Robert Pindyck on Averting and Adapting to Climate Change
Mar 21 2022

climate-science.jpg Economist Robert Pindyck of MIT talks about his book, Climate Future, with EconTalk host Russ Roberts. Pindyck lays out what we know and do not know about climate change. He argues that because of the nature of greenhouse gases, adaptation must be part of the policy response to climate change.

Bjorn Lomborg on the Costs and Benefits of Attacking Climate Change
Bjorn Lomborg, President of the Copenhagen Consensus Center, talks about the costs and benefits of attacking climate change with EconTalk host Russ Roberts. Lomborg argues that we should always be aware of tradeoffs and effectiveness when assessing policies to reduce...
Martin Weitzman on Climate Change
Is climate change the ultimate Black Swan? Martin Weitzman of Harvard University and co-author of Climate Shock talks with EconTalk host Russ Roberts about the risks of climate change. Weitzman argues that climate change is a fat-tailed phenomenon--there is a...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Shalom Freedman Freedman
Mar 21 2022 at 11:10am

The opening disclaimer as to being unable to know with certainty what present global warming will bring to the human future makes good sense. The point is made that there are too many variables to be able to know what heating the Earth by two or three degrees centigrade will bring to the future. Along with this Robert Pindyck strongly argues for the importance of a carbon tax in the US as it would not fundamentally transform the global situation but would contribute to some lessening of the warming.

In this in one sense the whole tenor of his remarks is to temper the incessant warnings of certain global catastrophe which have been a central theme in discourse on the subject. Toward the end of the conversation, he insists that global warming is not the first existential threat humanity faces but rather the possibility of nuclear terror or nuclear war is a greater risk.  This seems a timely remark considering the present Russian invasion of the Ukraine, and the Western world being on the verge of appeasing the world’s number one terror-state Iran.

The conversation does  not focus much on the kinds of negative changes we have already seen from global warming. The extremes of weather, the last few years of intense rise in global temperature, the melting of the ice-caps, the destruction of certain habitats are some of these. There is also what might seem to be a minor matter the simple fact that life has in my personal experience in the Jerusalem of the past fifty years become far less pleasant weather-wise than it once was.

There is in the conversation talk of adaptation and changes which can and will be made with climate change. But there is no real consideration of the human suffering which will be involved in what are likely to be massive movements of population. The future and certainly the long-term future is to a large degree unpredictable but in some ways the negative effects of global warming are already giving signs of worse to come.


Richard W Fulmer
Mar 21 2022 at 12:37pm

Mr. Pindyck admits that a carbon tax must be global, but then goes on to recommend that the U.S. unilaterally impose a domestic tax. The problem with a local tax is that you risk offshoring energy-intensive industry to countries with lower-priced – and dirtier – power. A local tax, then, risks making things worse rather than better.

The analogy between compensating my neighbor for denting his car and paying for the damage that my use of gasoline does to my neighbor is imperfect. When I, or my insurance company, pays for the dent, the dent is repaired. Sending carbon tax money to Washington doesn’t repair anything.

Mar 21 2022 at 3:37pm

Overall a good episode.  However, in spite of correctly emphasizing “It’s complicated“, the following comments by Pindyck significantly oversimplify matters to the point of being misleading.

Robert Pindyck: Yeah. So, what matters is the CO2 concentration in the atmosphere. And, as you say, when we emit CO2, it increases the concentration. The concentration lasts–the CO2 stays in the atmosphere–for a 100, 200 years, or more. A long, long time. And, the concentration has been increasing.

An increase in the concentration is what causes the temperature to go up. But, there’s a lag. So, if you doubled the CO2 concentration next week, the temperature would go up, but it wouldn’t go up next week. It would go up after about 30 years–20, 30, 40 years–gradually.

So, even if we cut emissions to zero worldwide–this is complete fantasy–but, if we did it, cut emissions to zero tomorrow, you still have an increase in the concentration that’s occurred over the last 30, 40 years that’s still going to have an effect on temperature.

So, the temperature will still continue to rise as a result of past increases in the CO2 concentration.

IF the effects of CO2 concentration were only the direct effect of a greenhouse gas to trap heat, then those statements might be true.  The direct effects of CO2 concentration for trapping heat have been well understood and quantified for a long time.  We know what that is and we know that it has a diminishing return on effect.  The concentration must double for each increase of 1.1 degrees C.

The big reason climate modeling is so uncertain and so unclear is that the direct warming effect is only a small minority of the influence in the predicted result of the models.  In climate models, the majority of the influence comes from speculation about the net effect of the positive and negative indirect feedback effects.  Will the net effect be to amplify the greenhouse effect or to counteract and dampen or diminish it?  Or to cancel out for little change in temperature?  See

The Skeptic’s Case
by David M.W. Evans.

The reason models may predict two or more times as much warming as we have actually observed is undoubtedly because we do not understand well the positive and negative indirect feedback effects.  For example, if increased CO2 concentration leads to some warming that leads to more water vapor in the atmosphere, that might mean more cloud cover.  But would that produce the kind of clouds that might trap heat in the atmosphere and amplify warming in an unending vicious cycle?  Or would that mostly produce the kind of clouds that block sunlight from entering the atmosphere, reflecting it back into space, and thereby provide a counterbalancing cooling effect that prevents runaway warming and helps climate to be more stable and resilient?

So, contrary to what the quoted statements might imply, we cannot say with confidence what the long term net effect on future temperature would be, even if we could maintain the present concentration of CO2 in the atmosphere.  What we can see is that the current models of indirect effects appear to be wrong and that we have observed only about half of the warming that climate models have been predicting.

Much of everything else Pindyck said is quite good.  If California had followed France’s good example instead of Germany’s misguided example, it could have had 100% carbon-free, reliable electrical energy by now (instead of blackouts plus carbon emissions).  See

The Green Atom
The Untapped Potential of Nuclear Energy

Robert W Tucker
Mar 21 2022 at 6:38pm

In asserting, as he does repeatedly in the early portion of the podcast, that climate and other scientists do not and cannot know the impact of specific levels of CO2. ocean temperatures, etc., Pindyck commits one of the oldest and long-ago refuted fallacies in scientific reasoning.

While confidence bands vary greatly across the spectrum of scientific knowledge we generally hold to be true, very little and by strict standards virtually no scientific knowledge is held to be certain. To think otherwise misunderstands science and is part of the myth of certainty. I have to assume that Pindyck knows this and therefore I cannot understand the extremity of his position, especially since he acknowledges the wisdom of mounting an intelligent response to climate change.

It is true that the confidence bounds are wide for many propositions generated within and related to climate science. Wide but not infinite and certainly not useless as Pindyck at times suggests. Moreover, some climate knowledge, such as inches of sea rise per degree of warming, are described by relatively narrow bounds anchored in empirics — bands more narrow for example than much of the medical science we take as actionable fact.

I waited but never heard Russ challenge this clear and obvious distortion of what it means to know something in a scientific sense, as he has challenged the same issue when raised in other discussions.

Steve Sc AZ
Mar 22 2022 at 10:35am

The problem with the carbon tax is that it will be wasted.

Wasting money is a government specialty.  They will find a way to fund pet projects that will fail or will divert to union jobs.  Solyndra anyone?  Biden just had a meeting at the White House with all the electric car manufacturers and who wasn’t invited?  Tesla.  Not unionized.

I would not mind funding basic research, but now we are going to trust the universities?  Yeah.  Right.  They will use part of it to fund 2+2=5 identity politics.  STEM is not immune to this, sadly.

No thanks.

Mar 22 2022 at 10:55am

Would have liked the guest expand on what the funds from a carbon tax would be used for: Subsidies for green energy alternatives? Some sort of prize money for entrepreneurs to bioengineer artificial methods of reducing CO2 levels? I’m no expert, but I’m imagining something like floating tree cities in the stratosphere… All this of course comes after the politician payouts to their relatives’ Green Energy consulting firms.

Anyway consider my vote submitted for renaming EconTalk to ScorpionTalk

Joe Born
Mar 22 2022 at 2:39pm

Mr. Pindyck consistently begged the question of whether the net effects of increased CO2 concentration and/or temperature increase are positive or negative and whether curtailing CO2 emissions might ultimately cause something catastrophic itself.  There are smart scientists–and I would say some of the smartest–who believe that the externalities are positive rather than negative;  to the extent that we want a Pigovian imposition the proper level would be a subsidy rather than a tax.

The incentive structure for mediocrities in the academy to skew possibilities toward catastrophe that we should have no confidence in the impression we get from them.

Joe Born
Mar 22 2022 at 7:14pm

Should have been “The incentive structure for mediocrities in the academy to skew possibilities toward catastrophe is so great that we should have no confidence in the impression we get from them.”

Mike Heins
Mar 22 2022 at 5:10pm

I liked this, and I don’t like many presentations on climate change. It very properly conveys the lack of certainty that pertains. I think most people are willing to grant that man likely has some effect on the climate, but beyond that, there is little to agree on with any confidence.

I wish more interviewers would address the elephant in the room with regard to characterization of global warming as dangerous. The world has been warming since the end of the Little Ice Age circa 1800, and there is definite warming from that time until now. But any warming before 1950 could have had nothing to do with man. What caused that warming? And how can we possibly attribute precise amounts to man when the warming occurs anyway and we don’t know for sure what causes it?

I won’t even get into the difficulty of characterizing cloud feedback that inevitably occurs as a result of human-caused warming, which most people don’t know is largely due to a much more potent greenhouse gas, water vapor.

We are layering guess after guess on top of the most complex system man has ever attempted to understand and model. Anyone who makes statements such as the typical climate activist does is surely overplaying their hand, and they are discounted by serious people because of that.

Luke J
Mar 23 2022 at 1:19pm

How does one provide nuclear energy to a population? Seems the US and EU nations should be building nuclear facilities and sending subsidized power to India and China. Is that possible?

To the Coase point,  What about compensating energy companies to reduce emissions? Why not pay people to use public/mass transit and bixycles?


Hunter McDaniel
Mar 23 2022 at 3:56pm

Transmission losses would be prohibitive for sending electricity between the US/EU and India/China.


Plus, these are both nuclear powers who are perfectly capable of building out nuclear electricity generation if they wanted to.  What they do instead is burn coal because it’s cheaper and, whatever they may say, they haven’t really bought in to the western obsession with CO2 and climate change.

Mar 27 2022 at 4:37am

Nuclear weapons are not same as nuclear reactors. Nuclear weapons can be as expensive as you want as the requirement of them is binary: you have it as deterrent or not. Nuclear energy has to be cheap continuously for every day use by billions of people. Additionally the per capita emissions of Indians is still much lower than any of the western nations. If climate crisis is a shared problem then Indians have to access cheap nuclear technology or it is only fair that Indians burn coal to have a reasonable standard of life, which by the way is much lower and energy intensive than any of the developed nations.

Mar 23 2022 at 3:13pm

I was tremendously impressed that they followed “it’s complicated” with a statement on the need for some humility. Usually when people say “it’s complicated” it’s not followed up explicitly at all, but what I seem to hear is something like “so don’t try and think about it yourself – just do what we tell you”.

Todd K
Mar 23 2022 at 4:58pm

It may be that we’ll have a catastrophic outcome, that things will be terrible, …

Yet only a tiny fraction of climate scientists surveyed in 2014, with over 1,800 replying, thought this is possible.

I’d like to hear Russ discuss climate change with energy physicist Steven Koonin, who was part of the Obama administration and wrote last year’s best seller Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters.

Gregory McIsaac
Mar 23 2022 at 5:33pm

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” F. A. Hayek

While Drs. Pindyck and Roberts seem to take the curious task of economics seriously when it comes to climate change and related policy, it was nowhere to be seen when it comes to nuclear energy. The complexities of nuclear energy and safety were ignored in favor of scoffing at knee-jerk fears of anything named “nuclear.”

Because of the very real dangers of radioactive substances, nuclear power plants need to be designed to withstand a wide range of possibilities such as operator error, terrorism, war, earthquakes, internal sabotage, theft, etc. The safety record has been good and underappreciated, but that occurred under heavy state controls. Concerns about concentrations of power should apply to the expansion of nuclear energy as well as other responses to climate change.

Existing regulations increase the cost of nuclear energy so that it is currently not competitive with other sources, even though the nuclear industry has received extensive government subsidies for decades. A carbon tax, if high enough, could make nuclear more price competitive. Could nuclear safety be more efficiently handled by the emergent order of a free market in uranium and plutonium?  I suspect there are few nuclear experts who would advocate for that.

There is also an unsolved problem and unknown cost of long-term disposal of high level nuclear wastes that will remain dangerously toxic for several thousand years — maybe longer than humans have had written language. One of the challenges in designing long term disposal has been designing warning signs that might be understood five to ten thousand years in the future. Insurance and liability seem to be even more challenging problems.

Todd K
Mar 23 2022 at 7:08pm

I was also going to comment on the discussion of nuclear safety and thought there was a small problem but in the opposite direction of what Gregory McIsaac has written above.

Robert Pindyck stated: “The risk of a catastrophic accident with a nuclear power plant is exceedingly low. Exceedingly low.” The risk is actually lower than that – the risk of a catastrophic accident at a nuclear plant is zero. The Chernobyl design has not been used for decades as 55 died after that accident, almost all workers. It is possible that another 200 could die of cancer in their 60s after the 2005 estimate. (A larger estimate is based on the now discarded Linear No-Threshold hypothesis of radiation risk.)

No one died from radiation after the worst case triple meltdown scenario at Fukushima and based on how many workers went over a radiation limit where some were exposed to a 1% increase in cancer risk (not death), then there is about a 50% chance that one could get cancer due to that exposure after 2040.

The stored used uranium sits in containers underground and poses no threat today nor will to anyone in the year 7,000.

Gregory McIsaac
Mar 25 2022 at 8:32pm

Commercial Spent Nuclear Fuel: Congressional Action Needed to Break Impasse and Develop a Permanent Disposal Solution | U.S. GAO

“Commercial spent nuclear fuel is extremely dangerous if not managed properly. About 86,000 metric tons of this fuel is stored on-site at 75 operating or shutdown nuclear power plants in 33 states, an amount that grows by about 2,000 metric tons each year.”


Mar 24 2022 at 5:14pm

Nowhere is there much public appetite for making near-term sacrifices to address a hypothetical future catastrophe; it’s just not human nature.  The public will accept decarbonization of energy only when and if we develop better and cheaper alternatives.  Intermittent renewables are not going to cut it.  Nuclear might, but we’ve wasted the last 50 years when we might have been perfecting that technology.

But hey, if we needed a “carbon tax”, then the Ukrainian war has provided it.



Mar 25 2022 at 8:21pm

I think the point about insuring against catastrophic outcomes was great. However, I don’t think adaptation is insurance, because it still wouldn’t do much to insure against the worst case scenario e.g. a highly unfriendly climate, with 1 in 100 year weather events happening every year, and a large proportion of humanity displaced and fighting over resources.  This article does a good job of envisioning a worst case scenario:

A global carbon tax seems like the insurance policy, but we know politics, short-termism and the incentive to free ride will be a problem.

I think some form immediate economic coercion is needed to achieve a global carbon tax. What if enough countries could form free trade alliances and threaten to sanction countries that aren’t doing their part?

Jason R Coombs
Mar 25 2022 at 11:07pm

Mr. Pindyck has a way of stating with confidence numbers that are far from accurate. For example, when comparing Covid deaths to Spanish flu deaths in US, he gave .1% and 4% but when I look at the numbers, I see 9.75/3200 = .3% and 6/1032 = .6%. I can’t tell if it’s malicious or not, but it’s a disservice to be so inaccurate in this forum.

Bob T
Mar 26 2022 at 11:41am

We know more than the author discussed. We cannot predict future outcomes with 100% certainty but we know the net effect is highly likely to be very bad for humans (the Earth will do just fine.) For example the military worries about the destabilizing effects of millions of climate refugees relocating to land already occupied. In a word, death and war. Entomologists tell us tropical diseases are already moving into former temperate zones. More death. Etc, etc, etc.

We have data from ice cores, etc. that show what the world was like when the temperature was 3 or 4 degrees C higher than now and can use that info to make some predictions with reasonable certainty. We know that average temperatures are warming faster than at any time we can measure going back millions of years which means past changes that occurred will likely happen much more rapidly this time.

Regarding the problem of the US acting alone there was no mention of the role of leadership. The most powerful country in the world should be the leader but instead it’s smaller countries taking action and waiting for the US to wake up. The first President to be alerted by his science advisor that human activity could impact the climate was JFK. Dr. Hanson warned Congress in 1988. Al Gore shouted from the rooftop, etc. We’ve lost at least three decades getting a handle on climate change because of people who have said, “Wait a minute. Don’t be so shrill. There’s uncertainty.”

A book that says “it’s complicated and uncertain” is not what we need. We need books that encourage politicians to implement a carbon tax ASAP and then work to see that the rest of the world follows. Emphasizing uncertainty means more delay and worse future outcomes.

Comments are closed.


Watch this podcast episode on YouTube:

This week's guest:

This week's focus:

  • Climate Future: Averting and Adapting to Climate Change, by Robert S. Pindyck. Coming soon at

Additional ideas and people mentioned in this podcast episode:

A few more readings and background resources:

A few more EconTalk podcast episodes:

* As an Amazon Associate, Econlib earns from qualifying purchases.

TimePodcast Episode Highlights

Intro. [Recording date: February 23, 2022.]

Russ Roberts: Today is February 23rd, 2022 and my guest is author and economist Robert Pindyck of MIT [Massachusetts Institute of Technology]. This is his second appearance on the program. He was last here in August of 2013, talking about climate change. His latest book is Climate Future: Averting and Adapting to Climate Change. Bob, welcome back to EconTalk.

Robert Pindyck: Thanks. It's nice to be here.


Russ Roberts: Now, this is a deeply, I would say, pessimistic and deeply optimistic book, which is quite an achievement. The other part I love about it is, it embodies the motto of this program, which is: It's complicated. There's a lot of humility about what we know and don't know, which I deeply appreciated. Let's start with a line from the book, "The extent of climate change and its impact on the economy and society more generally is far more uncertain than most people think." First, what do you mean by that; and second, why do you think it's true?

Robert Pindyck: Well, first of all, what I mean is fairly simple. We like to think that we know things and we like people to give us clear numbers. So, we want to know that tomorrow it's going to rain. People have trouble with the idea that there's a 40% probability of rain or 80% probability. We like to be told things. People like to know that, or they want to hear things like, 'Well, 30 years from now, the temperature is going to go up by one degree Celsius or two degree Celsius or whatever, if we don't do X, Y, and Z.'

But, the fact is that, we face a lot of uncertainty about the climate system, about what's going to happen and about what's the impact of what's going to happen. And, I think we have to recognize the uncertainty. And, it doesn't mean we shouldn't do anything. It doesn't mean that we should sit back and not worry about it. It just means that we have to be clear about the things we understand and the things we don't understand.

Russ Roberts: And, as you point out, a lot of things in life are like this. We should have some comfort, even though it's uncomfortable or at least some familiarity with this kind of issue. Although in this case, because it's related to public policy and it requires political action, that complicates it quite a bit. Certainly as you argue in the book and just now, people don't like to hear anything like, 'We don't know.' They want to know what's going to happen. And so, I think the scientific community and the policy community, if anything has done us a disservice with the certainty they've used around these issues.

Robert Pindyck: I think that's absolutely right. And, we're told that we're going to have a climate catastrophe, or this will happen, or that will happen. There's some people who argue the other side and say nothing will happen. People make statements, that: 'This is what will happen.' And, the simple fact is, we don't know what will happen. Even if we knew how much CO2--carbon dioxide--will be emitted by every country in the world over the coming 50 years--even if we knew that--we wouldn't know how much the temperature would increase as a result and what will happen to sea levels. We might have estimates. We might have a range of possibilities. But we don't know.

And, even if we did know--even if we knew precisely what the temperature will do and sea levels will do over the next 50 years--we don't know what the impact would be. We don't know whether that would be devastating to world GDP [Gross Domestic Product], to the world economy; whether it would be a little bit harmful, whether it would be moderately harmful. We don't have any data. We don't have any theory. We don't have any way of knowing what would happen.

And, that's maybe unfortunate, but that's just the fact of life that we have to come to grips with.


Russ Roberts: Yeah. We'll come back to that in some detail, of course. But, I can't help but think about economics in general and the uncertainty of any complex system. The interacting pieces of it--the complexity of those interactions--are not empirically understood with anything like certainty. And as a result, that leads to two things. One we've mentioned already, discomfort. The other thing it leads to is the temptation to lie in economics and I think in climate--to express that certainty out of either promotion, self-promotion; or, a better, slightly more attractive motive, but I think incorrect: the motive that, if we don't make it scary or we don't make it precise, there'll be this excuse for inaction, which you very clearly say in the book many, many times. Nothing of this uncertainty implies that, [?not that?] 'We shouldn't do anything, then.'

Robert Pindyck: Right. That's absolutely right. You're right: it happens in almost every area of economics. People in business want forecasts. They want to know, for example: What will interest rates be a year from now? And, I always joke with students and say, 'Anybody who tells you that they can predict what interest rates will be a year from now is either a scoundrel or the Chairman of the Fed. One or the other.'

And, people want to know: What will the price of oil be a year from now or five years from now? And, what will this be? Or, what will happen to the stock market? And so on. And, we just don't know. And, people make a lot of money by making believe that they know--by selling forecasts and making believe that they know. But they don't. And that's just how it is.

Russ Roberts: I have a feeling you don't get called by journalists very often to tell them what interest rates are going to be, because when they call me about those things--'What's the dollar going to be in six months?' And, I would say, 'I don't know.' And, then I'd say the same thing: 'And anyone who says they do know is a liar or a scoundrel.' And then they'd say--well, I'd say a liar or scoundrel. I wouldn't say Chairman of the Fed. And, then they'd say, Well, it's nice talking to you. Goodbye.' Because that's not useful to them. And, that tells you something about the world, of course.

Robert Pindyck: No, that's right. So, one of the things that this book tries to do is clarify why it is. First of all, clarify what it is we know and don't know. It's not that we don't know anything. There's a lot that we do know. And, there are areas where we know a lot; there are areas where we know a fair amount but there's some uncertainty; and there are areas where we know almost nothing. So, what I try to do in the book is clarify what it is we know, sort of know, and don't know; why it is that we don't know certain things; and then what the implications of that are in terms of policy.


Russ Roberts: So, let's dig into this question of how we deal with this, writ large. I want to challenge it, but first I want you to make the case. I mean, can't you argue, if there's so much uncertain around this and so much imperfect knowledge, isn't the best thing to do to just kind of wait till we've resolved some of the uncertainty? I'm going to let you answer, then I'll try to challenge it. But, let's hear the answer first.

Robert Pindyck: Let me give you a simple answer first. And that is: I don't know if you own your home. Let's assume you do. I'm sure a lot of listeners do own a home. And, if you own a home, you don't know whether there'll be a hurricane and a tree will fall down on it, or it'll burn down, there'll be a fire. And, if a tree falls down and there's a fire, you don't know how much damage there will be. A lot of uncertainty. Does that mean you shouldn't ensure, get insurance for your home? Most people have homeowners' insurance exactly because they don't know. If you knew, life would be a lot easier.

In fact, a lot of people have life insurance. They don't know when they're going to die. So, why do they buy life insurance? They don't know. But, you need insurance.

And, it's the same thing with climate change. Look, we may be lucky and it may be that 50 years from now--and we'll have another podcast in 50 years. I'm going to put it on my calendar--

Russ Roberts: Yeah. Me, too--

Robert Pindyck: We'll schedule it now because I get very busy. So, it may be that 50 years from now, we'll be in good shape. It may be that temperatures won't go up much. It may be, even if they do, it won't have much of an impact; and so on. That's great. It may be that we'll have a catastrophic outcome, that things will be terrible. That there'll be a large increase in temperature and that the increase in temperature will have a very severe effect on the world economy. That's also possible.

So, we need to ensure against the possibility of a catastrophic outcome.

Russ Roberts: One of the deepest things I've learned from Nassim Nicholas Taleb is that the average is often and frequently not at all what you should care about.

So, there might be an expected rise in temperature of, say, 1.8, 2.3 degrees Celsius over the next 50 years. But, that really isn't what you care about. What you really care about is avoiding the worst-case scenario, because--not necessarily the worst-case scenario. What you want to worry about is ruin. What you want to worry about is a catastrophic outcome that takes you out of the game and does not allow you to keep taking draws from the urn of life. So, that means you want to avoid death, mostly--there are costs of avoiding death, of course: you have to be careful. You want to avoid bankruptcy and ruin--financial ruin--if you're counting on, again, repeated plays to make this strategy you've employed rational.

So, in this particular case, for me, even though I've been something of a skeptic and still am something of a skeptic for large action in response to climate change--and we'll more about that--it is very much the case that we should be worried about the worst-case scenario, if it's catastrophic.

And, in a way--one of the arguments is, the worst-case scenario is five degrees of warming from the pre-industrial baseline, say, of--Celsius degrees. But I think there are actually other worst-case scenarios, which you didn't actually explore in your book, which I'll bring up. And, that's what I think we should be worried about. The fact that they're remote or small probability is not a comfort, because all that does is it means that the average is lower. That's not what we should worry about, either personally or policy-wise, in general.

Robert Pindyck: Right. No, that's right. It is unlikely that the tree will fall on your house, but nonetheless, you have insurance.

Russ Roberts: Well, especially--I'd say it more strongly. It's unlikely the tree will fall on your house, but you should cut it down if it's near your bedroom, because it's not the probability alone that counts. That's another thing I learned from Taleb. It's the actual outcome; and that could be death, if the tree crushes you. So, rather than ensure for the financial damage, you should cut the tree down, which is a way of avoiding the worst-case scenario.

Robert Pindyck: So, that's right. That's expensive to do. That still costs money, to cut the tree down. You still have to hire somebody to come cut it down, take it away, and all that. Still expensive.

Russ Roberts: Which in theory, you could argue, 'But it's such a remote event.' But it could kill you. So, it may be best to cut it down.

So, for me, the argument for a little less intervention would be that some interventions also have a worst-case scenario. You talk about irreversibility a little bit in the book. But I think the issue would be, if we got together as a world--which seems appealing in a problem like this: this is a global problem--you many times mention the challenge of a single nation trying to solve this is not really the wisest policy.

So, if we try to solve it as a world, there I want to worry about the worst-case scenario of what it would mean to empower certain dramatic actions to take place extra-nationally through some global force that generally I would worry about the concentration of power in the hands of people who are not accountable and so on. So, that would be my, the flip side of the worst-case scenario of worrying about climate change.

Robert Pindyck: Well, I don't think you have to worry about that. You know, I explain it in the book that we should try to redo CO2 emissions. And, I certainly would never argue, don't worry about emissions. Don't do anything to reduce emissions. We should try to reduce CO2 emissions. We should try to do it efficiently--lowest cost--which typically involves a carbon tax. But putting that aside, we should do it. But, we have to do it globally. And, you know, if the United States and Europe, which together account for 30% of global CO2 emissions now, reduce their emissions next week to zero--that's not feasible, but suppose it happened--well, that would leave 70% of emissions that's still growing, and growing rapidly. It wouldn't do the job. And we're not going to reduce our emissions to zero next week.

So, the only way you can really reduce emissions in a meaningful way is through a global agreement.

What are the chances of that happening? As I explain in the book, the United States and Europe are making headway. They will reduce emissions. But there are a lot of countries that won't, at least not over the next 20 years or so. Countries like China, India, Pakistan, Bangladesh, Thailand. I can go on and on. Indonesia, Malaysia.

And, the impact of that, the result of that, is that it is very likely that emissions are going to continue to grow over the next couple of decades. Which means it's very likely that we are going to see larger increases in temperature than the one-and-a-half or two-degrees Celsius that some climate scientists have said is kind of the critical limit. We're already at one degree. We've already increased the temperature by one degree. So, we don't have very far to go to hit two degrees.

Russ Roberts: So--yeah, it's one of those tricky problems. It's only one more degree, but it is doubling; but it is a worrisome problem.


Russ Roberts: And, you get at--I want to let expand on this. You get at what economists call the stock-and-flow problem. There's the stock of existing CO2 in the atmosphere. And, the flow is the additional amounts--or negative amounts, imaginably--the net flow that continue. And, if the United States and Europe went to zero--and if the rest of the world went zero--there'd still be a lot of carbon in there. It's not like it's going to get cooler. So, talk about that, because I think that's a--the fact that the past has happened has implications for the future that I think people don't fully appreciate--and you talk about it very nicely.

Robert Pindyck: Yeah. So, what matters is the CO2 concentration in the atmosphere. And, as you say, when we emit CO2, it increases the concentration. The concentration lasts--the CO2 stays in the atmosphere--for a 100, 200 years, or more. A long, long time. And, the concentration has been increasing.

An increase in the concentration is what causes the temperature to go up. But, there's a lag. So, if you doubled the CO2 concentration next week, the temperature would go up, but it wouldn't go up next week. It would go up after about 30 years--20, 30, 40 years--gradually.

So, even if we cut emissions to zero worldwide--this is complete fantasy--but, if we did it, cut emissions to zero tomorrow, you still have an increase in the concentration that's occurred over the last 30, 40 years that's still going to have an effect on temperature.

So, the temperature will still continue to rise as a result of past increases in the CO2 concentration.

Now, I think that in fact, the CO2 concentration is going to continue to go up. But, even if under some fantasy we stopped emitting CO2, we still would have the problem of past increases are still affecting temperature.

Russ Roberts: Yeah. The point I was making before about the risk of worst-case scenario in fighting climate change is that, if you think that the future of the human race is at stake--which some people do and not just the human race, but the biosphere generally--that justifies radical social change where you could mandate. Again, if governments had enough power and were motivated to do this. Those are two really different things. Hard to remember that sometimes. But, if government had enough power and if they were inclined to focus on climate change and not pay attention to people's pain and suffering, they could mandate zero. Just like we could have zero COVID from day one, if we had put everyone in house--not on day one, but shortly thereafter. If we had done something closer to what China did, put people under literal house arrest, not lockdown, but house arrest. You can quarantine people using the army.

And, if you thought that the future of the human race was at stake, you might make a case for that. You could, then, argue whether that would be a human race you'd want to be a part of, if it required so much tyranny or worse. It's not just the orders. It's what it might lead to in future malfeasance that I worry about when power is concentrated. But obviously that is a possible outcome. There are scenarios that are that bleak, and that does justify dramatic action, you could argue.

Robert Pindyck: Yeah, I wouldn't argue that. And, what I argue in the book is, first of all, when we talk about existential threat to the human race--we should get to that. There are a number of things that human race has to think about. Climate is only one of them. Let's leave that for a moment.

What I argue in the book is fairly simple, which is that, first of all, it's very unlikely that we're going to be able to reduce CO2 emissions, or net emissions--emission minus what we bring back from the atmosphere. It's very unlikely we're going to reduce emissions sufficiently and sufficiently quickly to prevent a temperature increase greater than two degrees. And that there's a very good chance--we don't know--but there's a good chance that the temperature will increase by three degrees Celsius, maybe more by the end of the century.

We don't know what the impact of that would be. It may be moderate because adaptation can take place. It may be severe.

But, what we do need to do is think about adaption and what we can do to adapt to climate change, what we can do to reduce the impact of higher temperatures. And there are a variety of things we can do. We do some of them already, but that's, I think, where we are and what we need to think about in terms of policy.

Russ Roberts: Yeah. We'll turn to adaptation, but the way I'm hearing you say it, and this is the way I take it in the book as well: Your focus on--not focus--but you're taking adaptation seriously is really a--it's a public-choice conclusion. There's nothing on the horizon that suggests that the peoples of America and Europe, let alone China or in India, have any stomach for the kind of severe restrictions that would lead to a dramatic reduction in CO2 emissions. And, therefore, adaptation is likely to be the most attractive strategy given that reality. Is that a good summary?

Robert Pindyck: Yeah, I think that's right. Yes. Yeah, yeah. In other words, you said: Okay. Look, there's a limit to what we can do. There's a limit to what we can expect. But, we can't expect India to reduce its emissions to zero. Their emissions are growing and are going to continue to grow. We can't expect that. That means that we have to be realistic about what's going to happen to temperature. And, that means that we have to figure out what to do in response. Do we just sit back and say, 'That's really too bad. I mean, we tried to reduce emissions and Europe did, and the United States did, and some countries did. And, what a shame, but that's life.' No, we have to then go to the next step and say, 'All right, what do we do if temperatures rise by three degrees or more Celsius?' And, that's where adaptation comes in.


Russ Roberts: Just one more footnote before we move on to some various policy responses. I searched for the word 'scenario' in your book and there are over a 100 occurrences of that word in a roughly 200-page book, which is a way of cataloging the fact that there's uncertainty about this. Why do you think there is so much uncertainty? We've hinted at it earlier, but I want to hear your version. Why is there so much uncertainty given that there are an enormous number of world-class, first-rate scientists desperate to understand the problem more fully?

Robert Pindyck: So, there are two kinds of uncertainty or two aspects to the uncertainty.

The first, is over the climate system, which is, if you have X amount of CO2 entering the atmosphere, and this is what happens to the concentration, what will happen to the temperature? What will happen to sea levels, and so on? And, the problem there--it's like predicting the weather. Meteorology is a very advanced science, but there's a limit to how well we can predict the weather, the rainfall, and so on. There's just limits to our ability to do that. Not because we don't have a lot of information, not because we haven't done lots of good work in meteorology. It's just the nature of the system.

And, the same thing is true with the climate system. And, we have an idea of what will happen, and climate scientists have developed very good models of what could happen, if emissions increase and so on. But, there's uncertainty. And, the climate scientists themselves in the papers that look at temperature increases, they attach probability distributions, or confidence bounds around their estimates of what will happen to the temperature. They understand that. And, part of the climate science is understanding the extent of the uncertainty: Why is there uncertainty? What's going on that's creating the uncertainty?

So, the first area is the climate system itself. It's just inherently complicated. It's not that we don't know anything. It's not that we haven't done lots of work. We have, we being climate scientists. But, there just remains a certain amount of uncertainty. We just don't know.

Then you get to the next part, which is the impact of higher temperatures or higher sea levels. Even if we knew--even if we could write down precisely what will happen to the global mean temperature in 10 years, in 20 years, in 50 years, and so on, what will happen to the sea levels in 10, 20, 50 years, and so on? Even if we knew precisely, then the question is, okay, so what? What would the impact be? If the impact would be mild, then who cares? Why do we need to do anything? But, if the impact is severe--if the impact causes lots and lots of economic and social damage--then we do need to do something.

Why don't we know what's going to happen? Well, the reason is that, a.) there is no theory. We have no economic theory, no physical theory, no theory from chemistry, physics, anything that we can use to predict the economic impact of higher temperatures over long periods of time.

And, secondly, we have no data. We've never experienced a three-degree Celsius increase in terms of the modern world--the industrial world--experiencing a three-degree temperature increase. It's never happened. So, we have no data. We have data--people run, people look at fluctuations in weather, and they look and say, 'Gee, there was a hot summer. It was really hot. And, agricultural output went down, and so on.' But that's weather. That's not climate. That's an unexpected hot summer. That's not the same as a gradual persistent increase in the average temperature. It's a different thing.

So, we've never experienced it. We don't have data. We don't have theories. We don't have a way to figure out what's going to happen, if temperature goes up by three degrees.

Russ Roberts: And of course, we also don't understand--can't predict, can't forecast--what you talk about carbon intensity--the amount of carbon that gets released for a certain amount of, say, economic activity. That's gone down over time. Will it continue to go down? Probably, it might. Yeah. How much? Not so sure. The kind of activity, unpredictable, the mix of activities of different carbon intensities.

So, all of that uncertainty is layered on top of it. The way I would think about it is--a fan of emergent order--is: the feedback loops embedded in the system are such that they cannot be statistically isolated and then improve a forecasting procedure. There's too many interactions across the different feedback loops within the system. And, as a result, it's a crude forecasting problem that can't be done the way we would forecast less complex systems. Is that a fair summary?

Robert Pindyck: Yeah. That's the climate science side of it. That's absolutely right. That's why we don't know exactly what will happen to the temperature; but on the economic impact side, we just don't know. We just don't have any theory, really. I mean, we say, 'Gee, it gets warmer. That'll hurt agriculture.' Well, I mean, you adapt. You don't just plant the same things in the same places. You adapt. We've done that historically. We've adapted to higher temperatures. When people moved from the East Coast to the center of the United States and encountered more severe weather, more severe climate, they planted different things. That's how they adapted.

So, we don't know the extent to which that will happen. And, that's why it's so difficult for us to determine what the impact would be of higher temperatures.


Russ Roberts: We'll come back to that story about the adaptation, because I find it so interesting. But first, I just want to ask: A lot of people are going to hate this book, aren't they?

Robert Pindyck: So, first of all--

Russ Roberts: Because I don't want to--we talked earlier; I don't want to hear this message. I don't like this. And, it sounds a little too pessimistic on the knowledge side. And it sounds like it could excuse--even though you don't agree with it--it could excuse some people saying, 'Since we don't know anything, we have to just wait and see.' They're not going to like that. I mean, there are other things they're not going to like, either. We'll get to this too. But the general theme of the book, it's going to make a lot of people mad, I think.

Robert Pindyck: It already has. [crosstalk 28:29] This book is sort of a culmination of a lot of work I've been doing over the past decade. And, in the last couple of years, I've written papers and given talks about this with this basic message. And, I've gotten a lot of angry feedback. I mean, first of all, they call me a climate denier. Well, I'm not a climate denier. I writein the book very clearly that we need to do something--two things: try to reduce emissions and think about adaptation. So, I'm certainly not a climate denier.

People say, 'Look, all this talk about what we don't know. We know everything. We know a lot. We know it's going to be an existential threat.' Well, the fact is, we don't know that much. We know something. We don't know everything.

And, then people say, as you suggested, 'All this talk about uncertainty, we won't do anything. It'll lead to inaction.' Well, that's possible. People could read this and say, 'Aha, this guy says that we don't know things, therefore who needs a carbon tax?'

I make it very clear in the book that that's not the right conclusion. We talked about this: insurance. That's not the correct conclusion. But, there's some people who say, 'That's what's going to happen.'

So, it already has generated lots of angry feedback.

Russ Roberts: What we're talking about is really what makes this--I don't want to overstate it, Bob, but it's kind of a brave book. In general, admitting ignorance is not the road to influence: it's the road to being ignored.

I'm thinking about COVID, for example in the middle of this pandemic. The number of people who asserted things, as if they knew what was going to happen--I'll start with me. I can't tell you how many times in the early days, I'd say, 'I think in about a month, I think things will be back pretty--.' And, then I realized a month later: 'Nah, I kind of misread that.' And, that kept happening until I finally realized I had no idea what I'm talking about--to my wife. I knew I had limited knowledge of the future. It wasn't like I was trying to reassure people out in the real world. Just in my household. But, I was also trying to reassure myself. I was trying to tell myself, 'Yeah, I think it's going to be okay.' And, I was wrong.

But, a lot of people forecast deaths, normalcy, you name it. And, I think it had a devastating impact on the quality of debate; and its real cost will be seen in the future in the deterioration of trust from people who should have known better and often were overconfident about what worked or didn't work--whether it's masks, vaccines, normalcy, this variant, when it's going to get better, when it's going to get worse. How many people die, what's going to happen in hospitals? All of that stuff. It's the same problem, in many ways. It's a complex system with--we knew a lot. Like you say, in same [?] example: We knew a lot, but we didn't know everything. And, people had trouble admitting that. And, I think it really harmed our policy response and our policy response of the future.

Robert Pindyck: No, I think that's right. And, it's true in all of these areas, where we have complex policy issues. From relatively small things like, what's going to happen to inflation and what should central banks do about interest rates? What should government spending be in the face of inflation? Should we worry about it? To bigger things like climate, pandemics, and so on.


Russ Roberts: So, let's start part way through the book now. We have to face the reality you're suggesting that, because of past emissions--because of the unlikelihood of major reductions in emissions in the near future--we have to accept the, close-to-reality, that we're going to have growing emissions going forward. And, then we are facing the policy issue of: Now what? Outline what you think a thoughtful policy response should be, given that reality. In other words, 'Don't put your head in the sand,' you're saying. Don't pretend we're going to solve this problem, so we don't have to do anything really hard--different kind of hard thing. That's done. That's baked in--if you'll pardon the expression--more or less. And, then we have to figure out some alternatives. What are those alternatives? What would you say we should do?

Robert Pindyck: So, first of all, we should still try to reduce emissions as much as possible and we should do it as efficiently as possible. And, for an economist, efficiently means lowest cost to society. And, some of your listeners are not going to like this, but the best way to do it, the most efficient way, is a carbon tax. It's simple and it's efficient. You're causing damage, you pay for the damage. And a carbon tax does that. When you burn carbon, you're causing damage. We call it an externality: you're causing damage to the environment. We price that and you pay that as part of the use of carbon, burning carbon.

So, we should try to reduce emissions, do it as efficiently as possible. It has to be done globally, which means, try to reach some kind of global agreement as best as possible. That's the first thing.

The second thing is: what we ought to do about emissions. What is likely to be done about emissions? We have to recognize that despite our best intentions it's likely that the world--not the United States, not Europe--the world will not reduce emissions fast enough or sufficiently enough to prevent temperature increases in excess of two degrees. We don't know whether there'll be a temperature increase of three degrees or more. Maybe we'll be lucky. We don't know, but we may be unlucky and we may see a temperature increase well above three degrees. So, we have to recognize that, despite our best intentions, there's a good chance we're going to see temperatures well in excess of two degrees Celsius. What does that mean? Well, we don't know what the impact of that will be. Will it be very, very harmful to the world economy? Will it be moderately harmful? A little bit harmful? We don't know, but we need to be ready for that.

And, the way you get ready is through adaptation. The way you do that is through varieties of adaptation--over sea-level increases, temperature increases, and so on.

So, that's what we have to do. We have to work now. Governments have to invest in adaptation now, not wait 20 years.

Russ Roberts: We'll talk about some of the range of adaptation that may be possible. I just want to push back a little against the way you phrased that. I don't know if you meant it the way you actually phrased it. You phrased it in everyday-speak, probably not economist-speak. You said, 'We should reduce emissions as much as possible.' Of course, we could ban all kinds of things. Those are politically unattractive, but even if they were politically acceptable, you might be hesitant to--for all kinds of reasons--to not go to zero emissions. In other words, you might not want a carbon tax that would be the so-called efficient carbon tax or optimal carbon tax. Because as Coase pointed out, it's not always the case that pricing externalities is the right approach. Right? Taxing negative externalities, subsidizing positive ones. That Pigouvian--named for A. C. Pigou--that Pigouvian approach has an attractiveness to it, but it actually ignores the potential for adaptation to be a lower-cost method of coping with the higher carbon.

Now, when you have catastrophic change, adaptation is not on the table. If what we were talking about was the elimination of, say, biodiversity--which I don't think you mentioned; some people do worry about it with respect to climate change--in which case you wouldn't want to argue, 'Oh, well, we'll adapt to a world without wildlife.' Or whatever it is. 'That's a primal value I don't want to trade off, for all kinds of reasons. And so, I'm not going to adapt to that. I want a more intense carbon tax.' But a carbon tax by itself is sometimes portrayed by economists as The solution. And, I think it's more complicated, because of Coase, and I think your adaptation point really brings that out. Do you agree?

Robert Pindyck: Let me explain why economists like the carbon tax. Why I think the carbon tax is the right way to go. There's a question as to how big the tax should be, how far you go. But, if you decide you want to reduce emissions, a carbon tax is the most efficient way to do that. Why is it?

You know, I give this example in the book where you buy a new car. Okay? And, you want a new car; you go out, you buy it, you pay for it. Nobody's going to give it to you for free. You pay for it. Okay? Now you are going to take your car and you're going to go on a long trip. Well, you need gasoline. And you've got to pay for that gasoline. Okay? Now, suppose your car, by mistake, you smash into your neighbor's car, which is parked on the street. You know, it was an accident. You smash into it. You probably, I would think, that you'd have to pay the neighbor for that damage. Your insurance would do it. You'd do it through your insurance, but you caused damage and you're going to have to pay for that damage. All right? If you take your car and run into, smash it into your neighbor's house, it can be even more damage that you're going to have to pay for.

When you go on your trip and you burn gasoline, burn carbon, you're emitting CO2, and that's causing damage. We call that damage--the social cost of carbon--because it's a cost that's borne by society, not by you. You pay whatever for each gallon of gasoline--three dollars a gallon, four dollars a gallon, whatever. That's the direct cost to you. But, in addition, there's a social cost. So, all we're doing is asking you to pay for the damage you're causing. That's the idea of a carbon tax. You're paying for the damage you caused.

And, we try to estimate that damage. Again, we don't know exactly what it is. There's uncertainty. We come up with an estimate, and we say, 'Look, this is what you're doing. You paid four dollars for the gallon of gasoline. But, on top of that, you caused a dollar-worth of damage to society. We should add that to the cost of gasoline. That will reduce your emissions by the right amount.'

So, that's the argument behind a carbon tax. There are other ways to reduce emissions. They're not as efficient. They don't work as well.


Russ Roberts: Well, just to reinforce your point, even though I don't agree with it a 100%. But, to reinforce it, it also says, 'Well, if you have a really inefficient car, you might be encouraged to buy a car that's more gas-efficient if gasoline is 20%, 25% more expensive.' And so, when you say it 'reduces the amount of emissions efficiently,' it's because it encourages people to make choices. That, it doesn't mandate who should buy a smaller car. It might be you have a large family and it's worth it to you, in which case that would be okay. But, someone who doesn't have a large family and has just by chance bought a large car because they like large cars, might decide, 'Well, it's not worth it.' So, all those choices are taking place in complex ways with millions of people.

The carbon tax doesn't try to figure out who should have the smaller car. It just lets everybody kind of figure it out for themselves. And it works--it's a centralized solution that encourages decentralized action.

The problem is, is that that might not be the best way to avoid the damage. If you had no other options, for sure there's an efficient argument there, but you could argue--I'm not saying this is true. It's just, Coase encourages you to imagine this possibility, which I think is mind-expanding. It could be that your neighbor should not park on the street. And, that's a cheaper way to avoid the harm from the damage you did than your insurance. And so, you should be allowed to bang into your neighbor and your neighbor then reacts and says, 'Oh, I guess I shouldn't park in the street. My other neighbor--this is a bad driver.'

And so, you could argue--again not saying it's fact or true--but it could be true that we shouldn't a have carbon tax. We should let people impose those social costs. And so, society will find other ways to reduce the damage that are cheaper than not driving as much, say. And, those cheaper alternatives--and by cheaper, I don't just mean monetarily, but in terms of true cost to human wellbeing--those could include, for example, buying an air conditioner, just take a trivial example. Climate change, like summer, leads to discomfort and tragically sometimes leads to death at extreme heats. And so, it could be--again to even take it to a crazier level--we should subsidize air conditioning, not tax carbon, if it's really easy to be comfortable. That would be the argument.

Robert Pindyck: Yeah, sure. And, I mean, the problem is that air--as you know an air conditioner emits heat.

Russ Roberts: Yeah. Well, that's not a good example.

Robert Pindyck: The air inside is cooled, the air outside is warmed. And air conditioners use electricity. And, much of the electricity we produce now is made with coal or oil or gas. So, it's not a great solution.

Russ Roberts: It's a hypothetical example.

Robert Pindyck: There aren't many great alternatives. Adaptation is something we do, but there aren't a lot of alternatives to a tax. Look, the kinds of things we do--

Russ Roberts: The alternative would be to move north, right? Which is what, of course, people do automatically. They do adapt those kind of--move away from coastline, if sea level is rising. And we lose something with that, too--that's not free, either. So, it's about trade-offs there. I think--Coase expands your mind to imagine a richer set of trade-offs.

Robert Pindyck: No, I think you consider all those things. That's right. People will move away from the coastline to more inland.

There's some countries where that it's not feasible. Much of Southeast Asia is at sea level. Bangladesh is at sea level. So, it's not feasible everywhere.

What we're doing now as an alternative to a carbon tax is extremely inefficient. What we're doing now is picking things to do subsidies, mandates, to reduce emissions.

So, an example of this is subsidizing electric cars. Electric cars are very nice. Of course, you need electricity. So, you've got to figure out a way to make the electricity without burning carbon. But, assuming you could somehow do that--you could decarbonize the entire electric sector--if you could do that, then electric cars would certainly emit less CO2 than gas-powered cars.

The problem is that it is very nice. It's very expensive. What you're doing is subsidizing something that some people will want. And by the way, the people who buy electric cars tend to be high income. And, what you're doing is giving a subsidy to the wealthy. And, they're the people who buy electric cars, not low-income people. And so, it's very, very inefficient to decide that we're going to reduce emissions by subsidizing electric cars.

It doesn't mean that people shouldn't buy electric cars. A carbon tax would push people to electric cars because it will raise the price of gasoline. So, naturally, some people will move to electric cars, not because they're getting a subsidy but because the alternative--which is to burn gasoline--becomes more expensive.


Russ Roberts: But, as you point out and others have pointed out--and we talk about it a little bit on the program now and then--as you alluded to, whether an electric car is carbon-friendly kind of depends on where the electricity comes from.

In the early days---and I think it's probably still true because there's not a lot of demand for electricity at night--it's a relatively effective way to charge your car at night without adding a lot to the carbon footprint of your driving. If more people start to own electric cars that will require larger capacity at night. All of a sudden you're driving a coal-powered car that looks like an electric car, if that's the source.

But, it makes the point that you make in the book: if you have nuclear-powered electricity, you're going to have a much smaller carbon footprint. And, yet, nuclear power is very unpopular with environmentalists.

Talk about that. You make the case for nuclear in the book or some of the appeal of nuclear. And, I think it's an incredibly important point about its safety. So, talk about that relative to alternatives.

Robert Pindyck: First of all, people have a tendency to overestimate very small risks and underestimate large risks.

Let me give you an example. If you ask somebody, what's the chance of you're dying on an airplane? You're going to fly from--I'm in Boston: Boston to Chicago--what's the chance of a crash and you'll die? People overestimate that risk. It's extremely, extremely low probability. And then you say, 'Well, what about driving the Chicago?' And you say, 'Well, that's safer.' Well, it's not. I mean, there's a much higher risk of dying in an automobile accident, if you drive from Boston to Chicago or New York or wherever.

So, we tend to not have a good sense of what the real risks are. And, nuclear is an example of that.

All of the studies now show that the risk, given current technology--not the technology in Chernobyl years of 40 years ago, or so--the current technology, the risk of a catastrophic accident with a nuclear power plant is exceedingly low. Exceedingly low. All right? And as a result, we have to consider nuclear because it is the cleanest way--a very clean way to make electricity. You don't need to store it. You don't need to deal with the storage problem. You generate electricity without emitting any CO2.

There are issues that people worry about, like nuclear proliferation. Will the enriched uranium, or more likely the plutonium that comes out of the spent fuel rods, be stolen and converted into bombs? Well, these are risks that you have to deal with and you have to figure out ways of making sure that we control the waste material that comes out of a nuclear power plant.

And the other point is, if you look at death rates from the production of oil or coal, relative to nuclear, coal kills lots and lots and lots of people. We don't worry about that because they aren't us. I don't work in a coal mine. But, people who do, experience very high death rates from black lung disease, accidents, and so on. We don't worry about that because we're not there in the coal mine. Burning coal--leave out the CO2--generates particulates: little, fine grains of pollution that when people breathe causes all kinds of diseases. And we don't think about that so much. So, coal, and for that matter, oil, is far, far more dangerous in terms of the threat to lives--lives lost--than nuclear power is.

So, I view nuclear power as a relatively safe option; and it's not something that we should simply push away because we worry about it. We don't like it. It's something that we have to consider. We have to use as part of a strategy to decarbonize the electricity sector.

Russ Roberts: And you could argue--I don't know if this is what people actually feel--you could argue, this is just an application. People's unease with nuclear power is just an application of the relative unimportance of average outcomes. The fact that in the past--so, it's super-rational to be against nuclear power because in the past, true nuclear--the total number of nuclear deaths, when you include Chernobyl--forget, the fact that we've gotten better at it--is dwarfed by the deaths from coal mining, for the workers. Particulate matter for the general population. And so on. And, yet people, quote, "irrationally" don't like nuclear power. But it could be simply that they feel, perhaps correctly, that there's a--even though it's very small--there is a chance of catastrophic outcome that makes them uncomfortable, especially in their backyard.


Russ Roberts: So that's one possibility, but the other part's just a little bit more visceral, and interesting. As you point out in the book, MRIs, Magnetic Resonance Imaging--I think I got that right; did I get that right? MRI, Magnetic Resonance Imaging--it used to be called Nuclear Magnetic Resonance. That's like: 'I don't like that. You can't do that on me.' And, we have perhaps just an irrational or visceral--it's like calling it, I don't know, Scorpion Magnetic Resonance Imaging. It's like, 'I don't like scorpions. They give me the creeps.' They associate people, associate it with nuclear weapons, which is horrific. And so, they don't like it. Maybe we need to rename it the way we renamed certain fish. You give it a certain name that sounds romantic, and maybe it would sell better politically.

Robert Pindyck: Yeah. Yeah. You read the footnotes in the book, too, which is good. And, there is a footnote about MRIs. And, I've had numerous ones on my shoulder and my knees and whatever, orthopedic injuries. And, when the technology was developed--the way an MRI works is that, a very, very high magnetic field is applied to, let's say, your knee--whatever they're looking at. And then, radio waves are imposed and the nucleus of the atoms of certain materials resonate and feed back--give back the radio waves. So, that's how you can determine what's going on in the thing you're looking at. So, it's the nucleus; and that's why it was originally called Nuclear Magnetic Resonance Imaging, because it's the nucleus that resonates.

And, it was NMRI; and people got upset. They didn't like the word 'nuclear.' So they got rid of the word and called it just MRI. And now everybody's happy. And, maybe that's what we need to do with nuclear power. I'm not sure what the right word would be, but maybe we need a new word.

Russ Roberts: I think was Alfred Khan who said, 'Don't call it a recession, call it a banana. Maybe it won't be so frightening to people.' But, again, truth in advertising doesn't seem to be--it seems to be a good idea.


Russ Roberts: Let's say you're the Czar of Climate Change. And, let's say, the United States, and not the world. There is no, say, World Czar. But we could imagine a United States situation where there was the power to do more than we're doing now. Let's just say it doesn't have to go through Congress. You're in charge. I'm going to give you a big budget. What do you do? What's your mix of carbon tax, adaptation? And, then after you tell me that, we'll talk some more in detail about what adaptations might be attractive. But, do you have a plan, what would be a good plan?

Robert Pindyck: Yeah. First of all, you have to be clear. The United States is not going to solve the problem. We account for 15% of the world emissions. If we reduced our emissions to zero next week it would help, but it would make a small dent. It would not come close to solving the problem.

Nonetheless, I would impose a carbon tax, at least a small carbon tax, to acknowledge that there's an externality, to acknowledge that there's a social cost of burning carbon, with a hope that would encourage other countries and would help to lead to an international agreement, which is what we really need to reduce emissions. So, that's the first thing.

The second thing I would do is start investing now in various forms of adaptation. There's some very simple things we can do. And, you mentioned houses on the coastline. I think in Florida people buy, build vacation homes or actual homes right on the beach, knowing that there's a good chance those homes are going to get washed away if there's a hurricane. And, we think that if temperatures increase quite a bit, there will be more hurricanes, more severe hurricanes. And, that would mean that more of those homes will be washed away.

Well, why do people build those homes on the beach? And, the reason is, the insurance that they pay is subsidized by the U.S. government. We subsidize people to basically buy these homes in places where you shouldn't be building homes.

And, we do that through the federal insurance program: we provide a big subsidy so that if you build a home on the coast of Florida, right on the beach, and there's good chance, there's a chance it's going to get washed away--the U.S. government will cover it. Not completely, but much of the cost of the insurance is covered by the government. Right? Why do we do that? Because wealthy people who own these homes don't want to pay more for insurance; and they vote; and, they support politicians financially. And developers who build these homes have strong lobbying power. And, they're able to lobby and prevent the reformulation of these insurance rates to be actuarily fair. So, the result is, we subsidize this.

Well, a simple thing to do is stop subsidizing it. That's all. Just say, 'Fine, you want to build a home on the coast, on the beach that may get washed away. That's okay. But, you pay for the insurance yourself. Don't expect the government to subsidize that insurance.' Very simple. And, the result is you'll have fewer homes built on the beach and fewer homes that get washed away.

Russ Roberts: It's a classic bootlegger and Baptist problem. Bootlegger/Baptist, for listeners who haven't heard it, is the idea that there's a self-interest motive for political action; and then there's sort of a good-hearted motive that appeals to people's emotional empathy.

So, in the aftermath of a hurricane, people say, 'Well, it's not fair that this person has to suffer through this disaster. This is an act of nature, an act of God. It's not their fault. It's the right thing'--forgetting that leads to a world where people tend to build more homes on the coast for the next 50 years, many of them are wealthy, it'd be better if they didn't build them at all. Probably, probably.

Okay, so, that's one: Stop subsidizing things that lead to damage that's paid for by others, for sure. What else?

Robert Pindyck: Well, since we're on the subject of flooding, you know that we worry about an increase in the sea level. We can't predict how much the sea level will rise. We don't even know what'll happen to the temperature, but even if we knew that the temperature would go up like three degrees, we don't know what that would do to sea levels. It might be a moderate increase, a small increase, a very big increase. We don't know.

But, we worry about that and correctly so, because there might be a large increase. Well, what do you do? What you do is you use seawalls and dykes and things like that to prevent the possibility of major flooding should there be strong hurricanes. This has been done historically for well over a 1,000 years.

The Netherlands, most of the Netherlands is below sea level and people live there quite comfortably because they have a system of dykes. The earliest ones were built around 800--about 1,200 years ago. And so, in the Netherlands, they don't worry too much about flooding because they have a very, very complex, sophisticated system of dykes.

There is a proposal to build a seawall around Lower Manhattan to prevent the kind of thing that happened--I forgot how many years ago, five, six years ago--and, there was a hurricane that flooded Lower Manhattan. The seawall would be below normal sea level. You wouldn't see it. The purpose is not to prevent an increase in the sea level. The purpose is to prevent waves from coming over and flooding Lower Manhattan--because that's what happens. It's not that the average sea level goes up and Manhattan is underwater. It's that the higher sea level combined with hurricanes can lead to large waves that would inundate parts of the city.

So, there's a proposal to do that, and it's being studied and there are estimates; and it would cost a couple of billion dollars to build that seawall, but that's something that we might want to invest in because it would prevent the flooding of Lower Manhattan. And, there's a lot of real estate in Lower Manhattan. So, you could say, 'Well, just leave Lower Manhattan. Move away.' But, that's not economically sound. So, that's a very sensible thing to do.

And, there are all kinds of things like that. Enhancing the levees and the dykes. The levee system around New Orleans, for example. There are many, many ways in which we can use seawalls, levees to reduce the risk of flooding from hurricanes and higher sea levels.

Russ Roberts: I'm glad you added that point about real estate in Manhattan, because, of course, the seawalls--a form of subsidized insurance that encourages people to stay there--implicitly, you're saying that it's not just the value, I assume--the monetary value--but the fact that it's nice to live near the ocean. And we could just all retreat into the center of the country, in theory. Not for maybe in Southeast Asia, but in parts of the United States where we could all move to higher ground. But we're presuming there's some value to being close to water. And, as human beings, I think we do like that. Whether, we should be subsidizing large beach homes is a somewhat different issue. They're related, but they're not the same.

Robert Pindyck: Yeah. I think beach homes are quite different from a whole city like Manhattan. I think it's quite different.

So, there's a huge amount of economic activity that takes place in Manhattan. And, you can't just pick up everything and leave. That's not so easy. And, that means you have to protect Manhattan, and one way to do it is with a seawall. Building vacation homes or homes on the beach is a very different matter. They don't have to be built. It's very easy for people instead to build their vacation home inland on a lake, if they like the water, rather than on the ocean.


Russ Roberts: Have you seen the movie Don't Look Up?

Robert Pindyck: Yeah, I have actually. It was fun.

Russ Roberts: Spoiler alert coming for those people who maybe have not seen it and who want to!

There's some amusing parts to it. And, there's some interesting conversation about--there's a really nice, very thoughtful review of it by Scott Alexander: as one might expect, it's quite long and thoughtful.

But, in that movie, it reminds me--your book reminds me of the movie because the movie is about an asteroid coming to hit the United States, where the scientific experts know with certainty, that it's going to destroy not just the United States--sorry, not towards the United States, toward the world. And, they know with certainty it's going to destroy the world. And people just ignore it.

And, the analogy, the implicit analogy that's being made--I don't think it's so subtle--is that: It's the same with climate change. The world's going to be destroyed and we just ignore it. We just say, 'I'd rather not think about it. We're going to dance while the music plays on the deck of the Titanic.' That's the implicit parallel there.

And, you're making a much more thoughtful point, which is that we're not sure it's going to destroy our world and that we should respond thoughtfully to that. What are your thoughts on where we're headed? I don't think--so, the part I accept about the movie is that I think a lot of people are somewhat oblivious to the evidence that there's a risk at least of the world being put into a catastrophic situation. Are we just going to muddle along and hope it isn't catastrophic? Or do you think people like you are going to make some headway in thinking about these things?

Robert Pindyck: Well, I don't even know what's going to happen. You know, like, again, I hope that we will take action to try to reduce emissions. I hope that we will take actions to work on various forms of adaptation. I don't know what will actually happen. I can't forecast those things.

But I do want to say one thing about this idea of the world coming to an end. So, in the movie, you know, an asteroid--it's actually a comet--hits the earth and destroys the entire planet.

Russ Roberts: Yeah.

Robert Pindyck: So, the analogy is: Climate change is existential. It's going to destroy the world. And, many people talk about it that way. That climate change is an existential risk. That word is used over and over again: it's going to destroy the world.

Now, we may have a very bad outcome that may be extremely severe, what I call a catastrophic outcome. The chance of destroying the world is low, very low. But, what I talk about in--not just the book, but much of my own research--is that we face a number of catastrophic risks that threaten the human race. And climate change is one of them.

But, there are others that I think are more severe. I think that nuclear terrorism and nuclear warfare are far more dangerous and existential than climate change is.

These are things that could happen in the next 5 or 10 years. These are things that could easily wipe out the whole world. And, we tend to ignore that. When you look at the number of nuclear weapons that exist--not just in the United States and Russia, but China, Britain, France--all around the world--Pakistan, India. And you think about the use of those weapons. Will they ever be used? We hope not, but do you know that they'll never be used?

And, what are the chances that bad people, terrorists, get ahold of some of those weapons and manage to bring them into a city in Europe, or the United States and set off a Hiroshima-level bomb that wipes out a city? What would that do to the world economy? What would it do to the world? These are things that could indeed be existential risks. They're just terrible.

We've had a pandemic. We've had a pandemic that isn't even close to what it did in the Spanish flu a hundred years ago. The Spanish flu a hundred years ago killed about four percent of the population of the United States and Europe. Four percent.

COVID has killed a lot of people, but it's maybe a 10th of one percent. It isn't even close to what the Spanish flu did.

And, if you look at the reports that came out of the CDC [Center for Disease Control] way before COVID happened, there were warnings that we're going to have really, really bad pandemics that are going to hit us, and it's going to be animal-to-human, and they're going to be terrible. And, they could be much worse than the Spanish flu. Well, COVID was not that bad, but there's still the possibility of extremely severe pandemics that lie ahead. And, there are other things that we could talk about--you know, bioterrorism, for example, that I find severe existential risk--moreso than climate change.


Russ Roberts: I think the pandemic is really interesting. This is way beyond both of our pay-grades, but I want to just speculate for a second about it. It's true that it didn't kill anything like the Spanish flu did. And you could argue that's because it wasn't as severe as a pandemic. You could argue that we have better ways to mitigate it. We came up with a vaccine--and I love to say we--human beings came up with a vaccine in a remarkably short period of time. I recently did an episode on that with Greg Zuckerman and a really fascinating story of innovation.

But, to me, the pandemic part of the pandemic is the least concerning--not the least, but is not even close to the whole story. It has torn the United States apart politically. It has created lunacy in how people respond and think about risk. And it's done real damage.

I don't believe that--I don't think it was a conspiracy. But it's a side-effect of the release of that virus--wherever it came from--that it did severe damage to the political system of the United States. That's one argument.

The other argument is, 'Eh, it could be anything.' COVID is just the vehicle, masks or just vaccines, mandates--they're just the vehicle for the expression of political tribalism. And, it's just a symptom of an underlying problem.

But, it could be it actually just helped create it. And, created such a visceral thing that doesn't have a common parallel if that hadn't come along. Wouldn't have this level of, to my mind, bizarro expression of self through political views of something that's public health. It's not even--it's not about a real war with an enemy. It's not about an economic intervention that has uncertainty around it. It's extraordinary. You couldn't have scripted this, seriously. It's much weirder than Don't Look Up. What's your thoughts on that?

Robert Pindyck: Well, I mean, I think that's true. It's caused political splits, there's no question. But so has climate change. For the past decade, two decades, there are people who just say it's all made up, it's all just a hoax. Climate change has been incredibly divisive in terms--politically divisive. And, we've had other divisions in the past. I'm old enough to remember the Vietnam War--

Russ Roberts: Me, too--

Robert Pindyck: Which was incredibly divisive in this country. Incredibly divisive. So, these things happen. I don't think that COVID was particularly a problem in that sense. And, we're going to have to figure out ways to deal with pandemics, with disease. There are big fights that existed before COVID over vaccine--measles vaccinations: do you vaccinate children before they can go to school? And, a lot of people don't want their kids to be vaccinated against measles. So, this has been a problem for a long time. It's not simply COVID.

Russ Roberts: Fair enough. Given those other risks, can't we worry about more than one thing at once? Is there any reason--I happen to agree with you. I think the climate and the Earth itself is pretty vibrant and resilient. I used to think that was through[?] our political system; I'm not so sure lately.

Robert Pindyck: Yeah.

Russ Roberts: Okay. So, there are other things that are maybe scarier than climate change. We can't we worry about all of them. Or do you think there are some trade-offs there in terms of focus, political energy, resources?

Robert Pindyck: Look, right now, we don't worry about much of anything--

Russ Roberts: We can certainly worry about all of them. Can we do anything about it? Yeah.

Robert Pindyck: You're starting from zero. So, we don't worry about much of anything right now. And, I think we've got to worry about all these possible risks. And, I think we have to spend a lot more money and resources.

I mean, just take pandemics. The budget, at least prior to COVID, of the CDC--I think even through the beginning of COVID--the CDC's budget has dropped in real terms, regularly, steadily. And, we don't spend much money right now on surveillance, worrying about new viruses, protecting ourselves against viruses and so on. And, we have to do more. These are serious, conceivably existential risks that we have to worry about.

So, it's difficult, and people don't want to spend money, and they don't want their taxes to go up, and they don't want the government to do much.

But, the fact is, there are a variety of things we need to worry about. And, we do need to spend more resources on all of these risks: on things ranging from climate, to pandemics, to nuclear terrorism, and so on.

Russ Roberts: My guest today has been Robert Pindyck. His book is Climate Future. Bob, thanks for being part of EconTalk.

Robert Pindyck: My pleasure.

More EconTalk Episodes