Dave Roberts has an interesting piece about the alarmism gap between climate scientists and climate economists, where economists take a much rosier view.
I think there are two main things going on here. One is that to an extent I think scientists (like people in general) tend to underestimate the robustness of human systems in the face of physical devastation. Someone standing amidst the wreckage of Japan in late 1945 would be hard-pressed to realize how bright the country’s future would be. And by the same token, if you had a predictive model in 1845 that said it was likely that 100 years later all of Japan’s major population centers would be rubble and its population starving to death you’d likely say you were predicting a doomsday scenario. And that’s where I think the scientists sometimes go wrong. They predict a wasteland and fail to see that we could recovery.
The larger error is the economists’ tendency to make the reverse error, seeing a steady upswing in economic growth and doing a “yadda yadda yadda” past the intervening devastation. If something happens that leads you to increase your estimate of total extinction of homo sapiens from 0.01% to 0.1%, that still leaves you with a model whose central tendency predicts steady growth. And yet that’d be a big deal. Meanwhile, if grandma dies of heatstroke that doesn’t really hurt GDP. Grandma’s not a productive citizen. She’s retired. But you probably love her anyway. GDP doesn’t care if Miami-area construction activity goes into building larger, nicer houses or bigger, better seawalls but people like large fancy houses. As far as global economic output is concerned, even hundreds of millions of dead subsistence farmers is no big deal. As long as it’s generally possible for rich people to buy the “unlikely to lead to death” land, production will continue apace.
The irony of all this is that from the point of view of something an economist can model, a tax on carbon dioxide emissions would be extremely growth-friendly relative to other possible taxes.