Global WarmingImage 191: DreamstimeOver at the Spectator, Rational Optimist Matt Ridley has a fascinating article, "Why Climate Change is Good for the World," that looks at data regarding both the costs and benefits man-made global warming. He finds that the benefits outweigh the costs for most of this century before turning negative. From the article:

There are many likely effects of climate change: positive and negative, economic and ecological, humanitarian and financial. And if you aggregate them all, the overall effect is positive today — and likely to stay positive until around 2080. That was the conclusion of Professor Richard Tol of Sussex University after he reviewed 14 different studies of the effects of future climate trends.

To be precise, Prof Tol calculated that climate change would be beneficial up to 2.2˚C of warming from 2009 (when he wrote his paper). This means approximately 3˚C from pre-industrial levels, since about 0.8˚C of warming has happened in the last 150 years. The latest estimates of climate sensitivity suggest that such temperatures may not be reached till the end of the century — if at all. The Intergovernmental Panel on Climate Change, whose reports define the consensis, is sticking to older assumptions, however, which would mean net benefits till about 2080. Either way, it’s a long way off.

Now Prof Tol has a new paper, published as a chapter in a new book, called How Much have Global Problems Cost the World?, which is edited by Bjorn Lomborg, director of the Copenhagen Consensus Centre, and was reviewed by a group of leading economists. In this paper he casts his gaze backwards to the last century. He concludes that climate change did indeed raise human and planetary welfare during the 20th century.

You can choose not to believe the studies Prof Tol has collated. Or you can say the net benefit is small (which it is), you can argue that the benefits have accrued more to rich countries than poor countries (which is true) or you can emphasise that after 2080 climate change would probably do net harm to the world (which may also be true). You can even say you do not trust the models involved (though they have proved more reliable than the temperature models). But what you cannot do is deny that this is the current consensus. If you wish to accept the consensus on temperature models, then you should accept the consensus on economic benefit.

Overall, Prof Tol finds that climate change in the past century improved human welfare. By how much? He calculates by 1.4 per cent of global economic output, rising to 1.5 per cent by 2025. For some people, this means the difference between survival and starvation.

It will still be 1.2 per cent around 2050 and will not turn negative until around 2080. In short, my children will be very old before global warming stops benefiting the world. Note that if the world continues to grow at 3 per cent a year, then the average person will be about nine times as rich in 2080 as she is today. So low-lying Bangladesh will be able to afford the same kind of flood defences that the Dutch have today.

The Tol chapter is not freely available online, but its conclusions evidently mirror those of a 2013 meta-analysis of several integrated assessment models (climate and econometric) published as a working paper. From Tol's analysis:

There are two striking results. First, the impact of climate change does not significantly deviate from zero for warming up to 2.5-3.5°C (unless monotonicity is imposed). On the one hand, this is a sobering verdict on the state of the knowledge. On the other hand, the official position that 2.0 °C is dangerous is not well supported. The second striking result is that none of the frequently used impa ct functions fit very well to the pattern of the primary estimates. This is doubly sobering. Not only is the empirical evidence thin, the models used are not consistent with the evidence. Decisions should be made, however, on the best available knowledge – even if it is not very good. The results show that, while modest warming is not a matter of great concern, more pronounced warming is.

In a 2010 Proceedings of the National Academy of Sciences article, Yale economist William Nordhaus reported, assuming that humanity does nothing to cut greenhouse gas emissions, that his RICE-2010 integrated assessment model finds that climate change damages:

To give an idea of the estimated damages in the uncontrolled (baseline) case, those damages in 2095 are $12 trillion, or 2.8% of global output, for a global temperature increase of 3.4 °C above 1900 levels.

Nordhaus' estimate evidently assumes that the world's economy would grow at about 2.5 percent annually reaching a total GDP of roughly $450 trillion in 2095.

On the other hand, in their New York Times op/ed, "Inconvenient Uncertainties," earlier this month, economists Gernot Wagner from the Environmental Defense Fund, and Martin Weitzman from Harvard University estimate that there is a 5 to 10 percent chance that global average temperatures could eventually exceed 6 degrees Celsius (10.8 degrees Fahrenheit). Based on this catastrophic possibility, they argue:

The scientific method imposes some order, but in the case of climate change, that order is probabilistic. For the sake of science and the planet, we should not become distracted by a false sense of certitude. Imprecise truths are the most inconvenient ones. We know enough to act now. What we don’t know should prompt us to even more decisive action.

By decisive action, Wagner and Weitzman favor a carbon tax that would raise the price of fossil fuels and thus encourage the development of new low-carbon energy sources.

For a critique of Weitzman's work on low-probability high-consequence climate change, see my column, "Wagging the 'Fat Tail' of Climate Catastrophe."