I have been meaning to write something about this ever since Jim Manzi linked to Indur Goklany's Cato paper climate change a couple weeks ago and wrote that "before anybody gets on a high horse about how CO2-laden economic development is such a threat to the poor of the developing world, he really ought to have a response to this analysis." So, in the interest of scrambling back atop the high horse, let me say a couple of things about Goklany's analysis (PDF).
The Goklany paper makes two basic arguments. The first is that we are not net necessarily better off with a cooler and poorer world than a richer and warmer world. Our money might be better spent adapting to the changing climate and sustaining growth, rather than changing mitigating the effects of climate change and reducing growth. The second argument is that the problems that global warming creates for the developing world pale in comparison the problems created by more predictable issues, like basic population growth. If that's true, why devote scarce resources to a comparatively small problem?
The paper is worth a read, no doubt about it. But I have four issues with it:
(1) Goklany's analysis does not extend beyond the 21st century. This is a problem for two reasons. First, climate change has no plans to close shop in 2100. Even if you believe GDP will be higher in 2100 with unfettered global warming than without, it's not obvious that GDP would be higher in the year 2200 or 2300 or 3758. (This depends crucially on the rate of technological progress, and as Goklany's paper acknowledges, that's difficult to model.) Second, the possibility of "catastrophic" climate change events -- those with low probability but extremely high cost -- becomes real after 2100.