The odds of climate catastrophe

Solve Climate: Dr. Martin Weitzman is considered one of the world's top economists.… His area of expertise is Environmental Economics, and he says there’s a chance, roughly around 1%, that the temperature of the Earth will rise by 36 degrees fahrenheit in around 200 years. In other words, there’s a small chance that global warming will lead to a mass extinction comparable to others that have happened before on Earth. For context, the "small chance" is 10,000 times more likely than the asteroid strike which wiped out the dinosaurs, a once in a hundred million year occurrence.

Dr. Weitzman is not an alarmist by any stretch of the imagination. Look at his paper -- On Modeling and Interpreting the Economics of Catastrophic Climate Change -- and you'll see for yourself. …The point of the paper is to explore an important question: given that the probability of catastrophic climate change might be about 1% in 200 years, what's the most rational way to place our bets? To answer the question, he considers the economics of catastrophes and shows that cost-benefit analysis (CBA), a standard tool of analysis, doesn’t work well on the big picture of climate change.

Critics of action on global warming frequently say that proposals to reduce emissions are economically illiterate and that CBA should be used to make more informed decisions. In contrast, Weitzman says CBA analysis of climate action so far has made an important error of omission: it has simply ignored the possibility of catastrophic outcomes.

…Spending money now to slow global warming should not be conceptualized primarily as being about optimal "consumption smoothing" so much as an issue about how much insurance to buy to offset the small chance of a ruinous catastrophe that is difficult to compensate by ordinary savings. How much insurance to buy. It's a question every homeowner answers. In this case, the home in question is the planet.

This painting by Donald E. Davis depicts an asteroid slamming into tropical, shallow seas of the Yucatan Peninsula in what is today southeast Mexico. The aftermath of this immense asteroid collision, which occurred approximately 65 million years ago, is believed to have caused the extinction of the dinosaurs and many other species on Earth. NASA, Wikimedia Commons