Nature 439, 370 (26 January 2006) | doi:10.1038/439370a; Published online 25 January 2006

Warming to economics


Climate research can only gain from closer collaboration with economists.

When a small group of economists first became interested in global warming around 1990, some climate scientists viewed their activities as an unnecessary intrusion. The warming of the planet, they reasoned, was being driven by economic expansion, and action on greenhouse-gas emissions was being opposed by some governments on economic grounds. Why should economists get involved when the future of the planet was at stake?

After some years of mutual apprehension, however, collaboration between climate scientists and economists is becoming widespread (see The costs of global warming). There is a growing acceptance on the part of the scientists that economic models are an essential piece of the toolkit needed to predict climate change. And there's an acknowledgement that mitigation actions cannot fly in the face of the considerations that economists probe, such as China's desire to grow and people's desire to drive their own cars. The centrality of economics to decisions in this sphere is neatly encapsulated by the British government's decision to give the Treasury lead responsibility for climate-change policy.

The inclusive nature of the Intergovernmental Panel on Climate Change (IPCC), which is currently preparing its fourth assessment of global warming for publication late next year, has further encouraged economists and climate scientists to work together. The resulting effort has shed useful light on how economic growth, lifestyle changes, international trade, and investment in the energy sector might influence greenhouse-gas emissions. But that's the easy part. The hard part is untangling the impacts of various possible mitigation actions in order to credibly estimate their actual impact on economics, climate and society.

Unfortunately, for the purposes of its impending fourth assessment, the IPCC won't manage to incorporate the economists' latest thinking on these different 'emissions scenarios'. The 'Special Report on Emissions Scenarios' that will accompany the assessment was developed in the late 1990s and rests on a number of assumptions that many economists view as outdated or simplistic.

Unfortunately, for the purposes of its impending fourth assessment, the IPCC won't manage to incorporate economists' latest thinking.

For example, it assumes direct 'cause-and-effect' correlations between factors such as population growth and technological change, instead of the more complex, two-way relationships that economists have established beyond reasonable doubt. It also makes macroeconomic assumptions, such as a rapid convergence between the per-capita income of rich and poor nations, that ought really to be discarded as wishful thinking.

Common-sense adjustments to the report on emissions scenarios could incorporate the best understanding that we have regarding the interaction of such variables in complex economic systems. They will not remove uncertainty, which is fiercely ingrained in economics. Increasingly empirical approaches to economic assessment and modelling, many of them borrowed from the 'hard' sciences, will, one suspects, never lead to a mechanistic understanding of economic forces. The development of such approaches is welcome nonetheless, and has an important role to play in the assessment of emissions scenarios.

The IPCC has initiated the development of an improved set of such scenarios for completion by the end of the decade, in time for incorporation into its fifth climate assessment, due in 2013. Such are the slow wheels of progress at an organization designed to forge painstaking consensus. The delay need not undermine the authority of the IPCC's work, but it will doubtless lend ammunition to its vocal and well-financed critics when the fourth assessment is released.