The Parliamentary Budget Officer (PBO) recently released a report on the effects of greenhouse gas emissions on Canadian GDP growth over the next 80 years. I’ve written previously about the recent economics literature investigating the link (or lack thereof) between global warming and economic growth. It’s a fascinating topic and I’ve been actively working with on it one of our PhD students for several years. While I would quibble with some aspects of the PBO report, the overall conclusions are not out of line with mainstream thinking on the topic. Which is why the findings are so astonishing and radical compared to what the government has been saying.
The PBO estimated what would happen to the Canadian economy between now and 2100 if temperatures and precipitation change as expected due to greenhouse gases. The report’s authors consider two scenarios—first, if emission-reduction policies stall at today’s levels and nobody complies with their Paris commitments, and second if countries comply with all their Paris commitments in full and on time. Under the first scenario Canada’s GDP in 2100 will be 6.6 per cent smaller than it otherwise would be.
Let’s pause there for a moment: 6.6 per cent after 80 years is a very small number. Canada has set out ambitious economic growth plans based on high levels of immigration and continued efforts to boost productivity and income. Suppose this results in 2 per cent real GDP growth from 2021 to 2100. That would mean Canada’s economy will grow by 388 per cent over those 80 years. According to the PBO, if we do nothing about global warming, it will instead grow by about 381 per cent.
This is from Ross McKitrick, “Parliamentary Budget Officer Just Demolished Climate Alarmism,” Financial Post, December 7, 2022, republished by the Fraser Institute, of which Ross is a senior fellow. Ross is also a professor of economics at the University of Guelph.
I hadn’t heard of the Parliamentary Budget Officer before. It turns out that Prime Minister Stephen Harper established it in 2006, when he first came to power. It’s kind of like California’s Legislative Analyst’s Office, in that both are independent of the various parties.
There is one error in the segment quoted above. If in 2100, Canada’s GDP, absent anyone complying with the Paris commitments, will be 6.6 percent lower than it otherwise would be, then Ross gets the overall growth wrong. Here’s the math:
Let x be GDP today. Then, with the Paris commitments complied with, growth will be 2 percent annually.
So GDP in 2100 will be x(1.02^79) = 4.78x. So Ross is right so far. GDP grows by 378 percent.
Now, with the Paris commitments not complied with GDP in 2100 would be 6.6 percent lower. That means it would be 478x*(0.934) = 4.64x. So GDP grows by 364 percent, not his 381 percent. It’s not a huge difference but it’s important to do the math right.
Notice that either way, Canadians would have much higher GDP in 2100.
I think the most important part of the quote from his article is this:
While I would quibble with some aspects of the PBO report, the overall conclusions are not out of line with mainstream thinking on the topic. Which is why the findings are so astonishing and radical compared to what the government has been saying.
It’s nice to see the budget officer not denying the economics of global warming.
READER COMMENTS
Todd Ramsey
Mar 9 2023 at 9:48am
Let alone the agriculture-related effects of warmer temperatures.
Is it not possible, even likely, that northern Alberta, Manitoba, Saskatchewan, and Quebec, in fact all Canadian provinces, would BENEFIT from warmer temperatures? What if the Northwest Territories became productive agricultural land?
David Henderson
Mar 9 2023 at 10:06am
I think that makes sense. David Friedman has written about this in some detail on his blog.
Nicholas Treat
Mar 11 2023 at 6:16am
You’re not wrong, but it seems to me rather cynical to applaud Canadian GDP growth while the rest of the world burns.
Jim Todd
Mar 21 2023 at 9:03am
The “benefits of warmer temperatures to agriculture” include more frequent and severe droughts and floods. And let’s not forget that an atmosphere richer in CO2 has already been demonstrated to yield more plant growth but with less nutrient value. Some folks’ll just repeat any old thing, eh?
C. Joseph Patrick
Mar 22 2023 at 6:17am
It may get warm enough for Northern provinces to have a longer growing season. However, The price that we’ll pay in flooding well outweigh any benefits. Remember that once the ice caps get to a certain point of no return the melting won’t stop as sea levels will rise. That in turn will change the weather drastically. There will be more surface water to evaporate and be processed into rain by nature. Put your house on a high hill and build an ark.
Daniel Hill
Mar 9 2023 at 12:02pm
Color me skeptical that a country that is 10 degrees too cold will suffer if average temperatures increase by 5 degrees. Sure there’ll be transition costs but 80 years is a damn long transition. Think how much the world has changed since 1943!
nobody.really
Mar 9 2023 at 12:26pm
Nice to keep things in perspective. Still, do I correctly understand the analysis to support implementing the Paris Climate Accords?
David Henderson
Mar 9 2023 at 12:30pm
I don’t think so.
dmm
Mar 9 2023 at 12:46pm
I’m surprised you didn’t blink at the 80-year projection.
Knut P. Heen
Mar 10 2023 at 9:54am
McKitrick does important work.
The difference between 2 percent annual growth over 100 years and 2.5 percent annual growth over 100 years is huge (7.2 vs 11.8 times base). Compounding really kicks over long periods.
Thomas Lee Hutcheson
Mar 10 2023 at 11:05am
The relevant question is, what is the cost of CO2 emissions compared to t he deadweight loss of reducing them in the most efficient way.
Of course there e tow tricky issues 1) _Canada_ may in fact benefit from ACC or at least suffer less. 2) Looking at the benefits to any small country of lower CO2 emissions by that country will always be miniscule.
James W Oliver
Mar 10 2023 at 4:11pm
I assume that Canada will be better at producing due to the warmer weather, but that since other countries are less productive they will lose 6.6% from where they would have been.
Euberto C. Licayan
Mar 14 2023 at 2:17am
Innovation and cooperation resulting from the application of human creativity will indeed foster development aspirations in time perspectives; meanwhile time is not static. The energy-water-food-healthcare-environment nexus has, to my understanding, will emerge as one of the most important management challenges facing the sustainability agenda; as all are basic natural resources underpinning development, not just in terms of healthcare, and poverty alleviation but also more solutions addressing climate change risk. The aforementioned nexus is also associated with the contribution of achieving UNSDG’S. As we live in a World of growing resource scarcity, demands on energy-water-food-healthcare-environment nexus will increase as population rises, moreover, demanding a clean better beautiful World for all: putting in place either short-term or long-term strategies for modern, prosperous, competition and climate neutral economies. To my view, if we are to respond to the challenges in any one of these interlinked resources or sectors, we must consider each resource or sector as part of an interconnected system – that maximize synergies and trade-off per se.
Lala
Mar 14 2023 at 9:01am
From flash freezes to flash floods, climate intervention operations are nothing less than weather warfare. The climate engineers are chemically cooling the continental US wherever and whenever they have enough atmospheric moisture available. Endothermic reacting elements are seeded into cloud canopies to initiate manufactured winter weather operations, flash surface cool-downs are the result. Patented processes of chemical ice nucleation cloud seeding are creating “snowstorms” of frozen material at lower elevations that would otherwise have received only rain. The frozen material that falls often has very different characteristics as compared to naturally nucleated snow. At their discretion the climate engineers can then manipulate warmer moisture flows of atmospheric moisture into regions buried under chemical snow, flooding is the result. What will it take to awaken the masses to the climate intervention operations?
And more they say…
“This isn’t something totally new and Frankenstein — we’re already doing it; we’re doing it in the most dirty, unplanned way you could possibly do it, and we don’t understand what we’re doing,” Wanser told CNBC.
Spraying sulfur in the stratosphere is not the only way of manipulating the amount of sunlight that gets to the Earth, and some say it’s not the best option. Toxic skies all around us … admitting not good for health . STOP CLIMATE ENGINEERING
Allen
Mar 20 2023 at 5:26pm
Let’s not forget that China and India are exempt from any emissions controls under the Paris Accord.
Let’s also remember that the IPCC stated “long term prediction of future climate states is not possible ” so why all the fear mongering over guesses and something Canadians can’t control?
Susan
Mar 21 2023 at 12:29pm
Nice to hear someone being rational and not propogating fear – thank you!
Jon
Mar 21 2023 at 10:26pm
If Canada’s economic activity ceased now, there would be no discernable Climate difference 100 years from now. Things will be decided from India and China. Is it reasonable for us to spend $6 billion to pipe carbon dioxide into underground storage? What economic benefit do we derive from that and what benefit do we forgot by not spending that amount on just about anything else? Madness.
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