a) Economists play several key roles in the climate debate, as highlighted in the papers by Golosov et al. (2014), Nordhaus (2015), Nordhaus (2018), and Patt et al. (2022). Firstly, economists provide valuable insights into the economic impacts of climate change and the costs associated with different mitigation and adaptation strategies. They analyze the costs and benefits of climate policies and assess their effectiveness in achieving emission reduction targets.
Economists also play a crucial role in designing and evaluating climate policies. They develop economic models that simulate the interactions between the economy and the climate system, allowing policymakers to explore different policy scenarios and their outcomes. These models take into account factors such as carbon pricing, technological innovation, and behavioral responses to policy interventions.
Furthermore, economists contribute to the climate debate by conducting cost-benefit analyses of climate policies. They assess the trade-offs between the costs of reducing greenhouse gas emissions and the benefits in terms of avoided damages from climate change. This helps policymakers make informed decisions by weighing the economic costs against the potential benefits of different policy options.
b) Golosov et al. (2014) and Nordhaus (2018) propose climate policies that aim to reduce greenhouse gas emissions. In Golosov et al. (2014), the authors recommend implementing a carbon tax to internalize the social cost of carbon emissions. Their model incorporates the dynamics of climate change and analyzes how optimal carbon taxes can be determined to achieve emission reduction targets.
Nordhaus (2018) also advocates for carbon pricing but suggests using a different approach called a “carbon fee and dividend” system. Under this system, a gradually increasing carbon tax is imposed on fossil fuel producers, and the revenue collected is returned to households as dividends. This approach aims to address concerns about the regressive nature of carbon pricing by redistributing the revenue to mitigate potential negative impacts on low-income households.
One of the main differences between the models used in these papers is their treatment of uncertainty and discounting. Nordhaus (2015) and Nordhaus (2018) incorporate uncertainty by using probability distributions for key parameters such as climate sensitivity and economic growth rates. They apply discounting to future costs and benefits to reflect individuals’ time preferences.
On the other hand, Golosov et al. (2014) focus on modeling the dynamic interactions between the economy and climate system, considering factors such as technological change and learning-by-doing effects. Their model does not explicitly incorporate uncertainty or discounting.
These differences in modeling approaches highlight the complexities involved in assessing climate policies and the various factors that economists consider when making recommendations. It also emphasizes the ongoing debate among economists regarding the most appropriate models and assumptions for analyzing climate change mitigation strategies.
