David Friedman has a critique of William Nordhaus’ March 2012 New York Review of Books article on why sceptics are wrong.
My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years. A look at Table 5-1 in my study A Question of Balance (2008) shows that the cost of waiting fifty years to begin reducing CO2 emissions is $2.3 trillion in 2005 prices. If we bring that number to today’s economy and prices, the loss from waiting is $4.1 trillion. Wars have been started over smaller sums.
What he does not mention is that his $4.1 trillion is a cost summed over the entire globe and the rest of the century. Put in annual terms, that come to about $48 billion a year, a less impressive number. Current world GNP is about $85 trillion/year. So the net cost of waiting, on Nordhaus’s own numbers, is about one twentieth of one percent of world GNP. Not precisely a catastrophe.
I suggest a simple experiment. Let Nordhaus write a piece explicitly arguing that the net cost of waiting is about .06% of world GNP and see whether it is more popular with the supporters or the critics of his position. I predict that at least one supporter will accuse him of having sold out to big oil.
Friedman has made a similar point before:
… the benefits of climate control, on Nordhaus’s own figures, are not very large. The optimal policy—for obvious reasons not likely to occur—is calculated to produce a net benefit of about three trillion dollars. That sounds like a lot of money—until one recognizes that it is spread over the entire world and about ninety years. That makes the annual benefit of the ideal policy about 33 billion dollar a year—roughly one percent of the current U.S. federal budget or one tenth of a percent of current world income.
See also Bob Murphy on this topic.