From Watts Up With That?

Essay by Eric Worrall

“… We find that climate change leads to a present value welfare loss of 31% and a Social Cost of Carbon (SCC) of $1,056 per ton of carbon dioxide (tCO2). …”

Economic damage from climate change six times worse than thought – report

A 1C increase in global temperature leads to a 12% decline in world gross domestic product, researchers have found

Oliver Milman
Sat 18 May 2024 00.00 AEST

The economic damage wrought by climate change is six times worse than previously thought, with global heating set to shrink wealth at a rate consistent with the level of financial losses of a continuing permanent war, research has found.

A 1C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), the researchers found, a far higher estimate than that of previous analyses. The world has already warmed by more than 1C (1.8F) since pre-industrial times and many climate scientists predict a 3C (5.4F) rise will occur by the end of this century due to the ongoing burning of fossil fuels, a scenario that the new working paper, yet to be peer-reviewed, states will come with an enormous economic cost.

A 3C temperature increase will cause “precipitous declines in output, capital and consumption that exceed 50% by 2100” the paper states. This economic loss is so severe that it is “comparable to the economic damage caused by fighting a war domestically and permanently”, it adds.

…Read more: 

https://www.theguardian.com/environment/article/2024/may/17/economic-damage-climate-change-report

The abstract of the study;

The Macroeconomic Impact of Climate Change: Global vs. Local Temperature

Adrien Bilal  & Diego R. Känzig
WORKING PAPER 32450

DOI 10.3386/w32450

ISSUE DATE May 2024

This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought. We exploit natural variability in global temperature and rely on time-series variation. A 1°C increase in global temperature leads to a 12% decline in world GDP. Global temperature shocks correlate much more strongly with extreme climatic events than the country-level temperature shocks commonly used in the panel literature, explaining why our estimate is substantially larger. We use our reduced-form evidence to estimate structural damage functions in a standard neoclassical growth model. Our results imply a Social Cost of Carbon of $1,056 per ton of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost-effective for large countries such as the United States.Read more:

 https://www.nber.org/papers/w32450?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg1

Why do they predict such extreme outcomes?

… Our estimate is six times larger than in previous work because we focus on a different source of temperature variation, one that captures the comprehensive impact of climate change: changes in global mean temperature. By contrast, previous work exploits variation in country-level, local temperatures. It turns out that global temperature has much more pronounced impacts on economic activity than local temperature. When we estimate the impact of local temperature on country-level GDP, based on the same empirical specification and using the same approach to construct temperature shocks, we find similarly small effects to previous studies. Econometrically, previous work that exploits localtemperature in a panel setting nets out common impacts of global temperature shocks through time fixed effects. Instead, we focus on these common impacts.

Why, then, does global temperature depress economic ativity so much more than local temperature? We uncover a novel relationship that rationalizes this difference. Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage: extreme temperature, extreme wind, and extreme precipitation (Deschênes and Greenstone, 2011; Hsiang and Jina, 2014; Bilal and Rossi-Hansberg, 2023). By contrast, local temperature shocks predict a much weaker rise in extreme temperature, and barely any rise in extreme wind speed and precipitation. This conclusion is consistent with the geoscience literature: extreme wind and precipitation are outcomes of the global climate that depend on ocean temperatures and atmospheric humidity throughout the globe, rather than outcomes of idiosyncratic local temperature realizations.

Consistently with heterogeneous exposure to extreme events, we find suggestive evidence that the impact of global temperature shocks on country-level GDP varies by baseline temperature. Warmer countries are more severely affected than cold countries, while high-income and low-income countries experience similar effects. However, these comparisons are imprecisely estimated and should be interpreted with some caution. …

Read more: 

https://www.nber.org/papers/w32450?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg1

Let’s hope the peer reviewers have a bit of fun with that piece of double speak.

As someone who lives in one of those “warmer countries”, and is preparing to cut 3ft of grass which apparently grew last night when I was asleep, I can personally assure you that warmer weather is no impediment to agricultural productivity.

The claim that global effects are more important than local is absurd, unless the authors are postulating everywhere in the world will suffer extreme weather simultaneously. The quality of extreme shocks only ever matters at a local level, except when critical outside supplies are disrupted. The harvest from farms in Idaho is not impacted when China experiences an extreme climate event, what matters for the harvest in Idaho is the weather in Idaho. A cyclone in Australia’s far North is just news in my part of Queensland, unless it takes a long trip south and wanders through my neighbourhood. Even a fifty mile miss is still a miss.

Claims of a significant future increase in weather extremes are likely unphysical. There is no future scenario in which extreme weather rises without limit, because fundamental physics imposes some limits. Global warming might cause a change in the distribution of the global weather event energy balance, but is unlikely to significantly alter the total energy available to drive extreme weather events. If one region suffers an uptick in extreme events, other areas will benefit from a reduction in extreme events – the total energy available to drive extreme events is rate limited by the sun’s ability to deliver energy to the Earth’s climate system.

Constrained work output of the moist atmospheric heat engine in a warming climate

F. LALIBERTÉ , J. ZIKA, L. MUDRYK, P. J. KUSHNER, J. KJELLSSON, AND K. DÖÖS

SCIENCE 30 Jan 2015 Vol 347, Issue 6221

Incoming and outgoing solar radiation couple with heat exchange at Earth’s surface to drive weather patterns that redistribute heat and moisture around the globe, creating an atmospheric heat engine. Here, we investigate the engine’s work output using thermodynamic diagrams computed from reanalyzed observations and from a climate model simulation with anthropogenic forcing. We show that the work output is always less than that of an equivalent Carnot cycle and that it is constrained by the power necessary to maintain the hydrological cycle. In the climate simulation, the hydrological cycle increases more rapidly than the equivalent Carnot cycle. We conclude that the intensification of the hydrological cycle in warmer climates might limit the heat engine’s ability to generate work.Read more (requires registration): 

http://science.sciencemag.org/content/347/6221/540.full

There is also plenty of evidence warmer weather is good for the biosphere. During the Paleocene-Eocene Thermal Maximum, 5-8C hotter than today, fish were more abundant in the oceans, and our monkey ancestors made their debut in the fossil record, and spread through the world, only retreating when the extreme warm period ended and encroaching cold drove them from their new homes.

“… True primates appeared suddenly on all three northern continents during the 100,000-yr-duration Paleocene–Eocene Thermal Maximum at the beginning of the Eocene, ≈55.5 mya. …” according to Rapid Asia–Europe–North America geographic dispersal of earliest Eocene primate Teilhardina during the Paleocene–Eocene Thermal Maximum. Much of the world was covered with tropical forests bursting with fruit – perfect conditions for our small primate ancestors.

Coupled with the observed CO2 fertilisation effect which is greening our planet, and the paleo evidence that warm periods in the past turned the Earth into a Garden of Eden, bursting with life and abundance, conditions which allowed our monkey ancestors to thrive and populate most of the planet, the overwhelming evidence is further warming would improve climate conditions for humans.

That image at the top of this article – that actually comes from the study quoted above. It is difficult to imagine a more compelling illustration of the correlation between warmer temperatures and per capita economic growth, though obviously there are additional factors at play such as technological advances and CO2 fertilisation improving crop yields. The authors are effectively presenting this image, then telling readers not to believe their lying eyes. Perhaps they should have picked a different set of graphs.