Download Generating Economic Impacts from Physical Climate Impacts

Generating Economic Impacts
from Physical Climate Impacts:
Implications for California
Prof. Charles D. Kolstad
Environmental Economics Program
Bren School of Environmental Science & Management
University of California, Santa Barbara
www.ckolstad.org
CCST, May 24, 2007
Problem Statement
• Regional impact models give us physical
dimensions of a changed climate for the State of
California
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Temperature and precipitation changes
Runoff
Sea level changes
Frequency of extreme weather events
• How to translate those physical impacts into
economic impacts?
– How will agents (eg, farmers) adjust and adapt to
changed climate?
– What will be the costs to business of the changed
climate?
– What are the losses to individuals of climate change
(hotter summers, less rain, etc)?
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The (Messy) Causal Chain
Need info on all these links
Physical Climate
Change (eg, temp)
Man-made ecoysystems
(eg, forests, agriculture)
Expanded Physical
Consequences (eg, runoff)
Other Human
Activities
Biological Changes
Natural Ecosystems
Policy Changes
(eg, water allocation)
Adaptation Investments
OVERAL IMPACTS
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Potential Climate Change Impacts
Individual well-being
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Climate Changes
(means, variances, extremes)
Temperature
Precipitation
Sea Level Rise
Crop yields
Irrigation demands
Pest outbreaks
Forests
Change in forest composition
Shift geographic range of forests
Forest health and productivity
Pest outbreaks
Water Resources
Changes in water supply
Water quality
Increased competition for water
Coastal Areas
Erosion of beaches
Inundation of coastal lands
Costs to protect coastal communities
Adapted from EPA
Species & Natural Areas
UCSB Bren School of Environmental Science & Management
Shift in ecological zones
Loss of habitat and species 4
Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Need information on diseases, vectors,
Weather extremes and susceptibilities.
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Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Crop yields
Irrigation demands
Pest outbreaks
Need information on diseases, vectors,
Weather extremes and susceptibilities.
Need information on adaptation,
productivity, Crop choice, farm programs,
and water allocation.
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Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Crop yields
Irrigation demands
Pest outbreaks
Forests
Change in forest composition
Shift geographic range of forests
Forest health and productivity
Pest outbreaks
Need information on diseases, vectors,
Weather extremes and susceptibilities.
Need information on adaptation, productivity,
Crop choice, farm programs, and water
Allocation.
Need knowledge of productivity changes,
Disease and harvesting changes.
UCSB Bren School of Environmental Science & Management
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Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Crop yields
Irrigation demands
Pest outbreaks
Forests
Change in forest composition
Shift geographic range of forests
Forest health and productivity
Pest outbreaks
Water Resources
Changes in water supply
Water quality
Increased competition for water
Need information on diseases, vectors,
Weather extremes and susceptibilities.
Need information on adaptation, productivity,
Crop choice, farm programs, and water
Allocation.
Need knowledge of productivity changes,
Disease and harvesting changes.
How will water supply change? Allocation
Policies (eg ag vs. urban)? Demand and
Increased prices?
UCSB Bren School of Environmental Science & Management
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Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Crop yields
Irrigation demands
Pest outbreaks
Forests
Need information on diseases, vectors,
Weather extremes and susceptibilities.
Need information on adaptation, productivity,
Crop choice, farm programs, and water
Allocation.
Change in forest composition
Shift geographic range of forests
Forest health and productivity
Pest outbreaks
Need knowledge of productivity changes,
Disease and harvesting changes.
Water Resources
How will water supply change? Allocation
Policies (eg ag vs. urban)? Demand and
Increased prices?
What protective measures are possible,
What is the rate of change? How do
Storm surges change?
What capital is at risk?
Changes in water supply
Water quality
Increased competition for water
Coastal Areas
Erosion of beaches
Inundation of coastal lands
Costs to protect coastal communities
UCSB Bren School of Environmental Science & Management
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Different paths to sectoral impacts
Health
Weather-related mortality
Infectious diseases
Air-quality respiratory illnesses
Agriculture
Crop yields
Irrigation demands
Pest outbreaks
Forests
Need information on diseases, vectors,
Weather extremes and susceptibilities.
Need information on adaptation, productivity,
Crop choice, farm programs, and water
Allocation.
Change in forest composition
Shift geographic range of forests
Forest health and productivity
Pest outbreaks
Need knowledge of productivity changes,
Disease and harvesting changes.
Water Resources
How will water supply change? Allocation
Policies (eg ag vs. urban)? Demand and
Increased prices?
What protective measures are possible,
What is the rate of change? How do storm
Surges change? What capital is at risk?
Changes in water supply
Water quality
Increased competition for water
Coastal Areas
Erosion of beaches
Inundation of coastal lands
Costs to protect coastal communities
Species & Natural Areas
Shift in ecological zones
Loss of habitat and species
What are the ecological consequences?
How do those translate to habitat require?
What are implications for people?
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Plus welfare impacts
• How worse/better do people feel with
changed climate?
• How is cost of living affected?
– Energy use
– Housing costs
– Water costs
– Recreational opportunities
• Other?
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Role of Policy in Assessing Impacts
• Water
– Water availability depends on allocations
– Do we continue with old allocations (ag vs eco vs
urban)?
– Do we adapt to changes with new allocations?
– Do we invest in more public infrastructure?
– Do we change water pricing?
• Sea level
– Do we proactively and gradually move capital (mostly
buildings) away from at-risk coast?
• Other?
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A closer look at agriculture
• What matters
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Productivity changes and cropping decisions
Farmer profit
Investments in irrigation
Employment and wages
Resource use (eg, water and energy)
Risk and uncertainty
Distribution of gains and losses
• Role of policy
– Pricing of water
– Allocation of water to different users
– Ag price supports and other programs
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A somewhat non-Californian example
Some random acre in the Central Valley
Prior to climate change
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A somewhat non-Californian example
Some random acre in the Central Valley
Simple results of productivity analysis
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A somewhat non-Californian example
Some random acre in the Central Valley
Loss from productivity analysis
Simple results of productivity analysis
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A somewhat non-Californian example
Some random acre in the Central Valley
Result with crop change
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A somewhat non-Californian example
Some random acre in the Central Valley
Loss with crop change
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Additional Factors
• Encroachment of urban areas changes
land prices
• Climate change may affect global crop
prices and input prices (eg, fertilizer)
• UCDavis may come up with more
adaptable crops
• Sacramento and Washington may change
farm policies
• Water policy is the big one.
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For example….
Offsetting
- crops move to
different parts of
CA
- crops move to
different microclimates (grapes)
- Varieties change
- Crops change
- UCDavis fixes
problem
- Prices increase
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Reinforcing
– Water moved
to urban users
– Pests increase
– Risk increases
– Change
unobserved
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What do we need to generate
impacts in ag?
• Good models of farmer choice and adaptation to
changed climate
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Represent uncertainty about climate change
Represent affect of weather extremes
Represent time path to change
Based in California experiences in different parts of
the state
– Based on history, not speculation
• Identification of likely policy responses to a
change climate (tough).
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Assessing Impacts to CA: Some Steps
• Commission studies of major sectors
vis-à-vis affect of weather outliers
and changes in dist’n of weather.
• Track activity at county level
• Identify spatial leakage
– One county to the next
– Move beyond state boundaries
• Analyze ecosystem changes
• Track consumer affects
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Energy use
Coastal erosion
Cost-of-living
Distributional consequences
Overall well-being
• Embed within accounting framework
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Summary
• Generating economic impact from regional climate
models is important and doable
• Need expanded set of physical consequences than
simply changes in temperature and precipitation
• Significant work needs to be done to develop the
tools to be able to translate temp/precip impacts
into economic impacts
– Research at sectoral level
– Focus on adaptation and other responses to changed
climate
– Effect of extreme weather also important
• Adaptation, both autonomous and public are
important
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