The least cost, the researchers found, is to implement a carbon tax that starts out at $10 per ton of carbon (about five cents per gallon of gasoline) and then gradually climbs to $33 per ton in 30 years. Such hedging effectively “buys insurance” against future adjustment costs and is extremely robust, especially when compared with a wait-and-see strategy.
“It would be much less expensive to buy low-cost, climate-change insurance now, than it would be to wait and act later,” Schlesinger said. People voluntarily purchase insurance as protection from extreme events when the risks are private, he said, but societies can require insurance when potential losses are distributed across a population. In the past, risk has influenced policies where voluntary action could prove insufficient.
“In the United States, for example, we allow drivers to decide how much insurance to carry, but we require minimum levels of coverage,” Schlesinger said. “We also allow individuals to choose how much to contribute to their retirements, but we use Social Security taxes to guarantee minimum levels of income protection.”
The study incorporates the uncertainty in the sensitivity of the climate system estimated by Andronova and Schlesinger in 2001 by using a simple atmosphere/ocean model to reproduce the observed temperature change from 1856 to 1997 for 16 combinations of the radiative forcing by greenhouse gases, the sun and volcanoes.
“Recent work by five independent research teams has shown that climate sensitivity could be larger than the 4.5 degrees Celsius upper bound published by the Intergovernmental Panel on Climate Change,” Schlesinger said. “In fact, climate sensitivities as high as 9 degrees Celsius are not implausible.”
Paralysis in near-term action could make temperature targets as low as 3 degrees Celsius impossible to achieve if the climate sensitivity turns out to be higher than 6 degrees Celsius, Schlesinger said, and the cost of adjustment measured in terms of discounted gross global product could be many times higher for lower climate sensitivities if nothing were done for 30 years.
The Man of Steel has built a political career arguing the evils of moral hazard. Somehow the need to plan ahead and make prudent arrangements for the future does not exist when it comes to climate change.