This is the third and final installment of my interview with Kenneth Arrow. Part one is here and part two is here. In the section below we discuss climate change: Dr. Arrow was a lead author on several of the Intergovernmental Panel on Climate Change reports, which are considered one of the most authoritative sources for estimating climate impacts. My questions are in bold.
Conor Clarke: I want to ask you about your work on the Intergovernmental Panel on Climate Change (IPCC). Tell me about your work with that organization.
Kenneth Arrow: I was the leader on two papers, in the third round.
And was this, like your health care paper, a situation in which they presented a theorist with an empirical problem to see what happened?
I was asked by the Council of Economic Advisors to be one of the American representatives, and then I got involved in two other topics that the IPCC was working on -- the discount rate and uncertainty.
Tell me about that. The treatment of uncertainty strikes me as one of the most confusing things about climate change.
[Laughs] And almost everything else besides climate change, too!
But with climate change there is an awful lot at stake! And the time horizon is long, and you have the risk of these incredibly high cost but low probability events...
Well, the least that can occur still looks pretty bad, and I don't want to overdo the uncertainty question. I think that, even if you take a very conservative point of view, things are bad. 150 years from now, the average person will be a lot poorer then they would be otherwise be.
I think that's true of people in South Asia, but it's not clear to me from the results that it's true of people in the United States...
I don't know. You sometimes hear the argument that it won't affect the US that much because agriculture is only 3% percent of the GDP...
Yes! I spoke with Thomas Schelling a couple of weeks ago and he made that point exactly.
But the affect of the seashore is going to be major. If you have large portions of the Arctic ice disappear, the rise in sea level will be in meters and yards. If it takes place gradually we can move back and there is no tragedy. If it rises more quickly then I think there is a real possibility of bad consequences. And while the United States, I guess it is true, will not be losing half of the world's agriculture, you have to realize that if it's happening here it's happening elsewhere. Food is going to become more valuable around the globe. Food will become scarcer. It's not going to be 3% of the American economy anymore. If we replaced food with imports, the imports won't come easily or cheaply. The price of goods will shoot up if there is additional scarcity. So the cost could be a much bigger number than [climate change experts] Mendelson and Nordhaus find.