Timing Is Everything: How Economists Can Better Address the Urgency of Stronger Climate Policy

The consensus findings from climate scientists regarding potential future climate change and associated damages have become increasingly ominous over the last decade. These findings reveal that in the absence of significant reductions in CO2 emissions, atmospheric concentrations of CO2 stand a significant chance of causing increases in global average surface temperature that are large enough to produce very serious climate-related damages within a decade or two. They imply that stronger policy action-beyond what has been pledged in the 2015 Paris Accord-is urgently needed. This article has indicated how economists can help reveal more clearly the urgency of stronger policy action. Such clarification requires policy evaluations that focus more sharply on the timing of policy action and the economic costs that result from delayed implementation. I have shown that economists can achieve this sharper focus in several ways. One is simply to place greater emphasis on the fact that earlier action reduces costs. A second is to expand the development and application of numerical models that reveal the economic impacts on key stakeholder groups. Such models provide information relevant to political feasibility and the prospects for near-term implementation. A third is to include attention to the timing of implementation in comparisons of the costs of policy alternatives. Other things being equal, a policy that is likely to be implemented sooner will have a cost advantage. A fourth is to apply IAMs to alternative emissions scenarios designed to isolate the costs of delay. These costs reflect either the additional climate damages from the higher future concentrations attributable to delayed emissions reductions or the extra abatement costs attributable to the future acceleration of emissions reductions that would be needed to avoid the future increase in concentrations that otherwise would result from delay. As discussed here, greater attention to the prospects for near-term implementation can alter the cost rankings of U.S. climate policy alternatives, increasing the attractiveness of some climate policy approaches that economists might otherwise tend to dismiss. While carbon pricing has several advantages over other instruments for CO2 abatement, I would argue that consideration of the prospects for near-term implementation justifies giving alternative approaches a closer look. By bringing out more effectively the significance of the timing of policy implementation and the costs of delay, economists can provide better guidance to policymakers struggling to address what is arguably the world's most urgent and important environmental problem. © The Author(s) 2020. Published by Oxford University Press on behalf of the Association of Environmental and Resource Economists. All rights reserved. For permissions, please email: journals.permissions@oup.com