Imagine your own child. Perhaps she’s nine this year. In 2030 she will be 21, just starting out on her own. Now: how much less do you value the quality her life two decades from now over that of your own life, today? Let’s add some precision to that question: in percentage points, how much less important to you now is each new year in the future? Does importance drop by 2.5 percent per year? Or by 3 or 5 per cent? Or are you a narcissistic hedonist, a terrible parent, at 7 per cent?

Last week William Nordhaus won the Nobel prize for a genuinely magnificent achievement: an integrated assessment model of climate and growth. There are many of these models now. They place a layer of macroeconomics over atmospheric science, and produce dollar value on the damages people will have to pay for when a ton of carbon dioxide hits atmosphere. Mr. Nordhaus has refined his own model over a quarter century, and is open about the limits to certainty in any model.

The federal government of the United States does not share his caution. US law requires, in fact, that any response to climate change must be justified by an integrated assessment model. The US uses these models to launder its own choices, to pretend that decisions on climate will have outcomes that are:

  • precisely measurable,
  • certain, and
  • purely economic.

But as with decisions on any regulation, our options on climate change are in fact:

  • not measurable with any precision,
  • uncertain, and
  • profoundly moral.

The answer to that question about how much less you value your daughter than yourself, for example — that’s in the model. It’s called a “discount rate,” and depending on who’s modelling, the rate does in fact run between 2.5 and 7 per cent a year. If you want to lie to yourself, hide it in a model.

William Nordhaus published his first work on climate change (paywall) in February of 1977. “Unlike many of the wolf cries,” he wrote, “this one, in my opinion, should be taken very seriously.” (February of 1977!) The next year, Jimmy Carter signed Executive Order #12044, instructing that federal regulations should be clear, reflect public comments, consider “direct and indirect effects,” and choose the “least burdensome of the acceptable alternatives.”

Cost-benefit analysis had been a part of federal policy-making since 1902, when a law directed the Army Corps of Engineers to weigh the cost of a new harbour against the value of commerce. As public projects grew, and corporate management grew up, mid-century was a hopeful time for measuring and predicting. After Carter’s order, regulators at least had to consider regulatory costs. Ronald Reagan signed an order to make cost-benefit analysis mandatory for major regulations. Bill Clinton refined it in 1993 with #12866, an executive order that still stands, amended by Presidents Bush and Obama.