Climate-change policy is inextricably linked to science, but the complexity of modeling Earth’s systems feeds into an imperfect policy process that often warps ideal economic instruments beyond recognition. In IAP 2014, the MIT Joint Program on the Science and Policy of Global Change continued a tradition of presenting to the MIT community the basics (and some of the nuance) of this complex issue over a two-session course.
While the minutiae of a three-dimensional atmosphere and ocean model may be daunting (and require clusters of networked high-performance computers to complete a run), much can be understood about climate change from simplified models that build on basic physics accessible to any first-year undergraduate. Fundamental principles, such as energy balance, yield straightforward arguments about why Earth should warm as we add greenhouse gases to its atmosphere. Those principles can be used to frame simple predictions about how future warming might proceed — information that policymakers and analysts can use to help plan for the future.
Considering climate change as an externality — a cost imposed on society by individuals and companies without compensation — economists have developed theories for reducing environmental impacts by appealing to pocketbooks. Putting a price on pollution (e.g., carbon tax) or selling and trading “rights” to pollute (e.g., cap-and-trade) are two common policy levers to encourage polluters to cut back while mitigating overall economic impact. Coupling global climate models with global economic models (collectively, the Integrated Global System Modeling framework – IGSM) illuminates the complex interactions between human activities and Earth system changes.
But which is better — tax, or trade? From a strictly economic standpoint, if we have perfect information on the damages from climate change and the costs required to mitigate, the two should be equivalent. However, given the uncertainties on both ends of the human-Earth interaction, the answer from a strictly modeling perspective depends on which can be better estimated: the social cost of carbon (the total cost to society of the externality) or the “tipping point” thresholds of irreversible climate change. This is an area of ongoing research.
Policymakers tend to respond to what they can see, an important part of the policy-science nexus of climate change. Typhoon Haiyan, which devastated the Philippines last November, provided a stark reminder of the human suffering that can result from extreme weather events — as did hurricanes Sandy and Katrina on the domestic front. Hitting land just as the annual United Nations climate talks opened in Poland, Haiyan (or Yolanda, in the Philippines) spurred international efforts there to create the beginnings of a “Warsaw Mechanism,” an international compensation scheme for loss and damage resulting from climate change. Predicting how the frequency and severity of such storms will change in a warming world is a crucial research focus, particularly as humans build more densely along coasts and in floodplains and expose themselves to more potential economic and personal loss.
Ultimately, no policy issue exists in a vacuum. Examples of current efforts in the U.S., China, and the European Union to reduce greenhouse gas emissions make clear how rare it is for policy to capture the best of both science and economics. Politics strongly influence where the needle lands — tax, trade, or other — indicating an even bigger challenge that lies before us, not as scientists, but as citizens.
Daniel Rothenberg and Daniel Gilford are graduate students in MIT’s Department of Earth and Planetary Sciences
Michael Davidson and Arthur Yip are graduate students in MIT’s Engineering Systems Division