Rortybomb, a a financial engineer, counters Manzi:
[T]he thing that worries me about the Cost-Benefit Analysis (CBA) approach to this issue is that there is always an implicit “do-over” cost in CBA. If we start a marketing campaign, hire a new team, or build a factory we do a CBA. If it turns out wrong, we simply stop the campaign, lay off the new team, or dynamite the factory. We eat our sunk costs and are back at square one. Sometimes this is costless, sometimes you have to pay for the dynamite. Indeed estimating the cost of this metaphoric dynamite should be high on the list of the CBA.
Now if 100 years from now, we want to “do-over”, how much will it cost to dynamite’ the previous 100 years of warming? How much of GDP will we have to spend to get back an additional 10-20% of biodiversity? I’m worried that we are looking at Planet Earth as the sunk costs in these CBAs, and that makes me very worried, and being very worried makes me more willing to spend. We can’t just jump to another Earth if we got it wrong, in the same way we can build a new factory if our projections were off. This isn’t even tail risk or precautionary principle’ land we, as managers of Firm Earth doing a CBA, want to know the costs of getting rid of that 3 degrees of warming. As far as I can tell, they will be very, very high. With that in mind, seeing Conor Clarke graph out a cost of an insurance policy to build against this doesn’t seem so bad, and that positioning the numbers from another direction (a fantastic argument through that link) makes it seem appealing as a firm manager.
I am eager to spend money to slow global warming. Still, I question whether a crippled cap and trade bill will make it harder to pass decent legislation later on. I'm of two minds on this bill and will be posting the best commentary on both sides of the debate throughout the day as I think it through.
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