New IPCC Report: Cost of Unchecked Man-Made Climate Change Likely Minimal

IPCCIPCCThe United Nations' Intergovernmental Panel on Climate Change (IPCC) has just issued the "Summary for Policymakers" for its new report, Climate Change 2014: Impacts, Adaptation, and Vulnerability. The report aims to sum up what is known about the likely impacts of future climate change, including more droughts, higher sea levels, greater risk of species extinction, and so forth. But what will these changes cost humanity in terms of economic output? Here is the relevant section from the Summary:

Global economic impacts from climate change are difficult to estimate.

Economic impact estimates completed over the past  20 years vary in their coverage of subsets of economic sectors and depend on a large number of assumptions, many of which are disputable, and many estimates do not account for catastrophic changes, tipping points, and many other factors. With these recognized limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (emphasis added) (±1 standard deviation around the mean)(medium evidence, medium agreement). Losses are more likely than not to be greater, rather than smaller, than this range (limited evidence, high agreement). Additionally, there are large differences between and within countries. Losses accelerate with greater warming (limited evidence, high agreement), but few quantitative estimates have been completed for additional warming around 3°C or above. Estimates of the incremental economic impact of emitting carbon dioxide lie between a few dollars and several hundreds of dollars per tonne of carbon (robust evidence, medium agreement). Estimates vary strongly with the assumed damage function and discount rate.

Let's assume that the increase in future global average temperature is below 2°C. Gross world product (GWP) in 2012 was about $72 trillion. That divvied up between 7.2 billion people yields an average per capita income of around $10,000. Now assume that world economy grows at 2.5 percent annually over the next 85 years and world population reaches 10 billion. GWP in 2100 would be about $590 trillion and per capita GDP would $59,000. If climate change lowered income by 2 percent by 2100, that would mean GWP would be $578 trillion and per capita GWP would be $57,800. How much should people living now on $10,000 per year sacrifice so that people making six times more in 2100 have an extra $1,200 in income?

Now let's assume that the high climate change damage estimate promulgated in the Stern Review: The Economics of Climate Change (2006) reduces incomes in 2100 by as much as 20 percent below what they would otherwise have been. Average income in 2100 would then be just $47,500—still nearly five times more than current global per capita income.

Over at The Telegraph, economist Andrew Lilico provides this interesting analysis:

The new report will apparently tell us that the global GDP costs of an expected global average temperature increase of 2.5  degrees Celsius over the 21st century will be between 0.2 and 2 per cent. To place that in context, the well-known Stern Review of 2006 estimated the costs as 5-20 per cent of GDP. Stern estimates the costs of his recommended policies for mitigating climate change at 2 per cent of GDP – and his estimates are widely regarded as relatively optimistic (others estimate mitigation costs as high as 10 per cent of global GDP). Achieving material mitigation, at a cost of 2 per cent and more of global GDP, would require international co-ordination that we have known since the failure of the Copenhagen conference on climate change simply was not going to happen. Even if it did happen, and were conducted optimally, it would mitigate only a fraction of the total rise, and might create its own risks.

And to add to all this, now we are told that the cost might be as low as 0.2 per cent of GDP. At a 2.4 per cent annual GDP growth rate, the global economy increases 0.2 per cent every month.

So the mitigation deal has become this: Accept enormous inconvenience, placing authoritarian control into the hands of global agencies, at huge costs that in some cases exceed 17 times the benefits even on the Government's own evaluation criteria, with a global cost of 2 per cent of GDP at the low end and the risk that the cost will be vastly greater, and do all of this for an entire century, and then maybe – just maybe – we might save between one and ten months of global GDP growth.

The IPCC Summary does additionally warn that warming higher than 2°C might shove the climate system over tipping points that would produce substantially more losses. The Summary asserts that "low-probability outcomes with large consequences, is central to understanding the benefits and tradeoffs of alternative risk management actions." The chance of total catastrophe warrants some action be taken to avoid it, but how much and at what cost?

For a discussion of that issue, see my article, "Wagging the 'Fat Tail' of Climate Catastrophe."

Note: Ronald Bailey is on book leave and should not be blogging, but he couldn't resist this time.

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  • Jordan||

    I wonder if Bill Nye and Neil Douchebag Tyson have crossed the IPCC off their list of people worthy of debate?

  • sarcasmic||

    One thing that has never been explained to me. If there exists this magical tipping point from which there is no return, yet the climate has been hotter in the past, how did it ever return?

  • ||

    Duh, asteroids. Killed the dinos and tipped the climate into mammal mode.

  • David Lango||

    As if dinosaurs weren't an establishment hoax to shore up their puppet Darwin and his theory of missing links...

    How about those Chemtrails?

    Not a peep about the folks employed in Geo-engineering I see. Obediently spraying nano-aluminum to block out the Sun in their establishment provided objective to fight global warming...

  • ||

    We didn't have crazy people going around polluting the earth back then. Now all these evil industrialists are just going to poison the earth with their toxins ad infinitum, with no regard for the air they and their customers breathe.

  • Zeb||

    Just guessing, but I suppose that there could be tipping points on small time scales. Something that takes a thousand years to come back to equilibrium is hugely significant in human history, but hardly worth mentioning in geological history. There is still continental glaciation, so we are technically still in an ice age and probably will be whether the tipping points are real or imagined.

  • prolefeed||

    Ice ages have tipping points, too. So perhaps humans slightly increasing the percentage of CO2 in the atmosphere could prevent a catastrophe.

    Yet the IPCC doesn't discuss this Black Swan possibility at all.

  • Pro Libertate||

    It doesn't matter. If AGW doesn't catch on, then they'll try something else.

  • Paul.||

    Maybe something more generic, like just the climate changing, at all. Get away from the 'warming' or the 'cooling'-- that boxes you in.

  • Pro Libertate||

    AGH--Anthropogenic Global Hatred.

  • Francisco d'Anconia||

    The aliens fixed it.

  • LiveFreeOrDiet||

    One thing that has never been explained to me. If there exists this magical tipping point from which there is no return, yet the climate has been hotter in the past, how did it ever return?

    The tipping point they're talking about is derived from a unique event when interglacial warming melted a blocking glacier, releasing a vast lake of fresh water, which stymied the ocean currents. They choose to ignore there is no such vast lake now. They think the currents will halt... somehow.

  • Francisco d'Anconia||

    250 ppm to 400 ppm. Not even double, but 2 times nothing is still nothing. In order for the theory to work, it requires positive feedback loops. The claim is that a slight increase in warming releases more CO2 from the permafrost and the ocean floor which creates more warming...

    This entire premise is bat-shit crazy because it implies that the environment is a statically unstable system. If that were true, it would have happened already, because as sarc points out it was much warmer in the past.

  • Juice||

    They choose to ignore there is no such vast lake now.

    They're saying that the Greenland icecap is the giant lake if it melts into the N. Atlantic.

  • Hugh Akston||

    (limited evidence, high agreement)

    Science!

  • Pro Libertate||

    A lot of this is because government controls/funds so much of this kind of science. We see this in other fields, too, where research dollars seem to push to a particular result, regardless of what the actual science shows.

    The big difference between goals-driven funding in public vs. private spheres is that the latter will give up or at least change horses if the results keep failing to justify the costs.

  • Hugh Akston||

    That's the nice thing about working for government though: nothing costs anything. If you start to run out of grant money, just put your boot down a little harder on the ATM machines or print a few trillion more Professorland Fun Bux. Tradeoffs are for losers.

  • Pro Libertate||

    There's a reason we don't have flying cars, immortality, moonbases with purple-haired women, and all the other good stuff.

  • Tonio||

    But we do have the internet, and extremely portable computers, which few people envisioned.

    Flying cars are impractical for traffic control reasons, as cool as they seemed back in the day.

    And I bet the Chinese will have a moonbase before 2020. That's the only space "first" they can reasonably achieve.

  • Pro Libertate||

    My point was that we could have had so much more. We coulda been a contender.

  • Juice||

    But we do have the internet, and extremely portable computers, which few people envisioned.

    Lots of people envisioned them, but it's a pretty boring topic to base a novel or a movie on, at least when compared with spaceships and flying cars.

  • Pro Libertate||

    It was mildly implied with the tablets featured in 2001.

  • GamerFromJump||

    "And I bet the Chinese will have a moonbase before 2020. That's the only space "first" they can reasonably achieve."

    Having seen the Chinese approach to engineering, this is terrifying to me.

  • sarcasmic||

    Every absurd piece of legislation they pass, from banning the international symbol for a good idea, to driving up the cost of food by mandating that it be burned in combustion engines, qualifies as a justifiable result.

  • Paul.||

    So what we need is a kind of Tobacco Hearings for Climate Change. Start badgering everyone about where their funding came from.

  • ||

    Absolutely a big problem, and not just with pushing a result regardless of what research shows. I've spoken to scientists in a variety of fields, and they all complain that funding agencies want to know results prior to granting funding. This has a devastating effect on purely experimental or explorative work.

  • sarcasmic||

    "What policies will the 'research' allow me to push?"

  • Pro Libertate||

    I've read that there's some of this in physics research, when it comes to unification theories. String theory variants are the thing getting the funding, so most researchers in the subfield are focused on string theory.

  • Bardas Phocas||

    What about the fucking Polar Bears?
    Are you going to provide them with food stamps?

  • Sevo||

    No, we're going to see celebrations among the seals; dances, balloons, parades. You know...

  • From the Tundra||

    Well, until the orcas show up.

  • The Original Jason||

    They're Canadians.

  • Jerry on the boat||

    Anyways, it's a problem that will solve itself when we finally run out of fossil fuels and energy prices will rise.

  • Tony||

    What physical law says we will run out of fossil fuels in time to prevent environmental harm?

    We know we need to stop using fossil fuels... so why don't we just do it?

  • Pulseguy||

    Good idea, Tony. Finally something specific from you. This will happen one person at a time. You go first. I'm right behind you.

  • Death Rock and Skull||

    Reason is late on this. Every other "news" publication on this report has already convinced me earth is doooooooooooooooooooooooooooooooooomed.

  • Ron||

    Its always been doomed in fact there is a very popular movie out now about the last time man was doomed, called Noah.

  • LiveFreeOrDiet||

    Saw it, and it sucked bad. That doesn't quite cover it. Galaxy Quest had a better rock monster. Master and Commander had a better disaster. Jaws: The Revenge had a better plot.
    I'm still being too nice. I'd rather clean my septic tank.

  • LiveFreeOrDiet||

    Exactly. Fuck the Earth, it's gone.
    Develop the Moon and terraform Mars so we can fuck them up.
    Next we'll go to the stars...

  • BakedPenguin||

    "Here's how it is: the Earth got used up, so we moved out and terraformed a whole new galaxy of Earths. Some rich and flush with the new technology, some... Not so much. The central planets, they formed the Alliance and waged war to bring everyone under their rule..."

  • James Anderson Merritt||

    Shiny! Keep flyin'!

  • gimmeasammich||

    Do I get my own Inara in this scenario? Because... God damn.

  • ||

    I'll take one skinny Christina Hendricks, please.

  • BakedPenguin||

    Hah! I'll take her plump! Or Inara, if gimmeasammich don't get her.

  • Auric Demonocles||

    There's not a lot of women in that show that wouldn't be acceptable.

  • Zeb||

    Even knowing what the future will bring?

  • mad libertarian guy||

    I'd rather have the mechanic.

  • Francisco d'Anconia||

    It's the PAX.

  • Auric Demonocles||

    Firefly's war would have gone much better if they learned the power of dropping rocks.

  • Rich||

    Global economic impacts from climate change are difficult to estimate.

    This is why those IPCC weenies pull down the big bucks.

  • Tman||

    Ron's Back!

    And not a moment too late.

    The chance of total catastrophe warrants some action be taken to avoid it, but how much and at what cost?

    One can easily make the argument that a catastrophic asteroid impact is inevitable in the earths future, based on historical data alone. Clearly this warrants some action, but if you look at NASA funding or international efforts it's not warranted enough to spend but a pittance of space dollars to address even the detection of said planet killers, never mind the deflection efforts.

    Then you look at things like eliminating malaria, which is clearly warranted and feasible yet is held up through politically correct environmentalism.

    There is no doubt that Global Pollution is a problem, especially concerning clean air (see: Beijing, China). So taking to steps to eliminate pollution is warranted and feasible.

    Taking steps to eliminate "global warming", which remains difficult to categorize as a primarily human-caused problem, is neither feasible nor warranted when placed in this scale.

  • Tonio||

    Good points all, Tman.

    Here's why I think asteroid detection isn't getting much attention - a killer asteroid scares the hell out of everyone, particularly government since we currently have extremely limited deflection options (ICBMs, maybe, but they don't have the range you'd want, etc, etc). Detecting a killer asteroid would only panic the population and highlight, finally, for many people how government can't solve all their problems.

    The Outer Space Treaty prohibits keeping weapons on-orbit, etc. We'd have to get rid of that to have a credible deflection capability.

  • Auric Demonocles||

    This is probably the biggest problem that could be solved by dropping a rock from a high place.

  • ||

    You both missed something.

    Asteroid detection/deflection does not offer the pretense for world socialism and control that global warming does. That is no reason to get into anyone's business. So why bother?

  • Tonio||

    Oh, asteroid deflection definitely does offer potential for mischief. If you have on-orbit weapons under UN control then it would be easy to control the planet. You only have to nuke one or two cities for the rest to fall into line.

  • Tman||

    Interestingly enough, it's looking like private industry and individuals are the ones doing the most to address the asteroid issue.

    The B612 Foundation and their Sentinel mission is by far the most advanced step proposed to address the detection gap in terms of potential hazards.

    b612foundation.org/sentinel-mission/the-mission/

  • Auric Demonocles||

    Oh, asteroid deflection definitely does offer potential for mischief.

    I would have thought my... plans.... would have made this obvious.

    By the way, don't even bother nuking anybody. Just deflect a rock and let gravity do it for you.

  • GILMORE||

    "'Well shit, we already spent all this time, effort and money creating an enormous politically-partisan Doomsday-Panic Industry = what, you think we're not going to *use it now*? Sorry bud; the 'science is settled' as they say, and your sanguine attitude is entirely un-helpful to keeping the ball rolling with this whole "The End is Neigh" deal. Because what I'm hearing from you doesn't exactly sound like, "Moar Grant Money", if you see where I'm coming from. If think you're going to get the 100+ university research labs to suddenly agree with your plan to hand this problem over to the "economics department", well I have a small army of White Coated Experts to suggest otherwise, homie.

    Look, why don't you stick with something that *works* for you, rather than kill the Golden Goose; like the War on Christmas or something? That pays well? How about how RU86 is going to make everyone's daughters into sluts? There's no reason to go fucking up a good thing here."

  • OldMexican||

    "You mean all of our efforts to return man to the age of cavemen will all be for naught?

    No way in hell will I accept that! No way in hell! Man is killing the Earth, therefore Man must die!"

    /Envirowacko.

    I don't think this realization will matter much in this discussion, Ron. As Matt Welch very astutely said two Fridays ago on "The Independents", real believers never accept so much as a cost-benefit analysis because for them this is nothing less than a CRUSADE. And as it is with all crusades, doubter, heretics and blasphemers will be brushed aside no matter how rational or reasonable their arguments.

  • LiveFreeOrDiet||

    Enviro-whack friend of mine keeps saying "deniers" should be "lined up against a wall and shot." I told him before he tries that threat on me again, please consider my response options:
    #1 To laugh him off as a jackass.
    #2 To take the threat seriously and shoot him first.
    So far I've gone for #1.

  • Gene||

    Obviously his days as a "friend" are numbered.

  • ||

    Remember this:

    1. I'm far more likely to be armed than they are.

    2. I know how to use my guns.

    3. My friends know how to use their guns.

  • cavalier973||

  • db||

    I intially read that as the cost was likely Manimal.

    No expense must be spared in our efforts to protect and preserve our rich heritage of 1980s TV.

  • LiveFreeOrDiet||

    I missed that one.

  • Emmerson Biggins||

    I preferred :

    http://en.wikipedia.org/wiki/A_Man_Called_Sloane

    I mean, it had a robot hand. Cmon.

  • prolefeed||

    "Losses are more likely than not to be greater, rather than smaller, than this range (limited evidence, high agreement)."

    Because nothing says "science" quite like groupthink despite scanty evidence.

  • prolefeed||

    I see Hugh said this with more brevity upthread.

  • James Anderson Merritt||

    I agree. The phrase "limited evidence, high agreement" is the mark of an UNscientific conclusion. Note, also that we see "robust evidence, medium agreement." What does that indicate? That the more evidence you have regarding a chaotic and complex situation, the more opportunity there is for nuance and disagreement, even within the confines of "real science"? It's pretty easy to see the pattern of a lion in the sky, when the dimmer stars are obscured by city lights and haze; much harder to discern that shape on a clear, cold. moonless night in the country, with the entire sky ablaze with stars. You CAN do it, and ancient people did, but it comes down to cherry picking your points. Others might make other choices, and see other patterns.

  • RannedPall||

    I smell a narrative being challenged. This is unpossible.

  • BakedPenguin||

    Several people have pointed out the religious reverence the zealots have; I'd like to make that a bit more specific. Take the idea of original sin, and change human knowledge to human economic activity, and see if these people don't look like the biggest book thumpers you've ever known.

  • James Anderson Merritt||

    So the economic damages of expected climate change are only "costs" in the sense that reductions of budgeted government spending growth are "cuts"???

  • PapayaSF||

    Silly Ronald Bailey, trying to apply the principles of cost effectiveness to matters of climate justice and religion.

  • ||

    Repeat after me:

    There is no TRUTH except Global Warming. Al Gore is the prophet.

  • Sevo||

    I have to ask, since I don't ver recall seeing it before:
    The catastrophists have be pitching doom and gloom for twenty years now; is this the first time that someone did a real cost analysis?
    And when might we expect a cost/BENEFIT analysis? It's not like a longer growing season is going to increase the cost of food.

  • Francisco d'Anconia||

    There can be no benefit...only doom.

  • Sevo||

    Which tells you these are not serious people.
    ANY change has both, and any claim ignoring either side of the ledger is immediately not only suspect, but guaranteed to be bullshit.
    (I'm not lecturing you)

  • Tony||

    Really? What is the upside of an earthquake or tornado?

    Yes, you are the serious person and the authors of over 9,000 peer-reviewed studies are the buffoons.

    I wouldn't deploy Occam's Razor about now if I were you.

  • Tony||

    The IPCC releases a report every few years, and they rely on thousands of peer-reviewed studies, and the report is combed line by line by hundreds of experts all focusing on their areas of expertise.

    Exactly what level of intellectual rigor do you apply to your beliefs? Ron Bailey's preferred method evidently is to hunt around for a pair of quasi-discredited outliers (one of whom is an avowed creationist) and report their findings over and over for no discernible reason (even those findings you reject, because obviously you're much cleverer than all the scientists on the planet).

  • enviro414||

    All of the average global temperature anomalies reported since before 1900 were caused by NATURAL phenomena. The correlation is 95% and uses only two drivers. CO2 change is not one of them. Search using key words AGW unveiled to see the simple analysis.

    The rise in plant growth due to increasing CO2 will initially offset the decline in plant growth due to a cooling planet.

  • Tony||

    So let's go with the status quo based on probably the least certain projection made in the report, one clearly labeled as probably too conservative?

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