UPI’s Dan Whipple writes an interesting weekly commentary on climate change. This week he writes about the long-term implications of climate change. In this week’s essay Whipple is off base on two important points. He writes,

“… nations have to decide what, if anything, to do to deal potentially destructive changes. Some argue to invest now to cut off greenhouse-gas emissions at the source, thereby reducing future impacts, Others counter that the money is better spent fashioning adaptations to a warmer world. Even if the skeptics are correct — and humans can easily adapt to global warming — those adaptations are going to cost money. Climate science actually is challenging the conventional way of thinking about investing in the future — something economists, the guardians of thought about long-term money, are loath to admit. Applying traditional economic tools, such as the discount rate, to investing in the amelioration of global warming, you quickly discover that you cannot justify even a tiny investment to stop or slow it.”

A first issue is that in the article in several places Whipple equates “climate skeptics” with those who support adaptation to climate. This is misleading for two reasons. First, most of the so-called climate skeptics are labeled as such because they are in some way skeptical of the “mainstream” perspective on climate science, e.g., as reflected in the IPCC reports. Many in this group do not support adaptation because it would mean admitting that there is a climate problem needing to be adapted to in the first place. Second, many who support adaptation are not skeptical of climate science at all, and would include the authorship of the IPCC which devotes efforts of its Working Group II to issues of adaptation. Perhaps those who expect that adaptation should be part of any response to climate change might be more accurately described as “climate realists.”

A second issue is that Whipple’s discussion of the discount rate is fundamentally misleading. The discount rate tells us something about the time-value of money (or action, or lives, etc.), it does not tell us how to act. Whipple quotes NYU professor (and someone I’ve occasionally collaborated with) Dale Jamieson as saying of the discount rate, “If I plant a bomb to go off in Manhattan in 500 years, if we discount that from the present, the discount rate tells us that there is no damage. That can’t be right,” and Whipple consequently concludes, “That kind of thinking clearly is indefensible.” Not only is it indefensible, both Jamieson’s analogy and Whipple’s conclusion reflect a fundamental misunderstanding of the concept of discounting. If there was a bomb planted in NYC to go off in 500 years and it cost, say, $100 to stop it from going off, rather than defusing the bomb today, we would be smart to invest that $100 for 499 years and then spend $100 (which would then be only a fraction of the resulting investment) on defusing the bomb 499 years from now. The discount rate does not say that we should not defuse the bomb. (This analogy is not directly applicable to the climate issue for several obvious reasons.) The real significance of the discount rate in the climate debate is that it tells us that we would be wise to concentrate on those adaptation and mitigation actions that can be justified both on their short-term and long-term benefits — that is why such measures are called “no-regrets.” The discount rate can also motivate us to carefully consider the goals of climate policies.