Arrow on CO2 reduction (December 20, 2007)

Greg Mankiw approvingly cites Ken Arrow, who concludes:

Critics of the Stern Review don't think serious action to limit CO2 emissions is justified, because there remains substantial uncertainty about the extent of the costs of global climate change, and because these costs will be incurred far in the future. However, I believe that Stern's fundamental conclusion is justified: we are much better off reducing CO2 emissions substantially than risking the consequences of failing to act, even if, unlike Stern, one heavily discounts uncertainty and the future.

• The IPCC's worst-case predictions have weak foundation, but are much of the argument for doing something "just in case". Further, it is entirely possible that the IPCC underestimates future damages due to CO2, and we will need to find some other tool very quickly. CO2 control only pays off if we are in the narrow band of future uncertainty where damages are high but not too high.
• There is a lot we can do with a trillion dollars. Arrow talks about GDP in percentages, which makes the numbers seem small. If you do the math, though, it adds up to trillions of dollars quickly, and hundreds of trillions per year by 2100. Given that amount of money, if you wanted to save the environment, what would you spend it on? Arrow joins the camp that says we should spend it on incremental removal of CO2, but why not try and find a more efficient way to spend it? For that matter, why not use it for humanity's more pressing problems?
• Technology changes change the whole story. Plants can remove CO2 directly from atmosphere. Can humans learn to emulate this process? Consider one of Dyson's ideas in this direction. If one such idea works out, then the trillions spent on CO2 emissions control will have been wasted.
• The costs of adaptation used in the Stern report are hard to believe. In the developed world, for various reasons, environmental problems have stopped being catastrophes. Deep down, do we expect this to change? How much will it really cost an advanced society to deal with even the worst-case predictions? I have not studied the Stern report myself, but Roger Pielke claims that "the Stern Review uses the Muir-Wood et al. (2006) as the sole basis for projecting future global losses from extreme events (see Table 5.2, p. 138)".