There is a whole class of economic models of climate change that reach the conclusion that we can (and, indeed, should) wait with climate protection measures, and reduce greenhouse gas emissions slowly in presence. In the future (after some 20-30 years), when “optimal, efficient technologies” have been developed and we will be able to invest in climate protection at less cost – then we should engage heavily in mitigation of climate change (this approach is sometimes called the “climate policy ramp”). The most influential models of this class – William Nordhaus’s DICE and Richard Tol’s FUND – reach their conclusion as a consequence of two factors mainly: their discounting practice (which I wrote on recently), and the assumption that there exists a so-called backstop technology (a concept going back to… William Nordhaus). Meanwhile, there are reasons to fear that there make come a Thanksgiving for this technology optimism.
Let’s start with the backstop technology concept. In short, the assumption is that no matter what (environmental) problems we are to create through economic activity, there always will be a backstop technology – a technology enabling us to solve the problem, developed and becoming affordable as a result of the increasing scarcity arising from our overuse of some natural resource (e.g., oil) or sink (e.g., the atmosphere and oceans in the case of global warming). This is assumed to be an ever-working, automatic mechanism: some prices (reflecting scarcities, as prices are believed to do) are going up, so firms and individuals have incentive to seek and invest in alternative solutions, and due to human ingenuity they find them in time.
To some extent all this is based on historical experience: so far humanity has been able to solve any major problem thanks to a sudden technological “quantum leap”. Nevertheless, the technology optimism of Nordhaus and others appears to be somewhat naive and similar to what Nassim Nicholas Taleb (the author of “The Black Swan”) described using an allegory (going back to Bertrand Russell) about a turkey:
Imagine a turkey that has lived for 1000 days on a farm, well fed, with proper shelter, playing with the farmer’s children and so on. The turkey has reason to expect, based on its historical experience, that this will go on forever – the 1001st day, the Thanksgiving, not being an exception.
I am not trying to argue here that there cannot be a backstop technology. The fact is that we cannot know whether there will. But since we don’t know, it appears reasonable to assume the worst case – that there will be none – (according to the precautionary principle), and do what we can now to prevent what may come – catastrophic climate change, for instance.
P.S. What I described here is similarly valid for economic growth and its limits.