Preventing dangerous man-made global warming? It'll be cheap, according to the Intergovernmental Panel on Climate Change (IPCC). That's the conclusion of the Summary for Policymakers (SPM3) from the IPCC's Working Group III on "Mitigation of Climate Change" that was issued in Bangkok earlier today.

Even the most stringent goal of following a greenhouse gas (GHG) emissions reduction trajectory that aims to stabilize greenhouse concentrations at around 535 parts per million (ppm) would reduce annual GDP growth rates by less than 0.12 percent per year by 2030. In that scenario, global GDP in 2030 would be 3 percent lower than it would otherwise have been without emissions reductions. The current world GDP is around $47 trillion, and in 23 years, at 3 percent per year growth rate, it would double to about $94 trillion without any emissions reductions. A 3 percent GDP reduction in 2030 implies that world GDP would drop to $91.3 trillion. In other words, putting humanity on a path to stabilizing GHG concentrations to below the equivalent of 535 ppm of carbon dioxide in the atmosphere would cost humanity an average of $117 billion per year in lost economic growth for the next 23 years.

The report lays out other possible and less expensive emissions reduction paths. For example, if the limit on eventual GHG concentrations were set at 590 ppm, the IPCC projects that that would reduce annual GDP growth by less than 0.10 percent and reduce global GDP in 2030 by less than 2.5 percent. An even looser goal of stabilizing GHG concentrations at below 790 ppm would cut annual GDP growth by 0.06 percent and reduce overall global output in 2030 by less than 0.2 percent.

The summary projects that keeping GHG concentrations below the equivalent of 535 ppm of carbon dioxide would eventually raise global average temperatures by about 2 degrees Celsius (3.6 degrees Fahrenheit) above current temperatures, keeping in mind that average global temperature today is estimated to be 0.8 degrees Celsius (1.4 degrees Fahrenheit) above what it was in 1850. In order to stabilize GHG at 535 ppm, emissions will have to peak before 2020 and must fall by 2050 to 30 to 60 percent below what they were in 2000.

Global average temperature are projected to rise by 2.4 degrees Celsius (4.3 degrees Fahrenheit) above the 2000 average if GHG concentrations reach 590 ppm. Stabilizing at below 590 ppm implies an emissions peak by 2030 and GHG emissions in 2050 between 30 percent below to 5 percent above the 2000 level.

If GHG concentrations rise to 790 ppm, the global average temperature is projected to increase eventually by 3.2 degrees Celsius (5.8 degrees Fahrenheit) above the 2000 average. Holding GHG concentrations below 710 ppm, means emissions peaking sometime before 2060 and allow an increase in emissions by 10 to 60 percent by 2050.

Contrast the relatively low IPCC SPM3 cost estimates for abating GHG emissions with the Stern Review of the Economics of Global Climate Change which projected in November 2006 that it would cost 10 times more-1 percent of global GDP per year-to stabilize the concentration of GHG at "safe" levels. Since the SPM3 report is a summary of the results of various econometric models run in conjunction with climate models, independent economists have not had a chance to evaluate the reported results. The summary reads like a list of good ideas rather than real policy proposals. For example, it suggests that cars be made more fuel efficient, fewer forests be cut down, more nuclear power plants be built, more research and development subsidies for carbon-free energy technologies like wind and solar power, and so forth. The summary does not assign any specific costs for the new energy technologies it recommends such as solar, wind, carbon capture and sequestration, nuclear, transport and building fuel-efficiency. Those very interesting and crucial details will no doubt be in the full mitigation report that will be released later this year.

But for the moment, let's assume that the IPCC has it right-that mitigating dangerous human-made climate change will only cost 0.12 percent of annual growth in global GDP. Is that a bargain? Without going into arcane details, most economists who have been working on climate change have dismissed the conclusion of the Stern Review that unmitigated climate change would reduce global GDP by between 5 and 20 percent of what it would have been in 2100. For example, in 2004 study Yale economist Robert Mendelsohn and his colleagues found "the aggregate net impacts [of climate change] for the globe are surprisingly small for the next century across all scenarios." They note that regional impacts of climate change would differ but they calculate that climate change overall would reduce global GDP by between 0.08 percent and 0.24 percent by the year 2100. "These estimates are considerably smaller than the earlier estimates in the literature that predict impacts of 1-2 percent of GDP," notes the Mendelsohn study. If Mendelsohn is right about the future damage caused by unmitigated climate change (and it's all iffy when making projections 100 years out), reducing global GDP by 3 percent from what it would otherwise have been 2030 to keep GHG concentrations below 535 ppm doesn't seem like a very good trade-off.

Most integrated assessment models (combined econometric and climate models) project gradual increase in temperatures and a gradual increase in the damage caused by climate change. To most economists this implies paying relatively less now and more in the future to abate man-made greenhouse warming. For example, Yale economist William Nordhaus suggests that the optimal carbon tax trajectory balancing costs and benefits would start with a tax of about $17 per ton of carbon rising to $84 per ton in 2050 and $270 in 2100.

But what if climate change is not predictably gradual? As the SPM3 notes, "if the damage cost curve increases steeply, or contains non-linearities (e.g. vulnerability thresholds or even small probabilities of catastrophic events), earlier and more stringent mitigation is economically justified." Doesn't the remote chance of climatic catastrophe suggest that humanity might want to purchase some extra insurance against that possibility? Harvard economist Martin Weitzman accepts that we should pursue a "gradualist climate-policy ramp up of ever tighter GHG reductions" such as that proposed by Nordhaus and most other economists. But Weitzman also argues the uncertainties about the probability of a future climate catastrophe means that governments should put "serious research dollars into early detection of rare disasters" and begin "a major public dialogue about contingency planning for worst-case scenarios." For example, since the possibility of rapid sea level rise as a result of melting ice caps in Antarctica and Greenland is one of the chief climate change worries, perhaps governments should spend more on research that aims to narrow the probabilities that such rapid melting might occur.

In any case, the range of proposed policy interventions in the SPM3 report including renewable energy mandates, producer subsidies, mandatory fuel economy standards, subsidies to public transportation, appliance and building standards, energy efficiency tax credits, and so forth leave a lot of scope for counterproductive government meddling and rent-seeking. The simplest policy aimed at reducing GHG emissions would be an internationally harmonized carbon tax. Increasing the price of carbon-based energy would encourage transport, industry, and residential fuel efficiency. There would be no need to set appliance or building code standards or offer subsidies to companies and consumers to switch to low-carbon sources of energy. Furthermore, subsidies or tax credits for companies to develop new low-carbon technologies would not be necessary-higher carbon energy prices by themselves will encourage energy supply innovation. Furthermore we must be on guard against creating institutions that could damage our capacity to respond to unanticipated catastrophes. But let's leave that full discussion to a later time.

Finally, if claims by the IPCC Working Group III Summary for Policymakers are right about the low cost of mitigating climate change-and analysts will have to wait to see the full report before thoroughly assessing their accuracy-then big sacrifices from consumers and massive changes in lifestyles will not be necessary. Even better news is that the economies of all countries, especially those of poor countries, can grow rapidly throughout this century. And that's especially good news because the best insurance against catastrophe-climatic and otherwise--is increased wealth and technological progress.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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