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Economics of Climate Change:
Impacts
Economics 331b
Spring 2009
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Global Warming and Sea Level Rise (SLR)
Major variations in geological history (-150 to +40 meters)
Sources in future:
- Thermal expansion (up to 2 meters)
- Small glaciers (0.5 meters)
- Greenland (up to 6 meters)
- Antarctic (56 meters), but major unstable is West
Antarctic Ice Sheet (7 meters)
- Arctic Sheet (very likely to disappear, 0 meters)
Major issues are stability and irreversibility
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Observed Sea Level Rise
18 cm rise since 1900
Current rate:
3.3 cm per decade
Rahmstorf, Cazenave, Church, Hansen, Keeling, Parker and Somerville (Science 2007)
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WBGU
Data:
Church and White (2006)
Scenarios 2100:
50 – 140 cm (Rahmstorf 2007)
55 – 110 cm (“high end”, Delta Committee 2008)
Scenarios 2200:
150 – 350 cm (“high end”, Delta Committee 2008)
Scenarios 2300:
250 – 510 cm (German Advisory Council on
Global Change, WBGU, 2006)
Delta Comm.
Recent Global Sea Level Rise Estimates
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Rahmstorf at http://www.ozean-klima.de/
Estimate of distribution of output and population by elevation
Cumulative distribution of global
population and output by year
.05
Output, 1990
Output, 1995
Output, 2000
Population, 1990
Population, 1995
Population, 2000
.04
.03
.02
.01
.00
0
2
4
6
8
10
Gecon.yale.edu
Elevation (meters)
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Impact of Sea-Level Rise
On Value of Real Estate in Cape Cod
Caroleen Verly, “Sea-Level Rise on Cape Cod: Predicting the Cost of Land and Structure
Losses”, Yale University, 2008
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Land value and altitude
Caroleen Verly, “Sea-Level Rise on Cape Cod: Predicting the Cost of Land and Structure
Losses”, Yale University, 2008
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Impact of SLR on Land and Structures
Caroleen Verly, “Sea-Level Rise on Cape Cod: Predicting the Cost of Land and Structure
Losses”, Yale University, 2008
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Non-linearities in the climate system
Most of the impacts literature examines gradual climate change,
with roughly linear systems and impacts.
Scientists have been particularly concerned about
discontinuities, abrupt climate change, tipping points,
catastrophic impacts.
Lenton et al. survey the terrain and find the following relevant
and important tipping elements.
We will discuss the dynamics of the Greenland Ice Sheet (GIS) as
perhaps the most important and potentially costly.
From economic/decision point of view, thresholds simplify
decisions as to the optimal policy.
Optimum Without Thresholds
Marginal
Abatement
Cost
0
Marginal Damage
Temperature*
Temperature
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Optimum With Thresholds
Marginal
Abatement
Cost
0
Marginal Damage
Temperature*
Temperature
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Tipping Elements in the Climate System
“Tipping elements in the Earth’s climate system, “ T. M. Lenton, et al.,
PNAS, Feb 2008.
Simulation of Melting
IPCC, Science, AR4, p. 830 from Ridley. This is roughly for a 6 °C
warming. Note that some climatologists think that this underestimates
the rate of melting.
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Mathematics of GIS dynamics
1
V  E *B
[volume of ice]
(2) T  T sealevel -  E
[temperature of GIS]
 3
[melt]
V  -  (T - T0 )
V = volume (km^3)
B = base(area, km^2)
E = elevation at top (km)
T = temperature at top (deg C)
T sealevel = temperature at sea level (deg C)
Solving, we get:
V  E B  - (T - T0 )  - (T sealevel -  E - T0 )
or
E  - T sealevel   E
In addition, because precipitation declines at high altitude,
there is a declining effect at high altitude, so we have:
E  - T sealevel   E  h( E )
dE/dt
E  - T sealevel   E  h( E )
0
E*
E
Have initial stable equilibrium
at E*.
dE/dt
0
E  - T sealevel   E  h( E )
E*
E**
Global warming raises sealevel temperature and lowers
the equilibrium height and
therefore volume from E* to
E**.
E
dE/dt
0
E  - T sealevel   E  h( E )
E*
E**
E
dE/dt
E***
0
E  - T sealevel   E  h( E )
E** E*
E
… then when the system
passes the tipping point, the
melting effect overwhelms the
precipitation effect, and the
equilibrium moves to E***.
dE/dt
E
0
E***
Reglaciation requires
considerable cooling to get
dE/dt positive again. This is
the “hysteresis loop.”
Hysteresis loops and Tipping Points for Ice Sheets
Frank Pattyn, “GRANTISM: Model of Greenland and Antrarctica,” Computers
& Geosciences, April 2006, Pages 316-325
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First Generation
Estimates of
Aggregate
Monetized Damages
of CO2 Doubling,
U.S., for present
economy
Source: IPCC, Second
Assessment Report
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Economic Impacts of Gradual Climate Change on the U.S.
Joel B. Smith, A Synthesis of Potential Climate Change Impacts on the U.S., Prepared for the Pew
Center on Global Climate Change, April 2004
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IPCC Collation of Global Damages, AR Three
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Estimated Damages from Yale Models and IPCC Estimate
11%
Climate damage/global output
10%
RICE-1999
9%
DICE-2007
8%
7%
6%
5%
4%
IPCC estimate
3%
2%
1%
0%
0
1
2
3
4
5
Mean temperature increase (oC)
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7
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Summary of Impacts Estimates
Early studies contained a major surprise:
Modest impacts for gradual climate change, market impacts, highincome economies, next 50-100 years:
- Impact about 0 (+ 2) percent of output.
- Further studies confirmed this general result.
BUT, outside of this narrow finding, potential for big problems:
- many subtle thresholds and tipping elements
- abrupt climate change (“inevitable surprises”)
- many ecological disruptions (ocean carbonization, species loss, forest
wildfires, loss of terrestrial glaciers, snow packs, …)
- stress to small, topical, developing countries
- gradual coastal inundation of 1 – 10 meters over 1-5 centuries
OVERALL: “…global mean losses could be 1-5% Gross Domestic
Product (GDP) for 4 ºC of warming.”
(IPCC, FAR, April 2007, but no solid data underlying this)
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Why Impact Analysis is So Difficult
1. Most impacts analyses impose climate changes on current socialeconomic-political structures.
- Example: impact of temp/precip/CO2 on structure of Indian economy in
2005
2. However, need to consider what society will look like when climate
change occurs.
3. Example of difficulties of looking backward:
– 2 ˚C increase in 6-7 decades – that was Nazism, period of Great
Depression, Gold Standard, pre-Keynesian macro
– 4 ˚C increase in 15 decades –Ming Dynasty, lighting with
whale oil, invention of telegraph, stagecoach, ….
4. In the end, it appears that major impacts are NON-MARKET, VERY
DIFFICULT TO VALUE, and VERY CONTENTIOUS.
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