Figuring the costs of climate change: an assessment and critique

In this paper we examine the evidence for the IPCC (Intergovernmental Panel on Climate Change) estimate that the costs of global climate change will be on the order of 1.5 - 2.0% of world gross domestic product (GDP). Although this estimate is widely and authoritatively repeated, it rests on a handful of preliminary studies, chiefly of the United States and performed by a select group of economists. We examine the methods and assumptions of these studies and consider the social and political commitments built into their analytical techniques. We conclude that the prevailing methods of economic damage assessment and valuation provide a highly conservative estimate of the potential costs and risks of future climate change. We suggest that the IPCC scientific assessment process has been organized in such a way as to foreclose public debate about the moral and political judgments built into the technical details of its reports.