> Summary of summary – the very mild 'pain' outlined by the economists above is probably non-existent. The pain of inaction is stupendous.

I couldn't agree more!

It's much harder to judge efficiencies. If we increase by fiat the market for insulation by a factor of 1,000 by how much will costs come down? Tricky. Better be cautious. Don't want to over-estimate the power of competition and the market.

And it's even harder to judge previously non-existent benefits. If we insulate more houses, we reduce the load on the grid, we allow energy production to take place further from population centers then there are fewer health problems from mercury from coal. There is a greater opportunity for local renewables. There is a reduced local surge effect when the weather changes – not just an overall consumption decrease. There are fewer roof ice-dams causing internal water damage as the roof stays freezing in winter. People can afford home ownership more easily as ongoing payments are reduced. etc etc etc Not to mention a reduced 'need' to kill people for oil and spend $3T in the process.

The examples are almost infinite, and certainly not comprehensively understood in the economic models. And we shouldn't expect them to be fully understood until we fully understand the human motivation that underlies all economics. (I.e. never.)

So:

1) Economists have always been incapable of making good predictions (predictions that are as reliable as climate science, for example).

2) They tend to inflate the known and underestimate the unknown. So we have an inflated picture of the costs of going green using today's technology and an underestimate of the benefits. And on the other side we have an inflated picture of the benefits of staying with our dirty economy and an underestimate of the costs of living through drastic climate change.

3) They ignore inter-country competition and assume a level playing field of costs and benefits free of an international market. If we are going to clean up our act is there an advantage in moving first and developing the approaches in-country? Or would we rather let Europe develop all of the technologies, techniques, infrastructure and knowledge and then buy this all in from European companies when we are forced by them (through trade policies) to live up to our obligations on this planet?

Summary of summary – the very mild 'pain' outlined by the economists above is probably non-existent. The pain of inaction is stupendous.

Quentin

• Both reports specifically analyzed the Lieberman-Warner Climate Security Act of 2008, not cap-and-trade generally.

• Both reports are online: NAM-ACCF study, EPA Analysis [PDF], supporting data for the EPA analysis.

• The emphasis in the Wall Street Journal quote was not in the original.