by Joseph Romm
Nobelist Paul Krugman has a long piece in the upcoming Sunday New York Times Magazine, basically climate economics 101.
It is nearly 8000 words, so while you should read the whole thing,
I’ll post some of the highlights below. I’ll also throw some links to
the scientific and economic literature that the NYT, in its infinite wisdom/stupidity, refuses to include.
The essay isn’t primarily about the science, but this is what Krugman has to say on that, starting with the opening paragraph:
If you listen to climate scientists—and despite the relentless campaign to discredit their work, you should—it is long past time to do something about emissions of carbon
dioxide and other greenhouse gases. If we continue with business as
usual, they say, we are facing a rise in global temperatures that will
be little short of apocalyptic. And to avoid that apocalypse, we have
to wean our economy from the use of fossil fuels, coal above all …
This is an article on climate economics, not climate science. But
before we get to the economics, it’s worth establishing three things
about the state of the scientific debate. The first is that the planet
is indeed warming. Weather fluctuates, and as a consequence it’s easy
enough to point to an unusually warm year in the recent past, note that
it’s cooler now and claim, “See, the planet is getting cooler, not
warmer!” But if you look at the evidence the right way —taking
averages over periods long enough to smooth out the fluctuations—the
upward trend is unmistakable: each successive decade since the 1970s
has been warmer than the one before.
Second, climate models predicted this well in advance, even getting
the magnitude of the temperature rise roughly right. While it’s
relatively easy to cook up an analysis that matches known data, it is
much harder to create a model that accurately forecasts the future. So
the fact that climate modelers more than 20 years ago successfully
predicted the subsequent global warming gives them enormous credibility.
Yet that’s not the conclusion you might draw from the many media
reports that have focused on matters like hacked email and climate
scientists’ talking about a “trick” to “hide” an anomalous decline in
one data series or expressing their wish to see papers by climate
skeptics kept out of research reviews. The truth, however, is that the
supposed scandals evaporate on closer examination, revealing only that
climate researchers are human beings, too. Yes, scientists try to make
their results stand out, but no data were suppressed. Yes, scientists
dislike it when work that they think deliberately obfuscates the issues
gets published. What else is new? Nothing suggests that there should
not continue to be strong support for climate research.
And this brings me to my third point: models based on this
research indicate that if we continue adding greenhouse gases to the
atmosphere as we have, we will eventually face drastic changes in the
climate. Let’s be clear. We’re not talking about a few more hot days in
the summer and a bit less snow in the winter; we’re talking about
massively disruptive events, like the transformation of the
Southwestern United States into a permanent dust bowl over the next few
decades.
Now, despite the high credibility of climate modelers, there is
still tremendous uncertainty in their long-term forecasts. But as we
will see shortly, uncertainty makes the case for action stronger, not
weaker. So climate change demands action …
At this point, the projections of climate change, assuming we
continue business as usual, cluster around an estimate that average
temperatures will be about 9 degrees Fahrenheit higher in 2100 than
they were in 2000. That’s a lot—equivalent to the difference in
average temperatures between New York and central Mississippi. Such a
huge change would have to be highly disruptive. And the troubles would
not stop there: temperatures would continue to rise.
Furthermore, changes in average temperature will by no means be the
whole story. Precipitation patterns will change, with some regions
getting much wetter and others much drier. Many modelers also predict
more intense storms. Sea levels would rise, with the impact intensified
by those storms: coastal flooding, already a major source of natural
disasters, would become much more frequent and severe. And there might
be drastic changes in the climate of some regions as ocean currents
shift. It’s always worth bearing in mind that London is at the same
latitude as Labrador; without the Gulf Stream, Western Europe would be
barely habitable.
But there are at least two reasons to take sanguine assessments of
the consequences of climate change with a grain of salt. One is that,
as I have just pointed out, it’s not just a matter of having warmer
weather—many of the costs of climate change are likely to result from
droughts, flooding, and severe storms. The other is that while modern
economies may be highly adaptable, the same may not be true of
ecosystems. The last time the earth experienced warming at anything
like the pace we now expect was during the Paleocene-Eocene Thermal
Maximum, about 55 million years ago, when temperatures rose by about 11
degrees Fahrenheit over the course of around 20,000 years (which is a
much slower rate than the current pace of warming). That increase was
associated with mass extinctions, which, to put it mildly, probably
would not be good for living standards …
For what the science says we risk if we stay anywhere near our current path of unrestricted emissions, see:
Nature Geoscience study: Oceans are acidifying 10 times faster today than 55 million
years ago when a mass extinction of marine species occurred
M.I.T. doubles its 2095 warming projection to 10 degrees F – with 866 ppm and Arctic warming of 20 degrees F
Our
hellish future: Definitive NOAA-led report on U.S. climate impacts
warns of scorching 9 to 11 degrees F warming over most of inland U.S. by 2090
with Kansas above 90 degrees F some 120 days a year—and that isn’t the worst
case, it’s business as usual!
Science:
CO2 levels haven’t been this high for 15 million years, when it was 5
to 10 degrees F warmer and seas were 75 to 120 feet higher—“We have shown
that this dramatic rise in sea level is associated with an increase in
CO2 levels of about 100 ppm.”
An introduction to global warming impacts: Hell and High Water
He has a discussion of the low cost of action:
Just as there is a rough consensus among climate
modelers about the likely trajectory of temperatures if we do not act
to cut the emissions of greenhouse gases, there is a rough consensus
among economic modelers about the costs of action. That general opinion
may be summed up as follows: Restricting emissions would slow economic
growth—but not by much. The Congressional Budget Office,
relying on a survey of models, has concluded that Waxman-Markey “would
reduce the projected average annual rate of growth of gross domestic
product between 2010 and 2050 by 0.03 to 0.09 percentage points.” That is, it would trim average annual growth to 2.31 percent, at worst,
from 2.4 percent. Over all, the Budget Office concludes, strong
climate-change policy would leave the American economy between 1.1
percent and 3.4 percent smaller in 2050 than it would be otherwise. And
what about the world economy? In general, modelers tend to find that
climate-change policies would lower global output by a somewhat smaller
percentage than the comparable figures for the United States. The main
reason is that emerging economies like China currently use energy
fairly inefficiently, partly as a result of national policies that have
kept the prices of fossil fuels very low, and could thus achieve large
energy savings at a modest cost. One recent review of the available
estimates put the costs of a very strong climate policy—substantially
more aggressive than contemplated in current legislative proposals—at
between 1 and 3 percent of gross world product.
Such figures typically come from a model that combines all sorts of
engineering and marketplace estimates. These will include, for
instance, engineers’ best calculations of how much it costs to generate
electricity in various ways, from coal, gas and nuclear and solar power
at given resource prices. Then estimates will be made, based on
historical experience, of how much consumers would cut back their
electricity consumption if its price rises. The same process is
followed for other kinds of energy, like motor fuel. And the model
assumes that everyone makes the best choice given the economic
environment—that power generators choose the least expensive means of
producing electricity, while consumers conserve energy as long as the
money saved by buying less electricity exceeds the cost of using less
power in the form either of other spending or loss of convenience.
After all this analysis, it’s possible to predict how producers and
consumers of energy will react to policies that put a price on
emissions and how much those reactions will end up costing the economy
as a whole.
There are, of course, a number of ways this kind of modeling could
be wrong. Many of the underlying estimates are necessarily somewhat
speculative; nobody really knows, for instance, what solar power will
cost once it finally becomes a large-scale proposition. There is also
reason to doubt the assumption that people actually make the right
choices: many studies have found that consumers fail to take measures
to conserve energy, like improving insulation, even when they could
save money by doing so.
But while it’s unlikely that these models get everything right, it’s
a good bet that they overstate rather than understate the economic
costs of climate-change action. That is what the experience from the
cap-and-trade program for acid rain suggests: costs came in well below
initial predictions. And in general, what the models do not and cannot
take into account is creativity; surely, faced with an economy in which
there are big monetary payoffs for reducing greenhouse-gas emissions,
the private sector will come up with ways to limit emissions that are
not yet in any model.
I have links to some of the key literature on this here:
Introduction
to climate economics: Why even strong climate action has such a low
total cost—one tenth of a penny on the dollar
Despite
its many flaws, EIA analysis of climate bill finds 23 cents a day cost
to families, massive retirement of dirty coal plants and 119 GW of new
renewables by 2030—plus a million barrels a day oil savings
New
EPA analysis of Waxman-Markey: Consumer electric bills 7 percent lower in 2020
thanks to efficiency—plus 22 GW of extra coal retirements and no new
dirty plants
The triumph of energy efficiency: Waxman-Markey could save $3,900 per household and create 650,000 jobs by 2030
And of course he discusses what scientific uncertainty means for economic modeling:
Finally and most important is the matter of uncertainty.
We’re uncertain about the magnitude of climate change, which is
inevitable, because we’re talking about reaching levels of carbon
dioxide in the atmosphere not seen in millions of years. The recent
doubling of many modelers’ predictions for 2100 is itself an
illustration of the scope of that uncertainty; who knows what revisions
may occur in the years ahead. Beyond that, nobody really knows how much
damage would result from temperature rises of the kind now considered
likely.
You might think that this uncertainty weakens the case for action, but it actually strengthens it. As Harvard‘s
Martin Weitzman has argued in several influential papers, if there is a
significant chance of utter catastrophe, that chance—rather than what
is most likely to happen—should dominate cost-benefit calculations.
And utter catastrophe does look like a realistic possibility, even if
it is not the most likely outcome.
Weitzman argues—and I agree—that this risk of catastrophe,
rather than the details of cost-benefit calculations, makes the most
powerful case for strong climate policy. Current projections of global
warming in the absence of action are just too close to the kinds of
numbers associated with doomsday scenarios. It would be irresponsible—it’s tempting to say criminally irresponsible—not to step back from
what could all too easily turn out to be the edge of a cliff.
For more on Weitzman, see
Krugman’s key conclusions are:
Stern’s moral argument for loving unborn generations as
we love ourselves may be too strong, but there’s a compelling case to
be made that public policy should take a much longer view than private
markets. Even more important, the policy-ramp prescriptions seem far
too much like conducting a very risky experiment with the whole planet.
Nordhaus’s preferred policy, for example, would stabilize the
concentration of carbon dioxide in the atmosphere at a level about
twice its preindustrial average. In his model, this would have only
modest effects on global welfare; but how confident can we be of that?
How sure are we that this kind of change in the environment would not
lead to catastrophe? Not sure enough, I’d say, particularly because, as
noted above, climate modelers have sharply raised their estimates of
future warming in just the last couple of years. So what I end up with
is basically Martin Weitzman’s argument: it’s the nonnegligible
probability of utter disaster that should dominate our policy analysis.
And that argues for aggressive moves to curb emissions, soon …
If it does, the economic analysis will be ready. We know how to
limit greenhouse-gas emissions. We have a good sense of the costs—and
they’re manageable. All we need now is the political will.
Hear! Hear!
Related Links:
The problem with a green economy: economics hates the environment
Revkin wants to talk ‘energy quest’ not ‘climate crisis’
Krugman says what political media won’t: economists agree climate action is necessary, affordable