Steven Levitt and Stephen Dubner follow on the tremendous success they enjoyed with their initial effort, Freakonomics, by pushing the envelope beyond sumo wrestlers to hookers.
The final chapter has been the source of virtually all discussion about this book. I'd embed the hyperlinks, but I'm way too lazy. Instead of joining the plaintive cries of heresy by those who would prefer faster and more immediate action to counteract limate change, or the more reasonable queries about the facts as Levitt and Dubner present them (e.g, DeLong), I'd like to address my concern as an economist. I expect Levitt to get the economics right, even if Dubner wrote most of the chapter.
In trying to be provocative and a little cute, the authors suggest that geoengineering might be a cost-effective way to offset emissions. Maybe it is. Certainly some of its proponents are wicked smart guys (e.g., Myhrvold). Forget about the engineering problems--they are easy to solve--the underlying problem is that the climate is a public good. We can't prevent anyone on the planet from experiencing the same climate as the rest of us, and one individual does not preclude another from experienceing the climate. So the economic issue involved in forestalling global cliamte change is a public good provision problem.
Public goods are not always provided in optimal quantites by private actors (sometimes they are--lighthouses, for example) for any number of reasons. One reason that Copenhagen was such a miserable failure is that nobody figured out how to solve the strategic interaction problem inherent in the necessary multilateral action. All of Europe can preach what it wants, but if China and India head in the opposite direction, the aggregate effect will be negligible.
Again, the problem is not that we don't know how to curtail emissions--we do. We can put a price on carbon, which will provide a valuable incentive. There are a number of good ways to do this through tradable permits, taxes, or other instruments. The problem is in imposing/enforcing that price everywhere in the world when there is a strong incentive to cheat.
Pumping sulfur dioxide into the stratosphere will supposedly alter the climate and could be calibrated to just offset warming due to anthropogenic emissions. Great. But geoengineering is also a public good. Levitt and Dubner blithely ignore the issues of public good provision. Who decides where, how much, and when to pump the gas into the air? Who pays for it? What happens if someone doesn't want to pay their share?
Levitt and Dubner's basic insight is maybe there's a cheaper way to get to the objective stated in the Stern report. Fine. But their proposal in no way moves us any closer to the geoengineering solution. Albeit the relatively low price tag sugegsts that a small number of wealthy indidivudals could unilaterally affect the global climate, but who would trust them? Did anyone else get scared by SPECTRE in all of those Bond movies? After all of the schlock about thinking "freaky," or like an economist, exploring the hidden side of everything, ..., I expected more from the authors.
