A Question of Balance: Weighing the Options on Global Warming Policies

Nordhaus has done pioneering work over the years on the economics of climate change and the policies to deal with it. In this short book, he provides an up-to-date account of his work for the nonspecialist, including a careful discussion of what he considers the best approach to the abatement of greenhouse gas emissions. Economists call an approach that does what is necessary at the least cost to other economic objectives "optimal." In Nordhaus' view, the prospective costs of climate change, insofar as they can be guessed at in the current state of uncertainty, are sufficiently high to warrant early action to reduce emissions of greenhouse gases (mainly but not only carbon dioxide from the consumption of coal and oil). But Nordhaus argues that early action should begin modestly and gradually intensify over time as the ability to decrease them improves. Moreover, he strongly urges a price-based approach to abatement -- rather than one that focuses on hard quantitative targets -- for example, imposing an internationally agreed tax on emissions of carbon dioxide. Partial approaches, such as that taken by the Kyoto Protocol, and crash programs, as proposed by the British government's Stern report, he considers unnecessarily costly to get the job done -- and hence undesirable.