jonaanda’s Recent Comments

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  Joseph Romm on Weitzman

  Your summary of Weitzman is excellent; but I'm not sure cost-benefit analysis gets us where we need to go.  Coming from Wall Street, where fat-tail risks are dynamically hedged daily, it seems like an options-based approach is needed.  Yes, that invloves relative varince calculations that are far from empirical...and yes, real options are still leading edge even in finance (so very tough to use with policymakers)...but pulling Weitzman's uncertainty paradigm into the world of risk management seems worth a try.

  From a piece I wrote a few weeks ago about Lomborg ("Risk Managment":

  Innovation requires linking capital to ideas; without carbon limits that process is blocked. Reducing carbon emissions by up to 2% per year from current levels, over a 40 year period, will deliver more technology and potentially at less cost than his proposal. But what if Lomborg is right and limiting CO2 now is more expensive than waiting? Well ... the choice of policy depends on the nature of the risk. Science points to climate outcomes that are statistically skewed towards worst-case, and irreversible, outcomes. (Specifically, the distributions of both the sensitivity of climate to greenhouse gas concentrations and the damage function are both lognormal.) That argues for stringency now and leniency later. If ex-post, capping emissions now turned out to be more expensive, we still made the right choice given the nature of the risk we faced.

  What my earlier piece needs are the numbers to back it up!On Harvard economist disses most climate cost-benefit analyses posted 2 years, 2 months ago 2 Responses

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  responding to odograph

  agreed that a carbon tax is about incentives...and that the question is how much...mit and ipcc would say that a price path of roughly $40 to $100 (real current dollars) between the start of policy and 2030 would get us to close to 450ppm/2 degrees...(i think technology will make those numbers turn out high)...also, carbon trades in europe at just under $30...even the weakest bill in congress (bingaman-spector) has a price path of $12 to $32 from start to 2030 (done by manipulating the market through a safety valve...which limits both the trading price AND upside to innovators)...in any case Lomborg's $2 is damn near worthless...in exxon, I was just trying to make a relatively simple analogyOn Bjorn Lomborg's new book misunderstands risk and investment posted 2 years, 3 months ago 11 Responses