Is climate change a global benefit?

A new line of argument has emerged against decisive action on climate change, put forward in two recent articles by Bjorn Lomborg and Matt Ridley. Global warming is actually a net benefit, they claim, at least over the next few decades. If so, why act now to avoid it?

Global temperature is currently about 0.8°C above pre-industrial levels, and there is significant further warming ahead. Under a scenario of continually growing emissions, scientists predict we are likely to reach 3.2-5.4°C before 2100, with further warming beyond. This could be reduced to 0.9-2.3°C if emissions were to peak now and come down rapidly.

Such warming has far-reaching implications. Not only will temperatures rise in a warming world, but rainfall patterns will change, sea levels will rise, and snow and ice will melt. There are likely to be some benefits but also major social, environmental and economic damages, and large unknowns:

  • The shipping industry is looking forward to time and cost savings from an
    ice-free Arctic sea route. In Britain, the Government’s own Climate Change Risk Assessment suggests fewer winter deaths and new opportunities for Britain’s farmers.
  • But other parts of the world face lower crop yields at just 1°C. Coral reefs, which host a quarter of the world’s fish species, are already being bleached by warmer, more acidic seas and will probably be largely gone beyond 2°C. Cities and small islands alike are dealing with increasing risks of coastal flooding.
  • Future climate scenarios go beyond anything our species has ever experienced. It has been at least 120,000 years since global temperature was 2°C higher. The last time a rise of 4°C or more occurred anything like as quickly, as far as scientists can tell, was 55 million years ago. What little information we have from these times carries large uncertainties, but points to big risks.

Can we put a monetary value on this complex pattern of uncertain effects? The net economic benefits cited by Lomborg and Ridley come from a set of climate-economy models which attempt to monetise all the impacts. This is an ambitious task. At low levels of further warming (up to 2°C or so) some models predict a net cost while others show a net benefit. For higher increases in temperature, all models agree on overall global damage.

The researchers who build these models are clear about their shortcomings and major gaps. It is virtually impossible to predict all the changes a radically different climate will bring, and the models include only a subset of fairly-easily characterised impacts. They also require deeply uncertain and subjective assumptions about future human development, the present value of future impacts, and the monetary value of non-monetary things (such as human health and the natural world).

So are these particular models a useful guide for deciding on a course of action? Scientists and economists have argued that climate change is more risky than the models suggest. The IPCC concludes they should “be interpreted very carefully” because “It is very likely that globally aggregated figures underestimate the damage costs”. Others are less diplomatic, stating they are “close to useless as tools for policy analysis”. The very study used by Lomborg and Ridley observes “The policy implication is that reduction of greenhouse gas emissions should err on the ambitious side”.

Good decision-making cannot rely solely on calculations of monetary costs and benefits. It also has to consider the robustness of those calculations, potential downside risks, and the distribution of impacts between the poor and the wealthy. Those already poor are expected to experience the greatest damage from climate change, even in the models that suggest an overall global benefit.

In the face of deep uncertainty and major potential damage, it is rational to base climate policy not on incomplete cost-benefit calculations, but on an insurance-like approach; seeking to sensibly minimise the largest risks.

UK action is explicitly motivated in this way, both in reducing emissions and adapting to the changing climate. Our carbon budgets are designed to be part of a global effort to keep temperature rise by the end of this century close to
2°C, and to minimise the chance of reaching 4°C. This is sensible risk management. But for what it is worth, when we checked this global effort using a climate-economy model we found that the benefits in avoided damage outweigh the costs of action.

This blog post was written by Sam Fankhauser and Steve Smith.

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