In these lectures we discuss the economic aspects of climate changes and CO2 emissions. These lectures are based on the work of W.D. Nordhaus, The climate casino: risk, uncertainty, and economics for a warming world. (Yale University Press, New Haven, 2013). Professor Nordhaus received in 2018 the Noble price for economics for his work.
The lecture is a series of videos on which we discuss the different aspect of economics and policy of CO2:
- In the first video, we argue that CO2 emission is a global externality for which the free market has no solution.
- In the second video, we discuss the cost associated with reduction of CO2 emissions. We compare the differences on how engineers and economists estimate these costs.
- In the third video, we discuss the costs of climate change. We show how different one can think about the impact of climate change on different sectors of the economy.
- As cost are happening today and the benefits are happening in the future, it is important to be able to compare the money associated with both. In the fourth video we show how one can apply discounting to compare the value of money at different times. We also show that discounting is important in thinking about the effects of climate change that occur at different times.
- The fifth video, we do a cost benefit analysis of the cost of reducing CO2 emissions and the benefit of less climate change. We also discuss what it means for society to have a carbon tax of $25.
- In the last video, we discuss the different policies governments can use to reduce CO2 emissions. All these policies are based on the observation that CO2 emissions are an externality so government intervention in terms of regulations, subsidies, mandates, or cap and trade are essential. In particular we discuss the difference between a carbon tax and cap and trade scheme.