes about as close to 100% as anything. Unless you can cite a verifiable, testable, unequivocal, quantifiable level of global harm from the rise in CO2.
If not, then more CO2 is “harmless”. QED
davidmhoffer says:
January 12, 2013 at 5:28 pm
Climate;
Possible threshold events: changes to environmental parameters such that insect pests, fungal diseases of crops, feral animals and weeds cut lose. This sort of stuff happens all the time.
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You bet it does. Has for centuries. Episodes in the past have wiped out entire civilizations. Of course that was before CAGW. Hmmmm, maybe they aren’t even caused by CAGW? Well never mind that, point is they don’t have the same devastating impacts they had in the past. Ya know why?
‘cuz us pesky humans invented pesticides, fungicides, animal traps and herbicides.
Thank you for accepting what several other posters are still rejecting: the existence of threshold events.
Climate;
The non-linear nature of climate behaviour is, I believe, reasonably well accepted.
>>>>>>>>>>>>>>>>>
Yes it is. CO2′s effects are logarithmic and the cooling response of the planet is exponential. As a consequence the earth’s temperature varies within a very narrow range as confirmed by the geological record which includes time periods with CO2 levels in the thousands of ppm. Thanks for bringing this important point to everyone’s attention.
Thank you for accepting what several other posters are still rejecting: the non-linear nature of climate. Mpainter persists in calling it ‘unscientific gobbleydook’.
These elements are ignored in Willis’ post detracts significantly from the credibility of the post. As does the absence of a time frame. As does his ignoring other aspects of monetization of CO2 emissions, including that by the insurance industry.
@Ace, climate that is,
Care to produce some evidence of AGW?
Then some impact of AGW over unmeasurable?
All you’ve managed so far is grandiose assertions, in bureau speak… Troll.
You have filled a lot of space on this thread, but have not said much, if you won’t provide some arguments of substance, with evidence, its thread-jacker, troll and bureaucrat.
trafamadore;
I was a leading Q from me because I know there is no published data saying that there will be more or less droughts with AGW; we really dont know.
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I provided you a link to an article discussing a peer reviewed paper recently published in Nature. This paper is heavily referenced in the draft of the UN report scheduled to be released next year. I also suggested you read the most recent literature from the WMO on weather extremes which says the same thing. I suggest you either read the literature so as to be able to discuss it, or continue looking foolish by insisting that the most recent science doesn’t say what you want it to say.
Climate Ace says:
January 12, 2013 at 6:45 pm
>>>>>>>>>>>>>>>>>>>>
Having had his entire premise demolished in my response, Climate Ace can only focus on the 2% of my response that he tries to paint as somehow agreeing with him. Sorry Ace, I didn’t agree with you. I pointed out that you used some words that sound all sciencey but that you drew conclusions from them that those very sciencey words don’t support.
I go back to my original point. While it is true, following the logic, that taking the purported crop-yield benefit could pay for future damage via some kind of taxing scheme, this assumes the farmers would be happy to just donate their CO2-produced profit, that crop prices could be kept high to pay for climate damage, and that the increased population didn’t just use up that increased yield, but otherwise the idea is fine. So we pay for the damage via the food prices rather than a carbon tax, all assuming the crop yields go up, and demand doesn’t, to support this plan. Excellent idea(?).
JT says:
January 11, 2013 at 8:52 pm
Um, the average of 20 + 2 = 22 is calculated by dividing 22 by 2 which = 11, not 21.
You don’t understand government arithmetic.
“maldistribution of wealth and resources, and reining in the growth of CO2 emissions.”
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So we approach the nub of the issue. Wealth is “maldistributed” by “malappropriation” of carbon. The dinosaurs died for our sins. Whether it be the suffering of the I phone deprived in this country who must suffer the indignity of flipphones or the actual suffering and starvation where industrialization has not occurred, energy is salvation.
Energy is a dancing plasma. More energy dances between the surface of the earth and the atmosphere than the earth recieves from the sun. According to quantum theory we create it by merely observing it. Still thinking about that one, but fission is essentially denied, fusion is being fussy, and we are left for the time being with Carbon, the element of life.
If we were really messing up the place with Carbon it would be one thing, but all of the evidence except for a twenty year correlation with atmospheric warming indicates otherwise.
D Böehm Stealey says:
January 12, 2013 at 6:39 pm
You ask: “…did you really mean what your statement implies, that CO2 is ‘beneficial’ in all cases and in all circumstances?”
Don’t be silly. In science as in life, nothing is 100%.
OK. So your statement was silly because it was an overgeneralisation. I suggest you vary it accordingly.
I would also be curious to know your views about where CO2 is not beneficial.
davidmhoffer says:
January 12, 2013 at 6:58 pm
Climate Ace says:
January 12, 2013 at 6:45 pm
>>>>>>>>>>>>>>>>>>>>
Having had his entire premise demolished in my response, Climate Ace can only focus on the 2% of my response that he tries to paint as somehow agreeing with him. Sorry Ace, I didn’t agree with you. I pointed out that you used some words that sound all sciencey but that you drew conclusions from them that those very sciencey words don’t support.
Which ‘entire premise’? That effective monetisation requires a time frame and needs to integrate climate thresholds and the non linear nature of climate? You have not demolished the premise. You have reinforced it. And no wonder. It is the sort of stuff investors do when they analyse an IPO. It is sort of stuff insurance companies take into account when they set their premiums.
I wasn’t really all that keen to get into a discussion about the implications of the concepts, although you make a start. They exist and therefore it is necessary to take them into account when trying to monetizing CO2 in a comprehensive and integrated fashion. Willis doesn’t do this which is why his post lacks credibility.
I am just grateful that you accepted their existence because there are a few posters who appear to be having difficulty with the notion that they exist at all. It means that they have difficulty understanding Willis’ post.
Caldermeade says:
January 12, 2013 at 2:06 pm
Along with S. Meyer, I’m having a bit of a problem with your cassava/CO2/cyanide connection and the information in this mid-2003 report:
http://researchnews.osu.edu/archive/cassava.htm
“Sayre and Siritunga engineered cassava plants in which the expression of the genes responsible for linamarin synthesis was blocked. They then analyzed the linamarin content in these plants’ leaves and roots, finding a significant reduction of the cyanogen in leaves (by 60 to 94 percent) and in roots (by 99 percent) compared to normal cassava plants.”
Climate Ace : How much warmer
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How much warmer do you like it? The warmer the world, the more life florishes.
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Climate Ace: I did not mention ‘acidification’. Stop pretending I did.
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You are the pretender; quit being evasive- For the second time, I ask what you mean by this statement:
“4) the impact on food availability caused by chemical changes in the oceans, for example, the possible collapse of Southern Ocean fisheries based on pterapods”
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Climate Ace: Arguing that any substance must always be either beneficial or harmful fails the pub test.
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Atmospheric CO2 forms the basis of life. The higher the level, the more life florishes. Formerly it was believed that CO2 would bring the further benefit of a warmer world, but that theory has so far been nothing but a disapointment.
Concerning what I refer to pseudo-scientific gobbledegoop, I mean your disconnected statements which showcase certain terms in order to convey the impression of competence. In fact, you appear as poorly educated and doctrinaire- another glib, but evasive, would-be scientist from Australia who imagines to refute the skeptical viewpoint.
Climate Ace,
As David Hoffer noted, I was quite specific. My statement was not an “overgeneralization”, it was a specific hypothesis that states that there is no global harm resulting from the rise in CO2.
You also say:
“I would also be curious to know your views about where CO2 is not beneficial.”
You do not understand the Scientific Method. It is your conjecture that AGW is a problem. It is your conjecture that CO2 causes global harm. Therefore, it is incumbent upon you to provide testable scientific evidence, per the Scientific Method, verifying that global harm.
If you cannot do so, then my hypothesis stands: CO2 causes no verifiable global harm, and thus it is “harmless”. QED
Willis,
Regarding RIRO:
Here is a handy little site I’ve often found useful . . .
http://www.acronymfinder.com/RIRO.html
. . . that shows, by rank, the common meanings of many acronyms.
Perhaps the one intended is at rank #2:
Rubbish In Rubbish Out
Nonsense. All of those factors are included in the $21 per ton that the alarmists claim is a reasonable estimate. Willis accepted the alarmist value in his calculation. Nothing was ignored.
davidmhoffer says: “I provided you a link to an article discussing a peer reviewed paper recently published in Nature.”
Right. Does the paper say that droughts cant be caused by AGW? No. It says there is no conclusive evidence that that droughts are caused by AGW but there could be. That means we dont know. Which is what I said.