06/19/2013 12:27 pm ET Updated Aug 19, 2013

Obama's Risk Wizards and Their New Crystal Ball

The Obama Administration has unleashed its highly educated prognosticators to develop a new math for the Anthropocene. It attempts to count things we haven't counted before. It also attempts to count things that haven't happened yet but that might and probably will.

Get ready for the carbon lobby to brand this as heresy.

Here's some background: Congress has failed to put a price on carbon. There's no sign it intends to do so. Meanwhile, the Obama Administration has developed a systematic way to estimate the "social cost of carbon" or SCC - in other words, the climate impacts of government policies on future generations. Agencies are using the SCC methodology to estimate the climate benefits of federal rules.

Here's how EPA explains it:

The SCC is meant to be a comprehensive estimate of climate change damages and includes changes in net agricultural productivity, human health and property damages from increased flood risk. However, it does not include all important damages....The models used to develop SCC estimates do not assign value to all of the important physical, ecological and economic impacts of climate change recognized in the climate change literature because of a lack of precise information on the nature of damages and because the science incorporated into these models lags behind the most recent research.

Despite these shortcomings, EPA regards the social costs of carbon as a "useful measure to assess the benefits of CO2 reductions".

Not everybody is happy about this new math because of its imprecision - a polite way of saying that it involves predicting the future. The carbon lobby may be especially concerned now because Obama's wizards are updating their estimates of the social costs of carbon. They now calculate the costs will be as much as 100% higher than their previous estimates.

More to the point, the carbon lobby is worried that the new cost estimates will be used to make projects like the Keystone XL pipeline look bad, as though it takes an advanced degree in math to recognize the costs of helping Canada sell its carbon-rich goo when scientists tell us most of it should remain in the ground. Neither the Keystone pipeline nor any other fossil energy investment will be more desirable if we ignore their costs.

The most important point about the Administration's SCC calculations, however, is not how precise they are in forecasting the full economic, environmental and societal costs of global climate change. The new math is all about assessing risk. And responsible risk management requires that we anticipate and prepare for worst-case scenarios.

So no harm will be done if the Administration's estimates of the social cost of carbon turn out to be too high. As so many Americans are finding out as victims of climate-related weather disasters, it's good to be prepared for the worst case today because that's what we're likely to get.