Bjorn Lomborg of the Copenhagen Business School, the Hoover Institution, and Stanford University has an interesting paper, "Welfare in the 21st century: Increasing development, reducing inequality, the impact of climate change, and the cost of climate policies". It is published in Elsevier's journal "Technological Forecasting and Social Change.
Here is the link.
---------------------------------------------
ABSTRACT
Climate change is real and its impacts are mostly negative, but common portrayals of devastation are unfounded. Scenarios set out under the UN Climate Panel (IPCC) show human welfare will likely increase to 450% of today's welfare over the 21st century. Climate damages will reduce this welfare increase to 434%.Arguments for devastation typically claim that extreme weather (like droughts, floods, wildfires, and hurricanes) is already worsening because of climate change. This is mostly misleading and inconsistent with the IPCC literature. For instance, the IPCC finds no trend for global hurricane frequency and has low confidence in attribution of changes to human activity, while the US has not seen an increase in landfalling hurricanes since 1900. Global death risk from extreme weather has declined 99% over 100 years and global costs have declined 26% over the last 28 years.
Arguments for devastation typically ignore adaptation, which will reduce vulnerability dramatically. While climate research suggests that fewer but stronger future hurricanes will increase damages, this effect will be countered by richer and more resilient societies. Global cost of hurricanes will likely decline from 0.04% of GDP today to 0.02% in 2100.
Climate-economic research shows that the total cost from untreated climate change is negative but moderate, likely equivalent to a 3.6% reduction in total GDP.
Climate policies also have costs that often vastly outweigh their climate benefits. The Paris Agreement, if fully implemented, will cost $819–$1,890 billion per year in 2030, yet will reduce emissions by just 1% of what is needed to limit average global temperature rise to 1.5°C. Each dollar spent on Paris will likely produce climate benefits worth 11¢.
Long-term impacts of climate policy can cost even more. The IPCC's two best future scenarios are the “sustainable” SSP1 and the “fossil-fuel driven” SSP5. Current climate-focused attitudes suggest we aim for the “sustainable” world, but the higher economic growth in SSP5 actually leads to much greater welfare for humanity. After adjusting for climate damages, SSP5 will on average leave grandchildren of today's poor $48,000 better off every year. It will reduce poverty by 26 million each year until 2050, inequality will be lower, and more than 80 million premature deaths will be avoided.
Using carbon taxes, an optimal realistic climate policy can aggressively reduce emissions and reduce the global temperature increase from 4.1°C in 2100 to 3.75°C. This will cost $18 trillion, but deliver climate benefits worth twice that. The popular 2°C target, in contrast, is unrealistic and would leave the world more than $250 trillion worse off.
The most effective climate policy is increasing investment in green R&D to make future decarbonization much cheaper. This can deliver $11 of climate benefits for each dollar spent.
More effective climate policies can help the world do better. The current climate discourse leads to wasteful climate policies, diverting attention and funds from more effective ways to improve the world.
This article will outline how to establish a rational climate policy in the context of many other, competing global issues.
It takes its starting point from the standard climate models as described by the UN Climate Panel, the IPCC, in its latest, fifth assessment (IPCC 2013a) and impact models (IPCC 2014a) along with its special 1.5°C report (IPCC 2018), showing that climate change is real and man-made, and CO₂ and other greenhouse gasses lead to higher global temperatures, which on average cause a net detriment to humanity.
Global warming1 has become a top priority across the world with almost every nation committing to a target of limiting global temperature rise at or just above 1.5°C. This is partly because climate impacts have been presented repeatedly as catastrophic, leading many people to believe that unmitigated climate change is likely to lead to devastated lives, collapsing societies, and even human extinction.
These claims of devastation are almost entirely unwarranted and can lead to wasteful climate policies in which resources are allocated and decisions made driven by fear and panic. In order to identify rational climate policies, it is first necessary to address these misplaced concerns about devastating impacts from climate change.
I will do this with data from the most respected sources. Given the divisive nature of the climate debate, my first choice where available will be data from the UN Climate Panel, the IPCC, which is respected by all parties. I will use global data where available and I will mostly use US data when I refer to a specific country, partly because of the much greater availability of long-term data for the US, and partly because of its uniquely highlighted profile in the global climate conversation.
The first chapter of this article will explore the backdrop to the climate conversation. It will show that the likely future is not one of devastation. Instead, the IPCC's own scenarios show it is likely that human welfare will continue to make dramatic increases throughout the 21st century. Welfare will be described throughout the article mostly using GDP per capita because, despite criticism, this measurement correlates highly with almost all desirable variables, including higher life satisfaction, better health, longer life, less child death, higher education, less malnutrition, less poverty, more access to water, sanitation, and electricity, along with better environmental performance.
Further, inequality in the 21st century is expected to decline precipitously to levels not experienced in the 20th or even 19th century. Each person will have access to much more energy, which is crucial to deliver opportunities and lift people out of poverty, and since services will get even more effective, the experienced increase in opportunities will be even greater.
This backdrop of dramatic and inclusive welfare growth is challenged in Chapters 2 and 3 by the specter of global warming, leading to worse lives and lower welfare.
In Chapter 2, I will first detail how it is possible for most people to believe things are getting worse, whereas the data shows this mostly to be untrue. The first factor is the Expanding Bull's-Eye Effect, which points out increasing population and more wealth lead to higher damages from natural disasters. A hurricane or flood hitting a sparsely populated Florida in 1900 would have done little damage. A similar strength hurricane or flood hitting a densely populated, wealthy Florida in 2020 leads to much higher costs. The cause is not climate change, but social change.
The second factor is that it is common in the climate change literature for projected impacts from climate change to disregard adaptation. If sea levels rise some 70 cm until 2100 and no nation adapts and maintains dikes at today's heights, the world will suffer catastrophic floodings possibly costing more than a hundred trillion dollars a year. It is entirely implausible that nations will not adapt and heighten dikes and other defenses as sea levels rise and incomes more than triple. Using more realistic assumptions of adaptation, impacts typically go from catastrophic to small or even declining.
Next, I look at four areas where escalating climate impacts are popularly portrayed: droughts, floods, wildfires, and hurricanes. I explore the claims that they already impact us negatively because of global warming, and that future warming will make them even worse. These are shown to be mostly incorrect and unsubstantiated in the actual descriptions in the IPCC reports and peer-reviewed literature.
Finally, I will present two general indicators that demonstrate increased resilience: that the number and risk of climate-related deaths have dropped by more than 95%, and that the fractional cost of climate impacts is not increasing, but actually decreasing.
In Chapter 3 I will present the generalized costs of climate impacts that are estimated in so-called Integrated Assessment Models (IAM). These show that realistically, the costs of unmitigated climate impacts are in the order of 3.6% of GDP by 2100 — a problem, but not a devastation. I will then address worries that the IAM costs miss challenges including catastrophes, ocean acidification, and biodiversity loss. Many aspects are already included, and a sizable 0.73 percentage points is added for omitted costs. Taking account of the actual estimates of these potentially left-out costs shows that it is likely that they are fully included within this buffer. I finally show that even with sizable climate cost estimates, the vast, expected baseline increase in welfare will in no way be compromised. While the overall welfare increase is about 600–1,000%, the decrease is one or two orders of magnitude lower.
This background now gives us a baseline from which we can evaluate climate policies, estimating their costs and benefits. Chapter 4 evaluates the costs and benefits of the most important current climate policy, the Paris Agreement. It is found that Paris will deliver very little CO₂ or temperature reduction at a cost of $1 trillion–$2 trillion per year. While these reductions will have benefits, it is likely that the costs will vastly outweigh the benefits, with every $1 of cost achieving 11¢ of climate benefit.
Chapter 5 allows us to consider the generally optimal climate policy. This emphasizes that climate policy consists of two costs: climate costs and climate policy costs. Each impacts welfare, so we need to minimize the total cost and hence minimize the total reduction in global welfare. This is achieved using Nordhaus’ DICE model, showing that with realistic assumptions, smartly designed if less effectively implemented climate policies can save us $18 trillion, or 0.4% of all future global GDP.
However, the more important finding is that we need to avoid policies that would attempt to achieve reductions of 2°C or 1.5°C. This would be a devastating policy for the world, eradicating at least $250 trillion in welfare, or 5.4% of all future global GDP.
Chapter 6 puts the climate problem in perspective. While global warming definitely is a challenge, it is a rather small issue compared to most other human challenges, both measured in welfare and in number of dead. It shows that most people rank issues like health, education, and nutrition much higher, and that most of the world's most effective policies can do much more than what even effective climate change policies can do.
The conclusion outlines the need for policymakers to weigh approaches to make sure we tackle the negative impacts of climate change without ending up incurring more costs by engaging in excessively expensive climate policies. It affirms that we should not remain passive in the face of global warming, but we should also avoid overly ambitious and costly climate policies, and must ensure that the world remains on a growth path that will continue to deliver significant welfare gains, especially for the world's poorest.
No comments:
Post a Comment