No. 431 February 2011

Climate Adviser Misses the Point

From The Economist

11 February 2011

In his recent report on Weighing the Costs and Benefits of Climate Change Action, Ross Garnaut argues that urgent action to reduce emissions by setting a carbon price would be in Australia's national interests.

To reach this conclusion, the report considers the costs and benefits to Australia of emissions reduction. It should be commended for doing so, as that brings vital discipline to the debate. Yet even accepting the report's account of the science, its assessment overstates the benefits of immediate action and understates its costs and risks.

The difficulties arise even if one assumes that effective international agreement on mitigation is reached, allowing Australia to reap long-term benefits from mitigation efforts. As the report recognises, it would still need to be established that those benefits outweighed costs.

Whether that test is met is affected by how costs, incurred now, and benefits, decades away, are converted into a comparable measure in the present. There are no easy answers as to how this should be done. It is obvious, however, that no one would accept an offer to invest $1 today in a project that would return only $1 70 years from now.

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This article was published by the The Australian on 11 February 2011.

Articles in the Perspectives series plus a large library of books, studies, speeches, articles and DVDs on a wide range of public policy issues can be found at www.nzbr.org.nz

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