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Climate Shock: The Economic Consequences of a Hotter Planet
How knowing the extreme risks of climate change can help us prepare for an uncertain future
If you had a 10 percent chance of having a fatal car accident, you'd take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you'd reevaluate your assets. So if we know the world is warming and there's a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren't we doing more about climate change right now? We insure our lives against an uncertain future--why not our planet?
In Climate Shock , Gernot Wagner and Martin Weitzman explore in lively, clear terms the likely repercussions of a hotter planet, drawing on and expanding from work previously unavailable to general audiences. They show that the longer we wait to act, the more likely an extreme event will happen. A city might go underwater. A rogue nation might shoot particles into the Earth's atmosphere, geoengineering cooler temperatures. Zeroing in on the unknown extreme risks that may yet dwarf all else, the authors look at how economic forces that make sensible climate policies difficult to enact, make radical would-be fixes like geoengineering all the more probable. What we know about climate change is alarming enough. What we don't know about the extreme risks could be far more dangerous. Wagner and Weitzman help readers understand that we need to think about climate change in the same way that we think about insurance--as a risk management problem, only here on a global scale.
Demonstrating that climate change can and should be dealt with--and what could happen if we don't do so-- Climate Shock tackles the defining environmental and public policy issue of our time.
If you had a 10 percent chance of having a fatal car accident, you'd take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you'd reevaluate your assets. So if we know the world is warming and there's a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren't we doing more about climate change right now? We insure our lives against an uncertain future--why not our planet?
In Climate Shock , Gernot Wagner and Martin Weitzman explore in lively, clear terms the likely repercussions of a hotter planet, drawing on and expanding from work previously unavailable to general audiences. They show that the longer we wait to act, the more likely an extreme event will happen. A city might go underwater. A rogue nation might shoot particles into the Earth's atmosphere, geoengineering cooler temperatures. Zeroing in on the unknown extreme risks that may yet dwarf all else, the authors look at how economic forces that make sensible climate policies difficult to enact, make radical would-be fixes like geoengineering all the more probable. What we know about climate change is alarming enough. What we don't know about the extreme risks could be far more dangerous. Wagner and Weitzman help readers understand that we need to think about climate change in the same way that we think about insurance--as a risk management problem, only here on a global scale.
Demonstrating that climate change can and should be dealt with--and what could happen if we don't do so-- Climate Shock tackles the defining environmental and public policy issue of our time.
264 pages, Hardcover
First published February 1, 2015
60 people are currently reading
1508 people want to read
About the author
Gernot Wagner
12 books22 followersGernot Wagner is an economist at the Environmental Defense Fund. He teaches at Columbia and graduated from both Harvard and Stanford. He doesn’t eat meat, doesn’t drive, and knows full well the futility of his personal choices.
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December 29, 2016
There Is No Expedient to which a Man Will Not Resort to Avoid the Real Labor of Thinking
[Through my ratings, reviews and edits I'm providing intellectual property and labor to Amazon.com Inc., listed on Nasdaq, which fully owns Goodreads.com and in 2014 posted revenues for $90 billion and a $271 million loss. Intellectual property and labor require compensation. Amazon.com Inc. is also requested to provide assurance that its employees and contractors' work conditions meet the highest health and safety standards at all the company's sites].
One such expedient is carbon pricing. In the field of climate change mitigation activism, the policy proposal is even considered radical. Probably because it has a puritanic ring to it: "(i) dumping carbon dioxide into the athmosphere causes damage; (ii) nobody is paying for the damage; (iii) start making people - all of us - pay for the damage and for sure nobody will dump carbon any more". And the well-meaning NGO policy advisors - WWF to CDP to Greenpeace - all nod resolutely. The problem is that the mechanism that should lead from carbon pricing to a change in carbon emission patterns - in general summarized or implied in the "for sure" passage - gets never investigated.
This book makes no exception. The authors avoid the real labour of thinking by pointing us in the direction of Arthur Pigou, who formalized the notion that taxes can be used to factor in negative externalities and thus drive socially better decisions. But pigouvian taxes bring about the desired outcome only in very special settings: where the decision maker can choose between two substitutable inputs or products, and once incorporated the social costs of the cheaper input through the tax, the decision maker will opt for the now cheaper non-damaging input or product. But what if the decision maker has no choice? What if the decision maker has a car or an aircraft or a freightship that runs on fossil fuel only? It's very likely that the decision maker will duly pay the tax and pass the cost on to someone else (employer, passenger, client). Without substitutes, carbon behaves like a Giffen good: when its price rises, you keep consuming it, reducing your consumption of something else, exactly as in the case of the poor peasants living on rice, situation the authors look down on with some commiseration if not contempt.
Tellingly, Richard Branson - owner of Virgin airlines - is quoted here as saying that a global carbon tax, applied to all airlines, to all fuels, in all countries, at the same level would totally make good business sense. Such a tax would in fact be automatically passed on to the passengers by all airlines, and in the absence of any substitute for air travel (the authors seem to posit that videoconferencing is not really a substitute) the tax would not be pigouvian at all, and won't change the way people emit carbon. And to name another example, giant oil & gas multinational ENI say in their 2016 investor relations presentations that they are perfectly comfortable with $40 per tonne - the carbon price put forward by the authors - which won't affect their profitability.
Less bluntly, if carbon pricing is to be a serious policy proposal, it is crucial that proponents research something called demand elasticity to changes in fossil fuel prices, that is how much the demand of fossil fuel goes up or comes down in responses to fossil fuel price variations. There should be years' worth of papers and books and conferences on this question only before carbon pricing can be considered a proposal to mitigate climate change (rather than something to be used by governments to bank on carbon). The authors instead prefer not to raise the issue at all, displaying the same willful blindness they consider a prerogative of the geoengineering freaks.
To ensure the directed technical change we need to transition to a low carbon economy (just to quote a bit of the boilerplate I'm exposed to on a daily basis) takes place, we must first make fossil fuels substitutable and then if necessary we can introduce a pigouvian tax. And what is resisted - in industry sectors reliant on fossil fuels and in politics - is the very idea that fossil fuels can be substituted. That is the folly, not carbon pricing.
As a final caveat, fossil fuels historically and originally (almost 200 years ago) crowded out renewables even though the latter were cheaper - do read the magnificent Fossil Capital: The Rise of Steam Power and the Roots of Global Warming for the truth. So what substitutable means can be very technical, organizational and very political before cost comes into play.
[Through my ratings, reviews and edits I'm providing intellectual property and labor to Amazon.com Inc., listed on Nasdaq, which fully owns Goodreads.com and in 2014 posted revenues for $90 billion and a $271 million loss. Intellectual property and labor require compensation. Amazon.com Inc. is also requested to provide assurance that its employees and contractors' work conditions meet the highest health and safety standards at all the company's sites].
One such expedient is carbon pricing. In the field of climate change mitigation activism, the policy proposal is even considered radical. Probably because it has a puritanic ring to it: "(i) dumping carbon dioxide into the athmosphere causes damage; (ii) nobody is paying for the damage; (iii) start making people - all of us - pay for the damage and for sure nobody will dump carbon any more". And the well-meaning NGO policy advisors - WWF to CDP to Greenpeace - all nod resolutely. The problem is that the mechanism that should lead from carbon pricing to a change in carbon emission patterns - in general summarized or implied in the "for sure" passage - gets never investigated.
This book makes no exception. The authors avoid the real labour of thinking by pointing us in the direction of Arthur Pigou, who formalized the notion that taxes can be used to factor in negative externalities and thus drive socially better decisions. But pigouvian taxes bring about the desired outcome only in very special settings: where the decision maker can choose between two substitutable inputs or products, and once incorporated the social costs of the cheaper input through the tax, the decision maker will opt for the now cheaper non-damaging input or product. But what if the decision maker has no choice? What if the decision maker has a car or an aircraft or a freightship that runs on fossil fuel only? It's very likely that the decision maker will duly pay the tax and pass the cost on to someone else (employer, passenger, client). Without substitutes, carbon behaves like a Giffen good: when its price rises, you keep consuming it, reducing your consumption of something else, exactly as in the case of the poor peasants living on rice, situation the authors look down on with some commiseration if not contempt.
Tellingly, Richard Branson - owner of Virgin airlines - is quoted here as saying that a global carbon tax, applied to all airlines, to all fuels, in all countries, at the same level would totally make good business sense. Such a tax would in fact be automatically passed on to the passengers by all airlines, and in the absence of any substitute for air travel (the authors seem to posit that videoconferencing is not really a substitute) the tax would not be pigouvian at all, and won't change the way people emit carbon. And to name another example, giant oil & gas multinational ENI say in their 2016 investor relations presentations that they are perfectly comfortable with $40 per tonne - the carbon price put forward by the authors - which won't affect their profitability.
Less bluntly, if carbon pricing is to be a serious policy proposal, it is crucial that proponents research something called demand elasticity to changes in fossil fuel prices, that is how much the demand of fossil fuel goes up or comes down in responses to fossil fuel price variations. There should be years' worth of papers and books and conferences on this question only before carbon pricing can be considered a proposal to mitigate climate change (rather than something to be used by governments to bank on carbon). The authors instead prefer not to raise the issue at all, displaying the same willful blindness they consider a prerogative of the geoengineering freaks.
To ensure the directed technical change we need to transition to a low carbon economy (just to quote a bit of the boilerplate I'm exposed to on a daily basis) takes place, we must first make fossil fuels substitutable and then if necessary we can introduce a pigouvian tax. And what is resisted - in industry sectors reliant on fossil fuels and in politics - is the very idea that fossil fuels can be substituted. That is the folly, not carbon pricing.
As a final caveat, fossil fuels historically and originally (almost 200 years ago) crowded out renewables even though the latter were cheaper - do read the magnificent Fossil Capital: The Rise of Steam Power and the Roots of Global Warming for the truth. So what substitutable means can be very technical, organizational and very political before cost comes into play.
May 15, 2015
This book talks a lot about probabilities and risk. It would be way over the head of lay readers trying to get a handle on climate change or climate economics. But it also had nothing new for those of us who are pretty knowledgeable about climate change (I worked in the energy/climate field for many years). So I don't know who the audience for this book should be. In addition, I thought it was very unclear in where it was going; the last chapter summarized the main thesis, but it was too little too late - I had little idea on the journey where the authors were going, and when they got there, it was an extremely brief stay. I think you could do a lot better reading any of numerous other fine books on climate change before this one.
January 19, 2016
Disclaimer: This book was given to me for free by Netgalley in exchange for a review.
I think that this book is a necessary read, and books like it as well.
It mostly focuses on environment and economics. There was a heavy emphasis placed on that saving the environment should not lie on the shoulders of individuals people nor individual countries but as a collective community. The problem, as the author has stated, is finding a practical and economical way to make each country reduce and possibly eliminate pollutants. The book was a lot more complex, but that is the main argument.
This book was a sad but illuminating read.
I think that this book is a necessary read, and books like it as well.
It mostly focuses on environment and economics. There was a heavy emphasis placed on that saving the environment should not lie on the shoulders of individuals people nor individual countries but as a collective community. The problem, as the author has stated, is finding a practical and economical way to make each country reduce and possibly eliminate pollutants. The book was a lot more complex, but that is the main argument.
This book was a sad but illuminating read.
July 19, 2016
The start of the book was good: climate change is both urgent and difficult. The topic was quite relevant: we need to address the problem of climate change through economic measures, somehow. But I lost interest in this book about halfway through, due to a combination of things that weren’t (in my opinion) explained that well, plus lack of sympathy with the basic ideas and assumptions. These assumptions were not defended, and the authors seemingly are completely oblivious that they are even being made.
The thing that wasn’t explained well was the idea of discount rates. A dollar today is worth more than a dollar ten or thirty years from now. Well, maybe, assuming that the economy grows forever, I suppose, and we don’t go into a resource-depletion-induced economic depression. But what does this idea of discount rates actually mean? That the economy is always going to be getting bigger, a highly questionable assumption? That if the environment is valuable, that we can discount the world’s environmental state 10 or 30 years from now? (P. 68). I like to think of myself as a pretty smart guy, but I don’t understand their point even from a formal point of view.
I could have probably re-read parts of the book, and looked up other references to “discount rates,” and figured it out, but it looks like this book wants to put a price on the environment. I don’t agree with the basic concept of “getting the price right” on environmental damage, e. g. imposing a carbon tax based on calculations of economic damage done by climate change. The authors evidently follow William Nordhaus’ views (see The Climate Casino: Risk, Uncertainty, and Economics for a Warming World) on climate, which I also disagree with and have critiqued in a Goodreads review, so this gave me another reason to drop the book. I do agree that we should have a steep carbon tax, but this reasoning is faulty and ultimately circular.
The whole problem with our economy is the takeover of the natural and wild parts of the planet by the human economy. The economy is part of the larger environment, not vice versa, and we are undermining the environment. Putting an economic price on this takeover assumes that it is already part of the human economy, or should be. But this co-optation of the environment is precisely the problem, because it is supports and underlies the economy. Just stop taking over every last square inch of the planet already! Once you figure this out, get back to me.
We should instead just reach an independent decision, based on scientific and environmental considerations, of what we need to do to preserve the environment and what kind of world, basically, we want to live in: e. g., CO2 no higher than 350 ppm, halt soil erosion, a viable wild population of elephants. We should then impose carbon taxes (and other environmental policies) not because this is somehow equivalent to the economic value of the environment, but because that is a rational thing to do. The critique of the ecological economists on this point, I believe, is fatal to the book’s point of view. Herman Daly discusses this issue further in an essay here.
The thing that wasn’t explained well was the idea of discount rates. A dollar today is worth more than a dollar ten or thirty years from now. Well, maybe, assuming that the economy grows forever, I suppose, and we don’t go into a resource-depletion-induced economic depression. But what does this idea of discount rates actually mean? That the economy is always going to be getting bigger, a highly questionable assumption? That if the environment is valuable, that we can discount the world’s environmental state 10 or 30 years from now? (P. 68). I like to think of myself as a pretty smart guy, but I don’t understand their point even from a formal point of view.
I could have probably re-read parts of the book, and looked up other references to “discount rates,” and figured it out, but it looks like this book wants to put a price on the environment. I don’t agree with the basic concept of “getting the price right” on environmental damage, e. g. imposing a carbon tax based on calculations of economic damage done by climate change. The authors evidently follow William Nordhaus’ views (see The Climate Casino: Risk, Uncertainty, and Economics for a Warming World) on climate, which I also disagree with and have critiqued in a Goodreads review, so this gave me another reason to drop the book. I do agree that we should have a steep carbon tax, but this reasoning is faulty and ultimately circular.
The whole problem with our economy is the takeover of the natural and wild parts of the planet by the human economy. The economy is part of the larger environment, not vice versa, and we are undermining the environment. Putting an economic price on this takeover assumes that it is already part of the human economy, or should be. But this co-optation of the environment is precisely the problem, because it is supports and underlies the economy. Just stop taking over every last square inch of the planet already! Once you figure this out, get back to me.
We should instead just reach an independent decision, based on scientific and environmental considerations, of what we need to do to preserve the environment and what kind of world, basically, we want to live in: e. g., CO2 no higher than 350 ppm, halt soil erosion, a viable wild population of elephants. We should then impose carbon taxes (and other environmental policies) not because this is somehow equivalent to the economic value of the environment, but because that is a rational thing to do. The critique of the ecological economists on this point, I believe, is fatal to the book’s point of view. Herman Daly discusses this issue further in an essay here.
July 4, 2015
This book is rather short, only 152 pages and then a ton of notes. But the content is very valuable to serious students of the climate crisis in a couple of ways. First, the authors explain the economics of the situation- why misguided market forces are driving us towards atmospheric carbon levels of 700 ppm in the year 2100, a situation that will benefit nobody. They explain that carbon pricing is the best solution. Second, they explain in depth the market forces that surround the concept of "geoengineering"- the proposal for the human race to try to counteract greenhouse gas warming by adding reflective sulfate particles to the high atmosphere. The authors state, correctly, that this is a dangerous idea because it does not address ocean acidification and because once started it would need to be continued almost forever in order to avoid a sudden burst of global heating. But they also state that the worst things get from global heat waves and sea level rise, the more psychological and political pressure will mount for dangerous geoengineering ventures.
No good news in this little book, but a great deal of common sense and clarity. Many of us are left behind in the economic nature of climate discussion, holding on to the wrong idea that humans will do the right thing if someone tells us that our grandkids are in danger. This provides a much needed antidote to that wrong thinking, which has been proved wrong by the last 25 years of international paralysis. Climate fee and dividend are the only chance we have left- and it is five minutes to midnight.
No good news in this little book, but a great deal of common sense and clarity. Many of us are left behind in the economic nature of climate discussion, holding on to the wrong idea that humans will do the right thing if someone tells us that our grandkids are in danger. This provides a much needed antidote to that wrong thinking, which has been proved wrong by the last 25 years of international paralysis. Climate fee and dividend are the only chance we have left- and it is five minutes to midnight.
August 19, 2021
Climate Shock offers an economic look at climate change. But the book actually unfolds very differently than that description suggests. Instead of being a treatise or monograph, Climate Shock is discursive, lighthearted, and speedy. It feels like having a coffee with the authors as you all trade ideas.
The ideas swirl around questions of probability and impact. There are several digressions into statistics to explore the likelihood of events and options. There is even a fantasy about James Bond.
So if you're new to the economic aspects of climate change, this might be an enjoyable entrance to the topic.
The ideas swirl around questions of probability and impact. There are several digressions into statistics to explore the likelihood of events and options. There is even a fantasy about James Bond.
So if you're new to the economic aspects of climate change, this might be an enjoyable entrance to the topic.
February 13, 2025
Kort och Lättläst introduktion till ämnet klimatförändring och geoengineering.
Gällande argumenten för att införa koldioxidskatter istället för de subventioner som fossil industrin idag använder i många länder är till viss del övertygande. Men de saknar den tyngd som mer omfattande vetenskapliga källor hade gett.
Gällande argumenten för att införa koldioxidskatter istället för de subventioner som fossil industrin idag använder i många länder är till viss del övertygande. Men de saknar den tyngd som mer omfattande vetenskapliga källor hade gett.
February 10, 2015
Climate Shock is a concise presentation of the economic consequences of climate change. The authors present climate change as a risk management issue, discuss the real vs. perceived risk of the those consequences, and how policymakers respond. Geoengineering is also discussed as an option of last resort (both financially and environmentally.) The book concludes with a discussion of individual action vs. policy change, and how the former is futile without the latter.
Very accessible read, with relatively well-known examples (such as the 1991 eruption of Mount Pinatubo, and more recent Chelyabinsklike meteor), easy to understand analogies, and clear terminology (the second chapter serving as a glossary -- while oddly placed, it was useful). However, as an academic text it barely scrapes the surface and I would have liked to see more in-depth discussion. Definitely a good starting point for college writing classes, as a starting point for further research, and would be suitable in a public library.
Thanks to NetGalley and Princeton University Press for the ARC of this title.
Very accessible read, with relatively well-known examples (such as the 1991 eruption of Mount Pinatubo, and more recent Chelyabinsklike meteor), easy to understand analogies, and clear terminology (the second chapter serving as a glossary -- while oddly placed, it was useful). However, as an academic text it barely scrapes the surface and I would have liked to see more in-depth discussion. Definitely a good starting point for college writing classes, as a starting point for further research, and would be suitable in a public library.
Thanks to NetGalley and Princeton University Press for the ARC of this title.
October 30, 2016
I appreciate the direct, dry, honest writing here. Wagner & Weitzman identify the fearsome foursome of anthropogenic climate disruption: it's global, it's long-term, it's irreversible, and it's uncertain. The final one, uncertainty, is the worst because we still do not know how bad it will be.
Further, the authors present why geoengineering methods might have appeal but their effects will not be the solution to climate disruption--it will merely be a means of treating the symptoms.
I also appreciated that this was written with an economical emphasis. The cost-benefit analysis for dealing with the crisis gives a fresh tint of realism to the nature of the disasters looming.
Essentially, since there is not enough being done on a global scale now, today, and since we have already crossed over the 400 ppm threshold, begin to figure out how you and yours can survive because...
The rich will adapt; the poor will suffer.
Further, the authors present why geoengineering methods might have appeal but their effects will not be the solution to climate disruption--it will merely be a means of treating the symptoms.
I also appreciated that this was written with an economical emphasis. The cost-benefit analysis for dealing with the crisis gives a fresh tint of realism to the nature of the disasters looming.
Essentially, since there is not enough being done on a global scale now, today, and since we have already crossed over the 400 ppm threshold, begin to figure out how you and yours can survive because...
The rich will adapt; the poor will suffer.
April 20, 2015
This 241 page book is really only 152 pages of text. There is *a lot* of endnotes and bibliography. The main text was a preface, 7 chapters and an epilogue. And one of those chapters (#2) was more of a glossary - it defined terms in alphabetical order.
Despite that, the book was actually a good read. It gives an overview of the problem. There is a lot on probability and best (350 ppm)/worst (700 ppm)/most likely case. Along with comparisons to the insurance industry. It was readable with "camels in Canada" as a catchy analogy. The economic forces were well described including taxes, true costs and the impact of feeling like we did something. There was also a good discussion of why geoengineering (such as sulfur seeding) is inevitable from an economic point of view - whether it is a well planned event or by a rogue actor - and why this could be problematic.
Despite that, the book was actually a good read. It gives an overview of the problem. There is a lot on probability and best (350 ppm)/worst (700 ppm)/most likely case. Along with comparisons to the insurance industry. It was readable with "camels in Canada" as a catchy analogy. The economic forces were well described including taxes, true costs and the impact of feeling like we did something. There was also a good discussion of why geoengineering (such as sulfur seeding) is inevitable from an economic point of view - whether it is a well planned event or by a rogue actor - and why this could be problematic.
November 29, 2015
A great look at the economics of Climate Change. I enjoyed it. My four takeaways:
-$40/ton of CO2 is the current US estimate. It's probably too low (at least by a third).
-There's a 10% chance of ending life as we know it if we get to 700 ppm. It's a lognormal probability distribution
-Economic models use discounts rates around 4%. That is too high. 1.4% has also been used, but I'd prefer to see something closer to negative 1%.
-Low beta: when the market is bad, the return is good. Climate change will do more damage to a healthy economy than to a bad economy. Therefore, a lower discount rate is better. (I'm still a little hazy on this last point.)
-$40/ton of CO2 is the current US estimate. It's probably too low (at least by a third).
-There's a 10% chance of ending life as we know it if we get to 700 ppm. It's a lognormal probability distribution
-Economic models use discounts rates around 4%. That is too high. 1.4% has also been used, but I'd prefer to see something closer to negative 1%.
-Low beta: when the market is bad, the return is good. Climate change will do more damage to a healthy economy than to a bad economy. Therefore, a lower discount rate is better. (I'm still a little hazy on this last point.)
January 11, 2015
On your left, you see a series of long articles about climate change disguised as a non-fiction book.
This is not a bad thing, not necessarily at least. It doesn't bore you, doesn't make you want to just ditch it and go live the rest of your life, but it does make you wonder if you would give it 28 bucks. It is very informative, including historical events for example as well as the thing it is actually about, and I appreciate how sincere the writing style is. Overall, I liked it, and I would recommend it, but it's not a 5/5.
This is not a bad thing, not necessarily at least. It doesn't bore you, doesn't make you want to just ditch it and go live the rest of your life, but it does make you wonder if you would give it 28 bucks. It is very informative, including historical events for example as well as the thing it is actually about, and I appreciate how sincere the writing style is. Overall, I liked it, and I would recommend it, but it's not a 5/5.
March 17, 2015
Depressing but informative like his last book on chemical- Exposed. And shows what a rogue state the U.S. with regard to both climate change and toxics, compared with the rest of the world.
The conclusion he reaches was obvious ten years ago - that market-based cap and trade was a system to be gamed and that we just need to tax carbon if we are serious.
We really really need political change on this issue. Not just hope.
The conclusion he reaches was obvious ten years ago - that market-based cap and trade was a system to be gamed and that we just need to tax carbon if we are serious.
We really really need political change on this issue. Not just hope.
October 3, 2022
Book is something of a missed opportunity. The authors could have provided an accessible but rigorous introduction to precautionary analysis, which is their domain of expertise, instead only skimmed over it. Nonetheless there were some things I took away from this that I had not gotten elsewhere yet.
As per the usual (and correct) analysis, they describe GHG accumulation as a global problem whose worst effects are likely far off, virtually irreversible, and highly uncertain. These are the features that lead societies to pass on taking costly actions to reduce GHG emissions.
There are past cases that suggest coordinated mitigation is possible—eg the case of banning ozone depleting gases. These authors’ telling of the ozone story is that key actors in industry (Dupont) led and then government and international action followed. That may offer a lesson.
Consequences of GHG emissions depend on the pace of ecological change relative to our ability to adapt. So, “consequences” are themselves moving target.
They note that there is alarmingly little investment in scientific modeling of GHG emission consequences — one can compare the DICE model (current state of the art) to what’s put into “marketing toothpaste.” DICE is maintained by a single scholar (Nordhaus) on a desk top computer. Marketing of major brand products like toothpaste is a multimillion maybe billion dollar pursuit. The difference would appear to be a societal failing.
The authors reference Litterman’s CAPM model to propose that the discount rate applied to climate catastrophe should be lower to the extent that catastrophes will also alter humanity’s ability to withstand it (brings about risk of total ruin). Catastrophic risks imply a risk premium. I found this intriguing and would have liked the authors to discuss at more length (missed opportunity).
Attention to “tail risks” (potential catastrophes) motivates the “precautionary principle.” We need action that gives us reasonable *certainty*, despite all the uncertainty, that we will never get to catastrophic levels of temperature change (eg 6 degrees C warming).
They appeal to “self perception theory” as a rationale for inducing people to take green action even if those actions each in themselves are arguably inconsequential. The idea is to inspire commitment to green virtues that may lay the foundation for political mobilization and voting to bring about more meaningful change through policy. Critique of that approach is “crowding out” effects— that by doing one thing you make it less likely they will do another in the same vein. (Latter is Michael Mann’s argument.) Both theories are plausible. Question is which dominates among the pivotal block that determines policy change. This is an area that ought to be the focus of social scientific research. As a social scientist myself, I found this to be a very helpful pointer from the authors.
As per the usual (and correct) analysis, they describe GHG accumulation as a global problem whose worst effects are likely far off, virtually irreversible, and highly uncertain. These are the features that lead societies to pass on taking costly actions to reduce GHG emissions.
There are past cases that suggest coordinated mitigation is possible—eg the case of banning ozone depleting gases. These authors’ telling of the ozone story is that key actors in industry (Dupont) led and then government and international action followed. That may offer a lesson.
Consequences of GHG emissions depend on the pace of ecological change relative to our ability to adapt. So, “consequences” are themselves moving target.
They note that there is alarmingly little investment in scientific modeling of GHG emission consequences — one can compare the DICE model (current state of the art) to what’s put into “marketing toothpaste.” DICE is maintained by a single scholar (Nordhaus) on a desk top computer. Marketing of major brand products like toothpaste is a multimillion maybe billion dollar pursuit. The difference would appear to be a societal failing.
The authors reference Litterman’s CAPM model to propose that the discount rate applied to climate catastrophe should be lower to the extent that catastrophes will also alter humanity’s ability to withstand it (brings about risk of total ruin). Catastrophic risks imply a risk premium. I found this intriguing and would have liked the authors to discuss at more length (missed opportunity).
Attention to “tail risks” (potential catastrophes) motivates the “precautionary principle.” We need action that gives us reasonable *certainty*, despite all the uncertainty, that we will never get to catastrophic levels of temperature change (eg 6 degrees C warming).
They appeal to “self perception theory” as a rationale for inducing people to take green action even if those actions each in themselves are arguably inconsequential. The idea is to inspire commitment to green virtues that may lay the foundation for political mobilization and voting to bring about more meaningful change through policy. Critique of that approach is “crowding out” effects— that by doing one thing you make it less likely they will do another in the same vein. (Latter is Michael Mann’s argument.) Both theories are plausible. Question is which dominates among the pivotal block that determines policy change. This is an area that ought to be the focus of social scientific research. As a social scientist myself, I found this to be a very helpful pointer from the authors.
August 25, 2023
On issues related to climate change, there is a discouragingly large number of pointless popular books out there. Ordinary folk haven’t the time, expertise, or inclination to read the enormous technical literature on these subjects. We depend on accessible summaries so we can fulfill our civic duty as informed voters.
This book doesn’t help. Despite the subtitle (which is why I bought it), the book has shockingly little to do with the economic consequences of climate change. The authors say at a rough guess that global economic output will drop by between 10% and 30% should global temperatures rise by six degrees Celsius, but there is practically no science to back this up—end of book.
Beyond this the authors cover any random topic related to climate change they felt like including, primarily ones that are not economic. And, like so many similar books, these authors give inordinate coverage to whatever hobbyhorse they best enjoy riding. This book contains more information than will do you much good on the relative merits of carbon taxes versus geoengineering. This is a false dichotomy: neither approach is a complete solution so why talk about it as though it is an either/or issue?
The real problem is that our nations are currently doing as little as our politicians can get away with doing to stop climate change. It is this inaction that matters. Meaningful information about the economic costs of their inaction might provide a kick in the pants where it is badly needed.
You could argue that, because the public has a limited attention span, books like this contribute to the problem of climate change because they drain your time and wallet without making you usefully wiser.
This book doesn’t help. Despite the subtitle (which is why I bought it), the book has shockingly little to do with the economic consequences of climate change. The authors say at a rough guess that global economic output will drop by between 10% and 30% should global temperatures rise by six degrees Celsius, but there is practically no science to back this up—end of book.
Beyond this the authors cover any random topic related to climate change they felt like including, primarily ones that are not economic. And, like so many similar books, these authors give inordinate coverage to whatever hobbyhorse they best enjoy riding. This book contains more information than will do you much good on the relative merits of carbon taxes versus geoengineering. This is a false dichotomy: neither approach is a complete solution so why talk about it as though it is an either/or issue?
The real problem is that our nations are currently doing as little as our politicians can get away with doing to stop climate change. It is this inaction that matters. Meaningful information about the economic costs of their inaction might provide a kick in the pants where it is badly needed.
You could argue that, because the public has a limited attention span, books like this contribute to the problem of climate change because they drain your time and wallet without making you usefully wiser.
September 12, 2020
Unfortunately light on actual content at only 150+ pages and 40 of footnotes, this jumps out with an urgent title on an urgent topic, but does very little with it. The opening half is promising enough, but it veers into meandering, features a satirical opening of a screenplay to highlight geoengineering, and has a soft conclusion that does little other than to suggest investing in areas that will be necessary once floodwaters rise and arctic permafrost melts, and be more environmentally minded because eventually we can collectively nudge governments in the right direction. In fact, I think this book spends more time debating the merits and hazards of geoengineering our way out of climate change with sulfur injected into the atmosphere than any substantive discussion of the "economic consequences of a hotter planet." Only brief mentions of how difficult it is for people to work or function in hotter climates, keep agriculture going, avoid drought and famine, mitigate flood/fire damage, and the resultant cascading effects of increased civil conflict, crime, poverty, etc (which is what I expected and wanted to read about). This feels like the opening 3 chapters in a bigger book that just sort of ends before it really begins.
November 12, 2021
"...we hope we are wrong because society will manage to steer the climate ship away from the proverbial iceberg cutting the flow of carbon into the atmosphere" (p 150). That sentence is contained in the above book published in 2015. The two economists writing Climate Shock haven't been proven wrong yet.
They estimate a 10 percent chance of catastrophic global warming of 6°C (11°F) by 2100 with accompanying sea level rise from 1 to 3 feet and a possible extreme of 66 feet. Their solution, not unique, is to "stick it to carbon" going from a current average global carbon price of negative $-15 per ton to $40 per ton, again not unique to these economists.
The first 3 chapters were somewhat confusing to me, but that is probably due to my lack of knowledge about economics. The final 4 chapters are much better in my opinion and if you start reading with chapter 4 with the assumption of the 10 percent chance of catastrophic change you probably haven't missed much from chapters 1 through 3. In total this book is 152 pages not counting its extensive notes portion. Although dated, it's worth checking out.
They estimate a 10 percent chance of catastrophic global warming of 6°C (11°F) by 2100 with accompanying sea level rise from 1 to 3 feet and a possible extreme of 66 feet. Their solution, not unique, is to "stick it to carbon" going from a current average global carbon price of negative $-15 per ton to $40 per ton, again not unique to these economists.
The first 3 chapters were somewhat confusing to me, but that is probably due to my lack of knowledge about economics. The final 4 chapters are much better in my opinion and if you start reading with chapter 4 with the assumption of the 10 percent chance of catastrophic change you probably haven't missed much from chapters 1 through 3. In total this book is 152 pages not counting its extensive notes portion. Although dated, it's worth checking out.
June 16, 2020
I highly recommend you do not read this book. It's core is an argument for a carbon tax, which keeps getting repeated in different forms, ad nauseum. Wrapped around this are a few basic facts about global warming, a long glossary, a huge amount of footnotes, a short epilogue on some actions you can take (vote, stop flying, divest). There is also an interesting section on "crowding out" which is where there are only so many "good" actions one can commit- and that some people recycle but fly, which is a thousand times worse. That bit was interesting. Thus maybe 1.5 stars
Importantly, the book has almost nothing to do with the title. It hardly talks at all about economic or social consequences of climate change. It gets deep into some economic models, mentions a few economic theories, and is just random. It talks a fair bit about geoengineering, but only at the level of a popular magazine article- really surface stuff.
Don't waste your time here! Its one of the least coherent, useful or interesting books I've picked up in a long time. At least it was short :)
Importantly, the book has almost nothing to do with the title. It hardly talks at all about economic or social consequences of climate change. It gets deep into some economic models, mentions a few economic theories, and is just random. It talks a fair bit about geoengineering, but only at the level of a popular magazine article- really surface stuff.
Don't waste your time here! Its one of the least coherent, useful or interesting books I've picked up in a long time. At least it was short :)
July 1, 2018
I enjoyed the refresher on basic climate maths - a scary reminder of why I decided to work on energy and climate change to begin with. You'd also struggle to find a book as well-written as this that better articulates the classic economist response to rising emissions: put a price on carbon and we can all go home. This is presented as self-evident rather when I'd argue it is anything but - certainly necessary, but not sufficient. Serious discussion of politics sorely lacking. I enjoyed the creative and in many ways quite thoughtful treatment of the practical and moral risks associated with geoengineering, though my own views differ somewhat from the authors. Scaremongering might be a useful and sobering antidote to overzealous techno-optimism, but if the "free-driver" effect means that geoengineering is more likely a question of when rather than if, I feel we have an obligation to think hard about how to do it "well" (whatever that means).
September 23, 2019
This is an OK book with two main points. Carbon should be taxed and we shouldn't engage in geoengineering. (Although, from my perspective, industrialization is geoengineering our planet.) I didn't realize the extent that instead of taxing carbon many nations actually subsidize fossil fuels. Also, the point that the potential "unknown unknowns" increase the need for action was interesting. The comparison to taking out insurance on low probability events was a good one, and I thought convincing. I really doubt I'm going to hurt someone with my car, but I have insurance in case I do. I hedge my investment bets. Why not put significant effort into combating climate change, which most scientists agree will dramatically alter our world?
Downsides to the book, it's repetitive and preachy.
Downsides to the book, it's repetitive and preachy.
March 1, 2020
Although the book's title advertises its main theme as the *economic* consequences of climate change, it primarily deals with the collective action problems associated with responding to this issue. This wasn't what I was expecting when I purchased this book to read, but it still ended up being fairly compelling. Wagner and Weitzman do a decent job of breaking down the obstacles associated with tackling climate change, including the uncertainty of its likelihood and impact, the challenge of getting societies to shoulder the costs, and the risk of unintended consequences that proposed solutions may inflict.
February 22, 2022
I agree with some of the reviews, I don’t know where the author want to go with his narratives, and it reads like the only main message I got from this book about climate change economic shock: we don’t know how much the shock will cost, which is understandable because it does not have the measurable dependent variable exist. Overall, this is more of an economics advocacy book other than the intro of economic knowledge and models of climate change. Even on this side, Emission trade and cap, carbon tax, and divestment, tell me something I don’t know. I think this book is just too old even though it’s only 7yrs old.
February 3, 2025
This is an important book, an interesting read and informative on carbon trading. I enjoyed it very much.
The authors argue the most important measure to curb global warming is carbon pricing. Other measures include subsidizing climate technology innovations to drive adoption. However, we may inevitably have to resort to geoengineering which could entail other environmental issues and will not fix the global warming afterall.
They discussed the various estimates of how much carbon should be priced at, and it could vary from study to study. The US government’s estimate is about $40 as of early 2010s. Of course, these are all guesswork and don’t take fat tail into account.
The authors argue the most important measure to curb global warming is carbon pricing. Other measures include subsidizing climate technology innovations to drive adoption. However, we may inevitably have to resort to geoengineering which could entail other environmental issues and will not fix the global warming afterall.
They discussed the various estimates of how much carbon should be priced at, and it could vary from study to study. The US government’s estimate is about $40 as of early 2010s. Of course, these are all guesswork and don’t take fat tail into account.
December 21, 2018
Fine overview, nice to have all the basic economic ideas about climate change in one spot. The authors provide a good overview of the science, including what's still unpredictable. Then they explain the economics of how we might cope with it. There's more here on geoengineering (e.g., shooting sulfur into the atmosphere to counteract the effects of global warming) than I would have expected, largely because they think it will be cheap enough that someone will have a financial incentive to do it (in contrast to reducing CO2 emissions, which may have too many international free rider problems to get right).
Certainly not an optimistic book. But it's pretty short, so if you're looking for a good overview on what you need to know about climate change, this is a good one.
Certainly not an optimistic book. But it's pretty short, so if you're looking for a good overview on what you need to know about climate change, this is a good one.
April 23, 2018
Not about climate science but about making decisions of the utmost importance under the utmost uncertainty. Explains different methods of pricing carbon, examines pros and cons of geoengineering. Does not go as much as I'd have liked into utility of a carbon tax. Makes a big point that the future price of carbon should not be discounted more than 2% at the most, but alas I could not get understand why. I want this on my shelf of climate reference books. Extensive end notes are a plus.
October 5, 2018
I could only get halfway through before giving up on this. I'm pretty disappointed and surprised by how annoyed I was since I agree with the premise! The authors are economists, not writers, and fail to organize their thoughts into a clearly digestible narrative, and instead scatter paragraph length sections of unconvincing ideas or inscrutable figures and graphs (with question marks for figures!) in a random fashion.
I'll be attempting Naomi Klein's book on the same subject next.
I'll be attempting Naomi Klein's book on the same subject next.
October 29, 2017
This is not a bad book, but it is not great, either. It is rather short. You can tell it is an amalgamation of various papers because each chapter presents in a very unique way. There is nothing overly revealing in this book. However, the topic is valid and the approach is sound. Sometimes dry. Sometimes entertaining. Always sobering.
August 15, 2017
While the book offers an in depth analysis of global warming with facts and figures, storyline is loose and leaves wondering of the logical sequence of sections. Feels more like reading a scientific paper than an scientific journalism book.
May 24, 2020
Thought the book was like Cliffnotes covering the climate crisis of Global Warming. I wanted something to dig my teeth into a little more, this really didn’t offer that. But, ultimately, can’t blame that on the book, that was its purpose. Just didn’t really love it.
May 30, 2022
A strong contender for the worst book I've read this year. Marty Weitzman was a great economist but his book is unbearably bad.
Generally if I don't like a book I start reading chapters from the end in the hope of finding some excitement. Nothing. What a waste.
Generally if I don't like a book I start reading chapters from the end in the hope of finding some excitement. Nothing. What a waste.
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