Book review: The Climate Casino, by William Nordhaus

The Climate Casino: Risk, Uncertainty, and Economics for a Warming World, by the economist William Nordhaus, provides a comprehensive stocktaking of the possibilities and consequences of global climate change, all of which can be summed up in one sentence: “Global warming is a trillion-dollar problem requiring a trillion-dollar solution.”

The author offers his thoughts on economic strategy to deal with this complex issue in a pleasing, plain-speaking writing style. His standing as Sterling Professor of Economics at Yale University brings academic rigor to this accessible treatise, as he delivers all the necessary data to build your own forecast models. This is a book that can be read by anyone, but should be read by insurance brokers and policy makers.

Nordhaus acknowledges that global warming is a complex subject that spans disciplines, but he is unequivocal on the science behind it. “The source of global warming is the burning of fossil (or carbon-based) fuels such as coal, oil and natural gas, which leads to greenhouse gases (GHGs). They accumulate in the atmosphere and stay there for a long time. Higher atmospheric concentrations of GHGs lead to surface warming of the land and oceans.”

The advice he delivers, along with graphs, citations and sources, is as pragmatic as it is plain. “Unless there is either a major slowdown in economic growth, or strong steps to curb CO2 emissions sharply, we can expect continued accumulations of CO2 emissions in the atmosphere – and the resulting global warming with all its consequences.”

Although he is adamant in his evidence, he is not pessimistic in his advice. He believes that coordinated global action can stem the Earth’s rising temperature. He advocates for continued research into climate change, the establishment of Carbon Pricing to create market incentives for innovators and businesses, support for technological change in the energy sector, and a transition to a low-carbon economy.

Global Casino would probably have ended with such suggestions if it was merely an economic viewpoint, but Nordhaus also acknowledges the need to consider social science when assessing climate change. In a section titled Climate Politics, he observes the interest groups who are muddying the water by providing misleading analyses.

He compares climate-change skeptics to the cigarette companies who fought to combat medical evidence on the link between smoking and cancer, and credits authors Naomi Oreskes and Erik Conway for their snappy phrase, “the merchants of doubt”.

Nordhaus goes to great lengths to address some of the most effective disinformation, giving the reader some quotable ideas to take away.

– Climate models do not exaggerate the extent of warming. “This experiment has been performed many times and has shown that the projections of climate models are consistent with recorded temperature trends over recent decades only if human impacts are included.”

– CO2 is a pollutant as defined by the Supreme Court of the United States. “Greenhouse gases fit well within the Clean Air Act’s capacious definition of air pollutant.”

– Global warming will not benefit anyone, and there is no value in waiting to act. “My research, along with that of virtually all other economic modelers, shows that acting now rather than waiting 50 years has substantial net benefits.”

From an economic perspective, Nordhaus’s message is clear: the millions of firms and billions of people, who need to spend trillions of dollars to bring about change, need an incentive to do so. The most effective incentive, he says, is a high price for carbon, which needs to be introduced now.

Read more book reviews on the Forum:Blog. Titles are selected in collaboration with getAbstract.

Author: Sheridan Jobbins is a journalist and screenwriter.

Image: A woman walks on a dried-up river bed in southwest China’s Chongqing Municipality. REUTERS/China Daily