Australian headlines are designed to scare people into not acting on climate change

(The Guardian, 21 Feb 2019) As we head into another cycle of climate change politics beware the economic doomsayers.

Whenever Australia starts to have a serious conversation about addressing climate change, headlines appear in newspapers of an economic apocalypse. This happened again in the Australian this week based on work by a long-standing economic modeller of climate policy, Brian Fisher.

So, what do economic modelling exercises tell us of the impact of reducing Australia’s contribution to global warming, and more importantly, what do they not? Should we cower in fear of action or embrace the inevitable change and manage the human and economic costs of transition?

Firstly, economic modelling results are not predictions. They are based on hypothetical future worlds. Economists try to capture the dynamics of economic systems in their models to understand the relative impact of different policy options. This means they are always wrong because economists can’t predict the future. Economic modellers are not the crystal ball gazers we read about in fantasy books.

Leading energy commentator and founder of Bloomberg New Energy Finance, Michael Liebreich, sums this up nicely. His graph shows what US government energy models have been projecting over the years compared with what is happening in the real world. Over and over again models have failed to capture how fast the cost of clean energy has been falling and the scale at which it would be deployed.

This does not mean the economic models are not useful, it just means they should be used to test the relative impact of different policy options and not be presented as predictions of the future. They have a long history of overestimating the costs of environmental regulations because people and markets can innovate faster than they often expect.

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The Guardian, 21 Feb 2019: Australian headlines are designed to scare people into not acting on climate change