The Economics of Climate Change: a Primer/Preface

scientific consensus is emerging that rising atmospheric concentrations of greenhouse gases are gradually changing the Earth’s climate, although the magnitude, timing, and effects of the alteration remain very uncertain. The prospect of long-term climate change raises a variety of domestic and international economic policy issues on which there is little accord. Considerable disagreement exists about whether to control greenhouse gas emissions, and if so, how and by how much; and whether to coordinate climate-related polices at the international level, and if so, through what mechanisms.

This Congressional Budget Office (CBO) study—prepared at the request of the Ranking Member of the House Committee on Science—presents an overview of issues related to climate change, focusing primarily on its economic aspects. The study draws from numerous published sources to summarize the current state of climate science and provide a conceptual framework for addressing climate change as an economic problem. It also examines public policy options and discusses the potential complications and benefits of international coordination. In keeping with CBO’s mandate to provide impartial analysis, the study makes no recommendations.

Robert Shackleton of CBO’s Macroeconomic Analysis Division wrote the study. CBO staff members Robert Dennis, Terry Dinan, Douglas Hamilton, Roger Hitchner, Arlene Holen, Kim Kowalewski, Mark Lasky, Deborah Lucas, David Moore, John Sturrock, Natalie Tawil, and Thomas Woodward provided valuable comments and assistance, as did Henry Jacoby of the Massachusetts Institute of Technology and Thomas Schelling of the University of Maryland at College Park. The comments of Chris Webster and John Reilly of the Massachusetts Institute of Technology and Mort Webster of the University of North Carolina at Chapel Hill were particularly helpful in developing the discussion of uncertainty.

Leah Mazade edited the study, and Christine Bogusz proofread it. Kathryn Winstead prepared the study for publication, and Annette Kalicki produced the electronic versions for CBO’s Web site.

April 2003