Economists: Climate Change Poses Economic Threat while Reducing Emissions Promises Net Benefits

Researchers at the New York University (NYU) School of Law issued today (4 November 2009) a policy brief summarizing the findings of its survey of economists on key questions related to climate change policy. "There is a strong consensus among the top economic experts that, in fact, climate change represents a real danger to important sectors of the U.S. and global economies,"  the report's preface says.  "Moreover, most believe that the significant benefits from curbing greenhouse gas emissions would justify the costs of action."

Economists & Climate Change:Consensus and Open Questions [PDF], produced by the NYU School of Law's Institute for Policy Integrity (IPI) says that:

“The majority of top economists surveyed feel that the United Sates should reduce domestic emissions regardless of the actions of other countries. They strongly support market‐based schemes for reducing emissions, such as a carbon tax or a cap‐and‐trade approach. There is also agreement that if a cap‐and‐trade system is established, the emissions allowances should be auctioned rather than distributed for free. There is near unanimity among respondents that pricing carbon—whether done through a tax or cap‐and‐trade program— will create incentives to invest more in energy efficiency and cleaner energy production."

Despite some areas of disagreement, the report adds: "There is broad consensus among top economists with expertise in climate change that greenhouse gas emissions pose a real economic threat, and that steps taken to reduce emissions, if done right, can produce net benefits."

The IPI queried about 300 economists; more than half responded. Among the specific results itemized in the report’s executive summary were the following:

• 84% of respondents agreed or strongly agreed that “the environmental effects of greenhouse gas emissions, as described by leading scientific experts, create significant risks to important sectors of the United States and global economies.”
• 75% agreed or strongly agreed that “uncertainty associated with the environmental and economic effects of greenhouse gas emissions increases the value of emission controls, assuming some level of risk‐aversion.”
• Agriculture was the domestic economic sector most identified as “likely to be negatively affected by climate change,” with 86% of respondents selecting this sector.
• 91.6% preferred or strongly preferred “market‐based mechanisms, such as a carbon tax or cap‐and‐trade system” over command‐and‐control regulation to reduce greenhouse gas emissions.
• 80.6% preferred auctioning carbon allowances rather than freely distributing allowances.
• 97.9% agreed or strongly agreed that “placing a ‘price on carbon’ through a tax or cap‐and‐trade system will increase incentives for energy efficiency and the development of lower‐carbon energy production.”
• 57% agreed that the U.S. government should commit to greenhouse gas reductions “regardless of the actions of other countries,” while an additional 15.5% agreed that it should do so “if it can enter a multilateral emissions reduction treaty with some countries,” and 21.8% agreed the U.S. should move forward “if other major emitters commit to reducing emissions through a global.” Only 0.7% would wait until all countries commit to action, and 2.1% thought the U.S. should not act regardless of the actions of other countries.
• 92.3% agreed or strongly agreed that “most of the environmental and economic effects of greenhouse gas emissions will be felt by future generations.”