Should we do anything about climate change?

John Llewellyn, Senior Economic Policy Advisor at Lehman Brothers, wrote an article in today's Observer discussing whether we should act on climate change.

He seemed to conflate the question of whether it is happening with whether we should do anything about it. I don't think this is helpful.

Dear Dr Llewellyn,

I read your article on climate change in today's Observer with interest.

Your categorisation of people with an opinion on the topic was probably fair (although I didn't recognise myself in any of them!) but I can't help thinking you missed a key point: the question of whether human-caused climate change is occurring is different to the question of what, if anything, we should do about it. Crucially, the first question is one for scientists whereas the second question is one, primarily, for economists.

If we grant that climate change is occurring, it does not follow that we should do anything about it. 1% of GDP, spent every year for a hundred years is a great deal of money and the power of compounding is such that world GDP in 100 years would be materially lower than it otherwise would have been. Therefore, it is necessary to show that the negative effects of climate change are sufficient to outweigh this massive reduction in the living standards of the people of the future (compared to what they would have been). In other words, arguments based on the idea of doing something "just in case" only work if the negative consequences of doing something are also considered.

Yours sincerely,

Richard Brown

At the risk of my blogging today turning into a link fest to the Portuguese scandium monopolist, I must confess that this argument was stolen shamelessly from him.

[EDIT: Do read kyb's post in the comments. As he points out, even if climate change isn't man-caused, there may still be a case for doing something about it. I may not agree with that but it makes the need to separate the two issues crystal clear]