Often when I read economists I find their reasoning to be good though their conclusions are false. This happens not only with economists, I just read them often so they provide abundant examples.

If we know that the earth is warming, but are uncertain about how fast and with what effects on climates worldwide, what are the most urgent steps that we should take to address it? One, of course, is to keep studying climate phenomena and their ecological impact. Another is to promote research and development aimed at remediation. We urgently need to understand what alternatives to fossil fuels there will be, how much energy can be conserved, how to extract CO2 from the atmosphere, and, if necessary, how to increase the earth’s albedo, its reflectance of incoming sunlight.

One way to ensure the necessary R&D is to rely on the market to finance and direct the work by using taxes, subsidies, rationing, and – most important – by convincing firms and consumers that fossil fuels will become progressively more costly. But private interests will not undertake some essential R&D under any circumstances; the “market” will not induce the necessary outlays, because investors cannot capture all the benefits of moderating global warming for the human race.

So the other option is for governments, cooperatively with business, to finance and direct R&D.

Sounds reasonable, but it doesn't describe reality. The problem is with the premise, the we word. Economists in particular seem to stumble since they are so politicized. They assume that societies somehow are controlled or guided by some elite, likely themselves, though they have political puppets. And so, their policies fail since life isn't like that.

Individuals, groups and firms will not solve our energy issues for the good of humanity, they'll do it for profit in a variety of currencies. The argument that "investors cannot capture all the benefits of moderating global warming for the human race" and so the burden falls on governments is just silly. Investors only seek an adequate return on investment, and governments have a hideously poor record. The argument fails on both ends.

The best that governments can do is to subsidize research in general. This isn't a crisis response, it's just good government at all times. They can also assist by publicizing the results of research and fostering communication among researchers. All of this should be done without strings, without targets or goals. Politicians have no clues about useful research directions. Scientists as a group have no clues either.

For some, particularly the Bush administration, uncertainty regarding global warming appears to be a legitimate basis for postponing action, which is usually identified as “costly.” But this idea is almost unique to climate change. In other areas of public policy, such as terrorism, nuclear proliferation, inflation, or vaccination, an “insurance” principle seems to prevail: if there is a sufficient likelihood of significant damage, we take some measured anticipatory action.

At the opposite extreme is what is often called the “precautionary” principle, now popular in the European Union: until something – for example, genetically modified foods – is guaranteed safe, it must be postponed indefinitely, despite substantial expected benefits.

Neither of these two principles makes sense, economically or otherwise. We should weigh the costs, benefits, and probabilities as best as possible, and not be obsessed with extreme cases.

Politicians don't make good governance decisions, they make political decisions. Their task is to get power and keep it, and that has nothing to do with good governance. If the author, Thomas Schelling, can reason that investors have no incentive to undertake world benefitting activities then why does he assume that politicians will do so even though they have even less incentive?

Of course, the uncertainties about climate change make a few actions infeasible for now, and probably for a long time. The acknowledged uncertainty about the “climate sensitivity” parameter implies that it makes no sense to decide now, through some multinational diplomatic process, what the ultimate ceiling on greenhouse gas concentrations must be, and then using this ceiling as a basis for allotting quotas to participating nations.

But most issues concerning climate change are not so clear. The most terrifying possible consequence of global warming that has been identified is the “collapse” of the West Antarctic Ice Sheet, which rests on the sea bottom and protrudes a kilometer or two above sea level. Unlike floating ice, which does nothing to the sea level when it melts, there is enough of this ice sheet above the surface that it could raise the sea level by something like 20 feet if it glaciated into the ocean, inundating coastal cities everywhere.

Estimates of the likelihood of the West Antarctic Ice Sheet’s collapse, or the likely time of collapse, have varied for three decades. Recent studies of the effect of ocean temperature on the movement of ground-based ice sheets are not reassuring. In my reading of the latest research, the likelihood of collapse in this century is small – but uncertain.

In responding to such uncertainty, we should neither wait until the uncertainty has been completely resolved before we take action nor act as if it’s certain until we have assurance that there’s no danger. These two extremes are not the only alternatives.

What does "take action" mean? This is an empty line of reasoning because there are no useful actions to take. If Europe and the US ceased to exist atmospheric concentrations would still rise. The Bush administration, for whatever reasons, has been doing the right thing in general, though they have used energy issues to justify continuation and expansion of vote buying, such as with ethanol subsidies. They are politicians after all. The uncertainties about climate change aren't only about how large a problem it may be, they are also about what can be done about it. The "do something" position is merely rhetoric since the "something" would be an illusion, a placebo, entertainment for the circus. Like ethanol. Politicians may be venal but they aren't stupid. They'll just use climate change arguments to justify pursuit of their regular agenda, and let the chips fall where they may. They'll be long gone by then.

Update: Some are worse than others

Climate scientists are collaborating with experts in economic theory to improve their forecasting models and assess more accurately the impact of rising atmospheric carbon dioxide levels. Although there is broad consensus that there will be a significant rise in average global temperature, there is great uncertainty over the extent of the change, and the implications for different regions. Greater accuracy is urgently needed to provide a sound basis for major policy decisions and to ensure that politicians and the public remain convinced that significant changes in consumption patterns and energy production are essential to stave off serious consequences in the coming decades and centuries.

There is no evidence that "changes in consumption patterns . . . are essential". This is merely ideology, unreasoning faith. There's nothing new about economists colluding with politicians to gull the public, it's just done in an increasingly crass manner.

Thejll is confident the new found cooperation with the econometric community will improve climate modelling and forecasting, but first there is a need to digest some of the new tools and ideas. The aim is to introduce greater statistical sophistication into climate analysis, partly by understanding better the correlation between different aspects of change, for example how one region impacts another. “We first need to see the spread of econometric methods so that we no longer read climate research papers that ignore important statistical problems,” said Thejll wryly.

This will lead to an important first step towards better climate change predictions models – understanding the limitations of existing models. “One improvement that can follow from the use of econometric methods in climate research is a better understanding of the level of ignorance we have,” said Thejll.

One problem at present is that uncertainties are commonly underestimated, and this makes it very difficult to predict with much confidence even the broad climatic consequences or rising atmospheric carbon dioxide levels. But Thejll hopes and expects that by incorporating the key tools of econometric modelling, climate prediction will become much more accurate and valuable.

My emphasis. It may be in this case that the economists aren't so bad. The press release in from the European Science Foundation, which probably added the nonsensical political spin.