Economists greatly underestimate the price tag on harsher weather and higher seas. Why is that?

beehive Or, Opinion: Climate Change Will Cost Us Even More Than We Think, by Naomi Oreskes and Nicholas Stern in the NYT. NO's involvement is unpromising, but vaguely sane people twote it, so let's read on. But before I do, some more snark: the NYT op-ed says it is "explained in a recent report by scientists and economists"; naturally, Stern being a shy retiring fellow modestly doesn't mention that he is one of the authors of the said report.

The first thing to do is to search for the word "discount", because as we know, that's most of it. It says in the summary:
Economic assessments that are expressed solely in terms of effects on output (e.g.
gross domestic product), or that only extrapolate from past experience, or that
use inappropriate discounting
, do not provide a clear indication of the potential
risks to lives and livelihoods.
But don't get too excited: that was my bold, and it's three quarters of the way down the summary. It also rather delicately doesn't discuss what "inappropriate" might be - something that Stern doesn't like, perhaps. Very similar text appears lower down in the "Why the risks have been missed, omitted or unquantified" section, but again there's no discussion; it's treated as given that the weight of economic opinion is wrong (actually, not even that; if you read just the report you'd get the impression that people are mysteriously using "inappropriate" discount rates for apparently no reason at all), and the report's authors are so trivially correct that they don't need to explain why. This is a pattern for Stern.

Otherwise, we're underestimating the costs because
Economic assessments of the potential future risks of climate change have been omitting or grossly underestimating many of the most serious consequences for lives and livelihoods because these risks are difficult to quantify precisely and lie outside of human experience...
  • Destabilisation of ice sheets and glaciers and consequent sea level rise
  • Stronger tropical cyclones
  • Extreme heat impacts
  • More frequent and intense floods and droughts
  • Disruptions to oceanic and atmospheric circulation
  • Destruction of biodiversity and collapse of ecosystems
But most of those are included. There's a section in the report for each. The tropical cyclones one, for example, tells us that TCs will get bigger blah blah but we know that already; there's nothing omitted there; what the section rather pointedly fails to include is any analysis showing why or how this effect is omitted from damage estimates. Ward, also an author on the report, has form in this area too. RP Jr also notes that Greenland ice sheet SLR has not been missed.

Extreme heat impacts is much the same. This isn't omitted from damage estimates  (e.g. 4th National Climate Assessment report: Labour).


However, I have a lot of sympathy with:
The biggest risks from climate change are associated with consequences that are unprecedented in human history and cannot simply be extrapolated from the recent past. As such they are uncertain and difficult for scientists to quantify in physical terms. Furthermore, the resulting consequences for lives and livelihoods can be difficult to determine because they involve assumptions about the resilience of populations, their capacity for adaptation and their ability to move in a crowded world. The cascading risks that can result from these impacts can be difficult to predict precisely and to capture in simulations using current models. These uncertainties mean that the impacts are difficult to represent in terms of costs and benefits and are therefore often ignored or omitted from economic models.
Although I'm doubtful that "omitted" is correct. But, there's nothing new there: this is the well know uncertainty-is-not-your-friend problem. What does the report add to the sum of human knowledge?

Runaway tipping elements of no return

(update) Ah, I missed out the "tipping points" stuff; or "tipping elements" (or was that only briefly fashionable?). From the NYT:
In economic assessments of climate change, some of the largest factors, like thresholds in the climate system, when a tiny change could tip the system catastrophically, and possible limits to the human capacity to adapt, are omitted for this reason. In effect, economists have assigned them a value of zero, when the risks are decidedly not. One example from the report: The melting of Himalayan glaciers and snow will both flood and profoundly affect the water supply of communities in which hundreds of millions of people live, yet this is absent from most economic assessments.
But again, Stern has run off the rails. Glacial melt is a real effect, and quite likely a real problem, but it isn't really a tipping point problem. There's an albedo feedback effect, but that's different (well, that leads towards the entire difficult discussion of whehter the tipping points stuff means anything much).


Societal tipping points - ATTP. There's a semi-good-point: [Economists] approach climate damages as minor perturbations around an underlying path of economic growth... Hence, this type of analysis cannot even address the question of whether or not there might be societal tipping points; it assumes, by definition, that there aren’t any. the problem is that this idea doesn't go anywhere other than "we should think about it".
* The Biggest Threat To Climate Science Comes From Climate Advocates - Roger Pielke, Forbes.
Consistency & freedom - Don Boudreaux
* Climate Chickenhawks


Ardy said...

What does the report add to the sum of human knowledge?

Just wondering, stoat, do you ever read what you write?

William M. Connolley said...

I thought of that. My excuse is that this is but a humble blog. I'm not puffing out reports, or publishing junk in the NYT which purports to be a reputable newspaper.

David B. Benson said...


So there you have it.

According to them.

David B. Benson said...

TNYT is a Newspaper of Record. Which is a kind of reputation.

William M. Connolley said...

> Amazon rainforest 'close to irreversible tipping point'

I think that's doubtful; to be fair, so does the Graun; they're whoring after headlines but at least somewhat more honest in the text: "a prominent economist has said... The report sparked controversy among climate scientists" and so on. The idea, and the disagreement about it, is nothing new of course.

Tom said...

Revisiting and defending past claims and publications is getting more common 15 years on. So with Stern, so with Nepstad... in other fields this has happened just prior to those claims being abandoned.

Discount rates exist for a reason and are established using past performance as a guideline. No guarantees that they're perfect, but they're quite literally better than 'nothing, or zero as it is so quaintly put.'

...and Then There's Physics said...

There's a semi-good-point:

Thanks :-)

the problem is that this idea doesn't go anywhere other than "we should think about it".

Fair enough; I don't really have any good ideas as to how to take this further. It probably is a very tricky problem to address. We don't really have a set of non-linear equations that describe the time evolution of society.

William M. Connolley said...

Well, if I can live with "circumspect" you can live with semi-good :-).

Andy Mitchell said...

Didn't we reach a tipping point when humans started consuming more than the planet can sustainably produce? The rest is just time.

Tom said...

Mr. Mitchell, as I hold a completely opposite view, I hope I can be forgiven for asking when and by how much humans started consuming more than in sustainable.

It is not that I believe there are no limits to safe consumption. It's more that I think we are in the position of someone who started digging for China five minutes ago and is worrying about what he/she will find on the other side. That is to say the limits are far in the future--perhaps millenia.

Andy Mitchell said...

As your post indicates a belief the planet has an infinite capacity to absorb/ignore humanity's impact on it, I will avoid wasting my time by suggesting you use Google.

Phil said...

How much can be consumed isn't a question that Google can answer. Far too complex, far too many unknowns.

So how might we bracket the unknowns?

Start with NPP, net primary production. Plants fix carbon, and humans consume plants. Humans can't consume 100% of NPP, the plants need to live. And other ecosystems services require energy as well. Yet think of that as the limit. The human appropriation of net primary production can't exceed 100%.

Humans currently consume about 25% of NPP. Here Google might help. For example:


This ignores the use of fossil carbon for power. Current HANPP is around 16 Pg C/yr. Current fossil fuel use is around 8 Pg C/year. Production of biofuels is fairly lossy with current technologies, so replacing fossil energy with biofuels isn't realistic, even if the efficiency could be raised.

Yet Google can't help with these questions. Is our current consumption too much? Maybe. So could we double our consumption? Maybe. Two doublings? Almost for sure, no. Is the limit millennia in the future? Only if future growth is very slow. What is the future growth in HANPP?

This ignores possible technologies, such as solar -> electric -> fixed carbon -> human foods. The first we are doing on a modest scale today, and the efficiency is far higher than photosynthesis. Electric power to fixed carbon has been done on tiny scales, and I've not heard of any human food production this way. Yet it is technically possible. Potentially this might allow more than an order of magnitude increase in the human consumption, by substituting 30% efficient solar cells for 1-2% efficient chlorophyll. Consider such a world, with the fields, forests and pastures covered in solar cells, factories consuming atmospheric CO2 and electric power turning out eatable oils, starches and proteins, and vast cities. As Don Henley sang in "Hotel California", "And I was thinking to myself, this could be heaven or this could be hell." Yet even this wouldn't allow for millennia of 2% growth. 1.02^1000 is 398,000,000

Andy Mitchell said...

"How much can be consumed isn't a question that Google can answer."

Really? I Googled and found this in 2 minutes: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52005DC0670


"Despite these improvements, increased production volumes have often outpaced any overall environmental improvements or efficiency gains and current policies have not been sufficient to reverse fundamentally unsustainable trends either in Europe or globally."

A bit more Googling and I found this which sounds more optimistic: https://www.resourcepanel.org/reports/global-resources-outlook

A Historical Trends scenario shows that the current trajectory of natural resource use and management is unsustainable, while a Towards Sustainability scenario shows that implementing resource efficiency and sustainable consumption and production policies promotes stronger economic growth, improves well-being, helps to support more equal distribution of income and reduces resource use across countries

Andy Mitchell said...

And then there is this: https://en.wikipedia.org/wiki/Global_Footprint_Network

Phil said...

I'd guess Google might reference my statement as well.
But notice that, while I rule out growth for millenia, I didn't answer the question.

The problem is that the question has too many unknowns. Google can find opinions, not answers. Look at the opinions and consider what wasn't considered.

Oh, and for Stoat:


William M. Connolley said...

You'd expect a nobel laureate to be a more competent economist (but see-also Econlib); "financial incentives are the primary driver of human behavior" is I think wrong; incentives certainly are, but why you'd restrict consideration to financial ones only is hard to understand.

As to what they mean by "just" or "justice", this is far from clear. They juxtapose it with "real suffering" so I must imply that they think that real suffering is unjust, which is nonsense.

Phil said...

Some people seem to think that only economic incentives are important. Like, say a carbon tax.

William M. Connolley said...

Probably some people think that but I don't know of any such people, nor can I think of any writings that would say that.

Tom said...

Incentives aren't everything, but incentives matter.

Phil said...

What should be done about climate change other than a carbon tax?

David B. Benson said...

Irrigated Afforestation of the Sahara desert and the Australian outback.

William M. Connolley said...

Mnay things "should" be done. Most obviously, people should be convinced there's a problem there to be solved, and useful information such as this blog are a part of that.

Then there's a need for better tech (e.g. solar panels) so that the shift from fossil fuels can ocur without too much pain.

Large-scale landscape changes might be good too but are likely to encouter opposition: the Abos won't even let people climb Ayer's rock, so are likely to consider reafforestation askance; the Sahara is politically unstable. Since we're talking about that, simple good governance would go a long way to helping, too.

Phil said...

"Then there's a need for better tech (e.g. solar panels)..."

I see that perhaps something I've written has slightly sunk in. Technology research, development and ramping up is the priority for the recent past and for now. Not just the research but subsidies until economy of scale has been achieved. Remember the declining cost curve, and notice these new technologies are head to head with long established technologies.

Carbon tax doesn't help until close to cost parity. Nice idea for the future, and the day is getting closer. Right now is too expensive, and not politically realistic. More efficient than subsidies, yes, but when dealing with small alternatives then lower cost is more important than higher efficiency.

William M. Connolley said...

I was thinking more in terms of idiots like Trump not putting tariffs on them.

David B. Benson said...


Halloween galaxies:

Does this resemble Boris?

Anonymous said...

'the Abos won't even let people climb Ayer's rock'

William M. Connolley said...

Hard to believe but yes it does seem to be true, e.g. https://www.channelnewsasia.com/news/world/uluru-celebrates-climbers-permanently-banned-12039164.

Anonymous said...

Sorry - I was referring to your casual use of racist language. Having been a long time reader of your blog I'd prefer if you didn't descend into full Boris.

William M. Connolley said...

Ah yes well fair comment then. I'm afraid I'll still be using the K-work and perhaps even the C-word, but probably not the A-word.

PhilScadden said...

On Uluru (Ayers rock) - all of us have some pretty fixed ideas about what general public are allowed to do on our private property. I am not lost on randoms climbing on the roof of my house for instance. Ownership was returned to Pitantjatjara in 1985 and I believe that they are asserting their property rights. On other hand, I am not an Australian so may be misinformed.