In This Review

The Economics of Global Warming
The Economics of Global Warming
By William R. Cline
Institute for International Economics, 1992, 416 pp.

Global climate change is potentially the most serious environmental issue mankind will face. As a result of human activity-mainly prolific use of fossil fuels that release carbon dioxide, but also including destruction of forests, growing rice, raising cattle and numerous other activities-the surface of the earth may gradually warm, ultimately affecting patterns of rainfall, sea levels and even ocean currents.

Cline nicely pulls together the often inconclusive scientific evidence on global warming, and ambitiously attempts a global cost-benefit analysis on actions to mitigate (mainly) carbon emissions, i.e., a global energy policy, versus simply carrying on as we have been. He finds in favor of mitigations. Unfortunately, Cline strains too hard to reach that conclusion. He relies on imaginative but one-sided calculations to assess the costs of global warming and uses a discount rate to assess the present value of distant events (100-250 years from now) that is far too low, given the other opportunities we have today for benefiting future generations. Fortunately, Cline's analysis is notable for its honesty and full disclosure, so readers can assess the arguments for themselves. In the end Cline proposes a sensible course of action, given the potential risks involved: take inexpensive mitigation actions now, and devote a lot of effort to reducing the scientific uncertainty; defer expensive actions a decade or so until we know more, but be prepared if necessary to take them then.