Economic view: Valuing global warming counteractions

The New York Times ran a column over the weekend called A Small Price for a Large Benefit, by Robert H. Frank. Like Chapter 9 in the Vig book, he looks at environmental policy through economic terms. He argues the cost of not trying to slow global warming will be far worse than the cost of taking action now, especially if the estimate that the Earth will warm 9 degrees in the next 100 years is a conservative guess. He considers the cost of carbon, and guesses that a $300 per ton price tag would be sufficient. He then relates this to something Americans care about dearly: the price of gas. It would be a $2.60 gas increase per gallon.

I can already hear people screeching about the recession and the burden a $2.60 gas increase would put on families. Yes, it would. However, Frank is arguing for this increase to be gradual in order to allow people to change their behavior. For a family, this would mean buying a more efficient vehicle. For the auto manufacturing industry, the incentive would exist to build more efficient cars.

What I am struck by as I read the Vig book is the focus on costs. Bush changed laws in order to lessen the cost for factories. In theory, this keeps the price of the good from rising substantially, thereby helping the American public. But the question that I always come back to, no matter how rational it is to keep prices low, is: What is the cost of inaction?