I’ve often cited the UN’s Intergovernmental Panel on Climate Change’s (IPCC) conclusion that if we do nothing about global warming this century, GDP in 2100 will be 3% lower than it would have been. This November 2022 report by Charles Kenny, a senior fellow with the Center for Global Development puts the number even lower. He writes:
By AR6 the IPCC was suggesting “under high warming (>4°C) and limited adaptation, the magnitude of decline in annual global GDP in 2100 relative to a non-global-warming scenario could exceed economic losses during the Great Recession in 2008–2009 and the COVID-19 pandemic in 2020.” (World GDP fell from $62.9 trillion to $62.1 trillion 2008 to 2009, and $84.7 trillion to $81.9 trillion 2019 to 2020, these are one-year declines, and the IPCC is suggesting climate change might cause the same impact over 90 years).
The IPCC’s estimates are toward the low end. A recent review of the literature using estimates of the impact of past temperature changes (alone) to forecast future impacts suggests global GDP will be 1-3 percent lower than otherwise in 2100 due to the impact of climate change (with a 95 percent confidence interval of -8.5 percent to +1.8 percent) consistent with most integrated assessment models, although some of those models suggest an impact up to 10 percent in the presence of extreme events like the collapse of the Greenland Ice Shelf.
He goes on to point out:
But even with Burke et al.’s approach, the annual global growth rate under their baseline scenario is 3.1 percent. Absent climate change, the global economy would be about 15.6 times larger in 2100 than 2010. They suggest the impact of climate change might be to bring that down to about 12 times larger.
A friend who lives in Miami called yesterday and said, “What if I accept the 3% claim? That doesn’t tell me what happens to wealth.”
He explained his point with an example. With global warming, coastal Florida might get seepage of seawater into their fresh water. That would he a wealth loss because they would have to spend substantial resources to use, say, desalinization. I answered that that’s Florida and I don’t how general that is, so that in the grand scheme of things, it might not be a large wealth loss. But we both recognized that I’m speculating. There could be other effects in various parts of the United States and the rest of the world that would cause large wealth losses.
It turns out that Kenny makes a related point. He writes:
One of the greater war crimes of the second half of the twentieth century was the massive and indiscriminate bombing of Indochina by the United States in the 1960s. The aerial campaign dropped more bombs than were used in the entirety of World War II. In North Vietnam, Operation Rolling Thunder destroyed more than half of the bridges and nearly 60 percent of the power plants alongside schools and houses, and killed at least tens of thousands of people. In 2011, Ted Miguel and Gerard Roland went looking for evidence of the long-term economic impact of the devastation. But they could “find no robust adverse impacts of US bombing on poverty rates, consumption levels, electricity infrastructure, literacy, or population density through 2002.” It was as if the mass destruction and loss of innocent life had never happened.
It would take an obscene amorality to suggest “well then, it didn’t matter.”
I think those who look at long-run economic forecasts of the impact of climate change and ask: “how can they be so small?” or look at those impacts and argue “see, it doesn’t matter” might be falling into a related error. It is true the long-term aggregate GDP impact of climate change might look underwhelming in much of the economics literature. In a way that should come as little surprise, in that the long-term aggregate impact of past disasters often looks pretty small in the literature too. But that doesn’t mean climate change is a small problem any more than those past disasters were; it means that long-term global GDP trends probably miss a large part of a big problem. “Lukewarmers” who use long-term global GDP forecasts to downplay the urgency of climate change are considerably too sanguine, then. But “doomsayers” who see the whole world heading toward a future amounting to a hotter version of the stone age are also wrong. The economic impact of climate change will vary considerably by country, with much of the effect driven by shorter-term shocks. And misdiagnosing the climate problem—either as small or universally existential—matters: it drives poor choices in the global policy response. The upcoming climate conference in Sharm El Sheikh is an opportunity to fix that.
Kenny’s analogy with bombing causes him to fall into a trap. It causes him to look just for the negative effects of global warming. But global warming is not like bombing: it also would have positive effects.
Kenny links to an IPCC chapter that discusses many of the bad effects of global warming that might be expected. But the IPCC chapter falls into the same intellectual trap that Kenny has fallen into: looking only at bad effects. There are also good effects and, as far as I can tell from perusing the lengthy chapter, the authors discuss literally none of them. “What good effects?” you might ask. Well, that’s easy for someone [me] from the cold Manitoba prairie to answer. There would be warmer weather further up north and, therefore, there would be farming further north in Manitoba, in Canada generally, in Norway and Sweden, and in Russia than there is now. Take a look at that chapter and you will see none of this.
David Friedman has done a great job on this specific issue of farming and food (here and here, for example.) It’s hard to find much else.
Here’s my more-thought-out prior on why the wealth losses would be relatively small. People would have time to adapt. Think about buildings on the coast that might be sitting in a foot of water. If that happened, it would likely happen in 40 or so years. So when people replace old buildings with new buildings, much of which they would have done anyway, there’s not much added cost.
Has anyone taken a careful look at the wealth losses and compared them to the wealth gains? If you answer, please include links. Comments that have lots of links generally get held up before they are posted. So a safe way is to type out the link rather than include a hot link. Your option.
READER COMMENTS
Dylan
Feb 10 2024 at 11:11am
I don’t know how you would judge careful, but yes, many of the studies I’ve looked at over the years have included potential benefits of things like longer growing seasons. Going off memory here, I’ll see if I can dig up a few links later, but my recollection is that these studies find that the benefits are dwarfed by the potential costs.
But, this brings me to the other part of this. Long term projections on just about anything are really hard and come with large error bars. The question to me is what is the appropriate amount to invest to try and insure against the extremes?
Dylan
Feb 10 2024 at 11:30am
Also, I’m not sure that this objection holds? Bombing is almost certain to have positive effects for someone. Certainly bomb makers and others that profit from the war, but even winners locally. I’m reminded of a friend I met towards the end of the pandemic who is from Ecuador and whose family owns a number of funeral homes. They did exceedingly well during covid, but it would be pretty hard to claim that their gain was worth the loss to everyone else.
Bill
Feb 10 2024 at 11:51am
Help me out with the reported statistics: ” … global GDP will be 1-3 percent lower than otherwise in 2100 due to the impact of climate change (with a 95 percent confidence interval of -8.5 percent to +1.8 percent) ” If we center the expected value on -2, with a 95% CI of -8.5 to + 1.8, what does that say about the shape of the distribution around the mean?
David Henderson
Feb 10 2024 at 2:44pm
That it’s not normal.
steve
Feb 10 2024 at 12:29pm
In the actual science literature I think the norm is to balance the positives vs the negative. In articles written for the mass public they often just cite the conclusions and not how they got there. A good place to start is the Roson and Sartorio paper. They note many instances where the effects of climate change are positive. They specifically note that the literature on agriculture projects a wide range of outcomes and that the effects will vary by region. (Kind of math heavy but not bad.)
https://www.unive.it/pag/fileadmin/user_upload/dipartimenti/economia/doc/Pubblicazioni_scientifiche/working_papers/2016/WP_DSE_roson_sartori_06_16.pdf
Would also suggest the Canadian paper at the link. It refrains from projecting outcomes but does a good job of laying out the pros and cons of climate change and potential costs and advantages. For example it notes that for Canada climate change should positively affect tree growth so the forestry industry should prosper. However, it also means new pests like the spruce beetle that affected the Yukon, so maybe the forest industry suffers.
https://natural-resources.canada.ca/impacts-adaptation-canada-changing-climate/10253
Also, just on agriculture, not all soils sustain farming as well as others. There is a reason we farm where we currently farm. It’s not really clear how much of the northern areas will have soil amenable to sustained agriculture even if warm enough to do so. Soil amendments, heavy fertilization, irrigation, crop rotations and (hopefully) genetically modified crops can make them more usable but those do come at a cost.
Steve
steve
Feb 10 2024 at 2:58pm
If you prefer a more business oriented approach Moody’s has one. They name the countries that they think will be winners and losers due to climate change. Canada and the US would be winners. However, they are pretty explicit about what they exclude in their analysis. They dont include the costs fo extreme weather crises. So hurricanes, tornadoes, droughts, heat waves dont get included. Next, while they assume adaptation in their assumptions they dont include the costs of adaptation. So, for the sake of argument, if GDP stayed steady but at the cost of 10% of GDP devoted to adaptation are we better or worse off? (I would guess that depends on a lot fo factors but it does suggest that we would be making trade offs.)
https://www.moodysanalytics.com/-/media/article/2019/economic-implications-of-climate-change.pdf
Steve
Jonathan S
Feb 10 2024 at 10:44pm
10% of GDP is off by a couple orders of magnitude: https://imageio.forbes.com/specials-images/imageserve/5dbaf8b9d85e3000078fd0dd/Weather-and-climate-related-disaster-losses-as-a-percentage-of-global-GDP–1990-to/960×0.png?format=png&width=1440
A serious question for people pessimistic about climate change: at what point will the costs of climate change start to increase relative to human productivity?
Concerns about climate change this century seem similar to worries regarding overpopulation in the mid- to late-20th century. In the absence of defeaters, I’ll continue to side with Simon over Ehrlich.
Thomas L Hutcheson
Feb 10 2024 at 4:27pm
The things to look at are net present values (some argue for very low time preference in arriving at the discount rate) of harm, net of costs mitigating harms (the friend’s cost of desalination) compared to the deadweight loss of measures to avoid net harm. It’s really just a very complicated benefit cost problem. Percentage reduction in wealth per se, seems pretty irrelevant.
I think what you are pointing to, however is quite valid. If we do not chose low cost harm avoidance mechanisms, tt is more than possible to incur more deadweight loss than the future harm avoided. Many “environmentalists” seem pretty blase about this risk.
Mactoul
Feb 10 2024 at 9:55pm
Earth has already greened significantly in last few decades and 25 percent of the greening has been ascribed to increased CO2. That is mainstream.
Tornado/hurricane etc are insignificant for a modern country. Lots of people used to die in cyclones but now they don’t.
Droughts are unlikely. Warming is associated with an enhanced hydrological cycle, not a depressed cycle.
Thomas L Hutcheson
Feb 11 2024 at 5:10pm
Yes there are many pluses and minuses. Let’s just put the numbers in the equations and solve for the tax on net emissions of CO2 that maximizes the present value. maybe it’s zero, but I doubt it.
Jose Pablo
Feb 12 2024 at 2:47pm
Or even (much) better, let every individual do these numbers by himself and decide what is better for him (by the way these are the only numbers that make any sense).
MarkW
Feb 11 2024 at 7:24am
The thing that always hangs me up in these discussions is that it seems as absurd for people (any people) of our own time to project the effects of policy decisions forward to 2100 and think that we can say anything reasonable about single-digit differences in growth by the end of such a long period. I try to imagine economists in 1924 talking about policies that would have such effects on the global economy by 2000 and it seems laughable. The major events and developments of the next 75 years would not have been imaginable. I’m not sure we should think we can be much more wise in looking so far forward than people 100 years ago could have been.
Jose Pablo
Feb 11 2024 at 9:31pm
it seems laughable
Chinese planners in 1980 deciding on the right number of children Chinese families should have, is far from laughable. They cause a lot of harm to individuals and severely miscalculate the nefarious consequences of their convictions.
Their cost benefit analysis and optimized net present value models, turned out to be weapons of individual mass destruction. And yet these “no skin in the game way too clever guys” keep playing at being Malthus, thinking that the only problem with predictions and models of the past is that they were not made by them.
David Henderson
Feb 13 2024 at 10:46am
Good point.
Vegas
Feb 13 2024 at 1:58am
Hopefully, Russian criminals will not harvest more. Did not they steal enough grain from Ukraine? It would not be a benefit of a warming climate.
David Henderson
Feb 13 2024 at 10:47am
It would almost certainly not be Russian criminals who would harvest more; it would be Russian farmers.
Mike Burnson
Feb 13 2024 at 10:52pm
This returns to my previous comment about the Myth of Malthus: if you start with a false premise, you will arrive at a false conclusion. There is no demonstrable impact of human activity on global temperatures. Humans are 1/3 of 1% of so-called greenhouse gases. Our total addition since the dawn of the Industrial Revolution remains far below a single year of natural activity.
There has never been a single prediction from the IPCC that has come to pass: sea levels have not changed beyond their centuries-long patterns, every port city of 1700 or 1800 remains a port city today, island nations in the Pacific have not been submerged. Temperature projections are 0-for 72 in their predictions, and none can reproduce the known history since 1900. There has not been any “climate migration” forcing peoples to abandon their historical lands. Yet we are supposed to fall for their economic projections for the next 75 years? Preposterous.
Ryan M
Feb 14 2024 at 5:16pm
Exactly
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