Global Experiences and the Korean Perspective
KDI/EWC series on Economic Policy
Edited by Chin Hee Hahn, Sang-Hyop Lee and Kyoung-Soo Yoon
Chapter 2: Sustaining Growth and Mitigating Climate Change: Are the Costs of Mitigation Underestimated?
Stephen Howes INTRODUCTION Despite many estimates showing that the costs of mitigation of climate change will be moderate, concerns remain that mitigation will slow and possibly halt economic growth. Take for example the conclusion of Dieter Helm, who, though he supports the “case for urgent action” (Helm 2008:236), argues: The happy political message that we can deal with climate change without affecting our standard of living—which is a key implicit message from the Stern Report on which politicians have publicly focused—and do so in a sustainable way, turns out, unfortunately, to be wrong. (Helm 2008:228) This chapter explores the concerns of those such as Helm in relation to standard and often-used estimates of mitigation costs, and assesses their validity. It begins with a brief survey of mitigation cost estimates, and then outlines and considers a range of issues in relation to them. The aim is to address in particular the apprehensions around whether the standard estimates of mitigation costs are too low. Whereas Weyant (2000) and Barker et al. (2006) explore reasons why different models give different cost estimates, the concern in the discussion below is more with cost considerations that might not be captured by the models from which global cost estimates are derived. The chapter draws in particular on the recent Australian Garnaut Review of Climate Change (Garnaut 2008), the related modelling of the Australian Treasury (2008), and the public debate in Australia in relation to the introduction of an emissions trading scheme. The...
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