But let’s start by accenting the positive. Krugman’s explanation of mainstream environmental economics is clear and powerful. He recognizes that there really are a lot of free energy lunches lying around uneaten, in the form of potential efficiency improvements. He knows that predictions of economic disaster due to carbon policy are without foundation and fail to take into account the potential for innovation. Above all, he understands that investments in minimizing climate change offer valuable insurance against potentially catastrophic outcomes—the ice-sheet meltoffs and methane megabelches that we have little ability to predict and from which we would have little chance to recover.
Why ask for more? Because three enormous concepts are completely missing.
1. Equity. How the burdens of climate policy, bearable as they may be, are distributed is a very big deal. First, vast sums of money—hundreds of billions of dollars—are at stake. Note that these do not reflect costs as economists understand the term. We are not talking about overall loss ... Read more