NYU Law's Livermore discusses consensus among experts on economic impacts

A recent Institute for Policy Integrity study found most expert economists agree that reducing greenhouse gas emissions can help avoid a major economic malfunction. Which policy options will produce the best results? How will an international agreement affect the economy? During today's OnPoint, Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law, discusses the study and explains how its findings can be applied to the congressional climate debate.


Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Michael Livermore, executive director for the Institute of Policy Integrity at NYU Law. The institute just released a new study, "Economists and Climate Change; Consensus and Open Questions." Michael, thanks for coming on the show.

Michael Livermore: My pleasure, thanks for having me.

Monica Trauzzi: Michael, over the last couple of years we've really seen a shift in the climate debate from being one about science to really focusing on the economic impacts of climate change and your organization's new study finds that most of the economists that use surveyed for this study agree that global warming puts the economy at risk. Why do you feel that now was the time to release a comprehensive study on the economics of climate change? Are you trying to influence the policy debate at all?

Michael Livermore: Well, I think it's exactly the point that you raise, which is that the debate has shifted from the science to the economics and one of the things that we were interested in is that there's widespread acknowledgment of the consensus that scientists agree that climate change is real, that human activity is likely causing it. But at the same time, we were curious if the same kind consensus existed for economists or if there was disagreement or maybe economists thought that climate change wasn't a big risk. And so it really was a time in the debate and also in kind of public understanding of what experts on the issues thought and we thought it was a good moment to take a look.

Monica Trauzzi: One-hundred-and-forty-four economists participated. There are differing views out there about the economics of a cap and trade, about the climate legislation. How did you ensure that all views were proportionately represented?

Michael Livermore: Well, what we really wanted to do was find a group of what most people would agree were real experts on climate change. And so what we did was we used the top 25 economics journals, we went through carefully to look at the articles that were written that had something to do with climate change, folks that had done models, folks that had criticized models, various kinds of economic questions. Most of these are very academic articles, so just reading them you wouldn't know what anyone's views were. But at the same time, there was a real diversity of viewpoints about various kinds of technical issues on the economics of climate change. And so we took that group, which the total was about 289 authors of various articles in these journals and we polled them and from that sample we are getting a fairly broad group of economists that have expertise, they've written on this topic in peer-reviewed journals and if you actually go through and look at the topics of the articles you can see that there's a fair amount of diversity of viewpoints.

Monica Trauzzi: So, what would you say are the key findings of the study? Top line those for us.

Michael Livermore: Right, so probably the finding that's gotten the most attention is we asked the economists whether according to mainstream scientific views climate change posed a significant risk to the U.S. and global economies. And 84 percent of our respondents either agreed or strongly agreed with that statement, so that's a fairly strong consensus viewpoint that climate change poses economic risks. That's probably the single most attention grabbing one. We also polled on some of the specifics of legislation or policy. So for example, 75 percent of the economists we polled agreed that uncertainty associated with climate change, both uncertainty about what the risks are going to be in the environment and how that's going to impact the economy, the whole range of uncertainties actually increases the value of emission controls, which is actually something that runs counter to some people's intuition, is that they want to wait and see because of uncertainty, but actually uncertainty is a reason, in this context to act. We also polled about whether a market-based mechanism was a good idea. Perhaps unsurprisingly, almost all economists agreed that a market mechanism was the way to go. And then we also asked about the role of the U.S. in the kind of global situation and 57 percent of the respondents said that the U.S. should act to control emissions even kind of regardless of what other states do, what other countries do. And basically all economists, 90 plus, 97 percent, said that if there's a global regime we should join it.

Monica Trauzzi: So, were they all in agreement or were there certain points that there were disagreements on?

Michael Livermore: Oh, there were definitely some disagreements. They say if you get 10 economists in a room you'll get 15 opinions and one area where you find that is in how we should treat future generations. So, almost all economists agreed that many of the impacts or most of the impacts of climate change will be felt by a future generations and so this poses a problem for an economic model because we incur costs today in order to prevent harm in the future. And so there's various ways of dealing with that. Probably what would be considered a mainstream way is you discount the harm, so whatever harm happens in the future you actually treat it a little bit less. If there's $100 worth of harm you discount it down to say $75, because it happens out in the future. And economists, in our survey, disagreed about whether you should do that. A significant number said that you shouldn't do that at all and among the majority who said you should do some kind of discounting there was basically even division about how they should do it. So there is disagreement on some very important technical points.

Monica Trauzzi: So, how do you take the findings of this study and apply it to the legislative process that we're seeing in Congress right now?

Michael Livermore: I think that one of the things that the study helps do is show where there's agreement and where there's still disagreement and we should focus our resources on talking about things that we can make progress on and not worry about kind of rehashing debates that there's already consensus on. So we shouldn't really be arguing about whether it's a good idea to do climate change legislation. There's widespread agreement among scientists and our study showing among economists as well that action on climate change makes sense. This is a real risk. It makes sense to do something about it. So the question should get to some of the mechanisms to do it and kind of the stringency and so on. These are real live debates that we should focus on and do not whether it's a good idea or not. Clearly, it is and it's really the details that we need to be focused on, how to do it and how to work with other countries, how stringently to regulate.

Monica Trauzzi: So, the partisan disagreements that we're seeing in Congress right now, do they lack merit because of the findings of the study or are they of value to the overall debate?

Michael Livermore: Well, it's an interesting question. It's a tough call. At some level partisan dynamics are always not particularly helpful for making policy because at some level partisanship kind of, by definition, means that people are acting not necessarily according to some disagreement on policy, the kind of jockeying for positioning an electoral cycles. So I don't think that that is terribly helpful. And then I think there's some serious deficiencies in the rhetoric that you get, really, on both sides of debate. In fairness, it's not one side or the other, but the whole debate itself is not being carried out in a way that's probably most conducive to getting at a good policy answer.

Monica Trauzzi: So, if the economics are right, why do we continue to see reluctance from certain business groups like the U.S. Chamber of Commerce for example?

Michael Livermore: That's an interesting question. It's a good question. Now, of course, because the overall economics show that it's good for the country or that climate change is a risk, that doesn't mean that there's not some winners and losers, right? And so firms and others that represent some of those losers aren't going to be happy, even if overall it's the right thing to do for the economy.

Monica Trauzzi: Okay, we'll end it right there. Interesting study. Thanks for coming on the show.

Michael Livermore: My pleasure, thanks for having me.

Monica Trauzzi: And thanks for watching. We'll see you back your smile.

[End of Audio]



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