Some, however, like the late Ian Castles, a former head of the Australian Bureau of Statistics, have defended Lomborg in a more dispassionate way, welcoming his contribution and suggesting that, if parts of his analysis are unsound on scientific grounds, it should not be beyond the capacity of scientists to demonstrate this in free, critical and civil discussion. Castles, almost religiously non-partisan and professionally analytical, was always worth listening to and his writings on economic growth, well-being, inequality and the environment remain highly relevant.

Dennis Trewin (another former Australian statistician) and I edited a book, Measuring and Promoting Wellbeing: How Important is Economic Growth?, in honour of Castles last year. The book intersperses a selection of Castles' contributions with contemporary research on the role of economics in defining and promoting well-being, measuring well-being, measuring inequality, and climate change and the limits to growth. Within the last section is a chapter, "Scientists, statisticians and the prophets of doom", written in 2001, in which Castles defended Lomborg's work and sought "free, critical and civil discussion" of it by his critics.

Central to this chapter, and many of Castles' other writings in the book, is the carefully woven argument that economic growth is not the cause of environmental damage – the real cause being the failure to make proper use of the opportunities afforded by economic growth to address environmental concerns. Castles was acutely aware that well-being involves much more than GDP and he pioneered the measurement of other dimensions of well-being, including the environment. He also argued that growth in GDP should never be the objective; rather, the objective should be the efficient use of available resources to conform most closely to the preferences of the community. Achieving this objective, in most but not all cases, leads to increases in measured GDP and GDP per capita; that is, economic growth is best regarded not as a goal or target but rather as a result of good policies.

Mannheim reported the views of Australian National University earth scientist Will Steffen: that Lomborg's cost-benefit analysis approach is exceptionally narrow and, in the case of climate change, "actually stupid". "If we took Bjorn Lomborg's approach ... and fixated only on our immediate problems, we would become absolutely overwhelmed by the longer-term consequences of the problems we neglected," Steffen said.

But it is this very challenge – how to balance costs today against benefits tomorrow, or benefits today against big costs a century away – that governments and the community at large must face today. This is the main focus of the section in the book on climate change: what discount rate should we use when investing now to limit the damage of climate change in 100 years' time? Or more broadly, how do we take account of the well-being of future generations when assessing well-being today?

Mark Harrison, in his chapter, explores the challenge of balancing well-being over time, and focuses in particular on discount rates and their crucial role in setting any carbon prices today to limit the costs of climate change in the future. This choice matters a lot: the discount rate of 1.4 per cent a year proposed in Britain's Stern Review (similar to the rate proposed by Ross Garnaut here) leads to a carbon price 50 times as high as the one based on the 5.5 per cent originally proposed by economist William Nordhaus (Nordhaus has since suggested a discount rate of 3.5 per cent, still much higher than Stern's).

Harrison draws on a wide range of economic theory before concluding that a cost-benefit approach is to be preferred to address opportunity costs properly. This was also the general consensus among the range of economists and statisticians at a Castles symposium hosted by the Academy of the Social Sciences in Australia in late 2012, which led to the book. It implies that a considerably higher discount rate than those proposed by Stern and Garnaut should be used, or that a range of options be considered against a range of possibilities. These options might include deferring action while money is invested (with higher returns than the Stern/Garnaut discount rates) for later mitigation and adaptation effort, or more modest effort now than proposed by Stern and Garnaut, perhaps with more effort on research and on capacity for adaptation and less on setting a price for carbon (or perhaps, as Lomborg seems now to support, a slowly rising carbon tax). The Castles symposium did not explore exactly what a more modest approach might look like, nor how different this might be to the then Labor government's proposals (and, of course, came to no conclusion that could be compared to the Abbott government's approach).

But the general conclusion was that a measured response to claims of impending crisis or doom is required, with a degree of optimism about society's capacity to manage future challenges.

Cost-benefit analysis may similarly help to guide priorities for development aid. It should not replace more broadly informed judgments, not least because of the measurement challenges involved (for example, in assessing the effectiveness of aid to improve governance). But it is an important tool to assist a "measured response" to achieve best value for money, as against ill-informed and possibly self-interested agendas.

Andrew Podger is a professor of public policy at the Australian National University and a former federal departmental secretary. andrew.podger@anu.edu.au