Arguments
Climate change could cost the U.S. economy hundreds of billions a year by 2090
Posted on 30 April 2019 by dana1981
This is a re-post from Yale Climate Connections
A newly-published peer-reviewed analysis of climate change impacts across broad sectors of the U.S. economy provides what may be the most comprehensive economic assessment to date of those costs.
The April report in the journal Nature Climate Change is a condensed version of the Environmental Protection Agency’s 2017 Climate Change Impacts and Risk Analysis report. That analysis was used to help inform the Fourth National Climate Assessment Report published in late 2018.
Written by two EPA professional staffers – but with the standard caveat that it represents their views, and not necessarily those of the agency – the research addressed in the April report considers two global warming scenarios: Representative Concentration Pathway (RCP) 4.5 and 8.5, numbered to correspond to the global energy imbalance (in Watts per square meter) created by the increased greenhouse effect in the two scenarios.
RCP4.5 would lead to about 2.8°C (5°F) warming of global surface temperatures above pre-industrial levels by the year 2100. Limiting global warming to that degree would require more aggressive international climate policies than are in place today, but would nevertheless miss the 2015 Paris climate agreement targets of 2, and ideally of 1.5, degrees C. Continuing emission under the RCP8.5 approach would lead to about 4.5°C (8°F) warming by the end of the century, which is close to a worst-case scenario in which international policies do not slow global fossil fuel use and carbon pollution.
The Nature Climate Change analysis – by EPA scientists Jeremy Martinich and Allison Crimmins – examines 22 different climate economic impacts related to health, infrastructure, electricity, water resources, agriculture, and ecosystems. The bottom line conclusion: by the year 2090, impacts on those 22 economic sectors in the U.S. would cost about $224 billion more per year if we follow the RCP8.5 pathway than if we achieve the RCP4.5 pathway. The authors’ report comes with an important caveat:
only a small portion of the impacts of climate change are estimated, and therefore this Technical Report captures just a fraction of the potential risks and damages that may be avoided or reduced when comparing the alternative scenarios.
Asked to comment on the new research, economist Frank Ackerman, who was not involved with writing the report, said it is “entirely consistent with the broader hypothesis that climate change, if unmitigated, will have large negative impacts throughout the economy before the end of the century.” Impressed with the large number of impacts analyzed, Ackerman, formerly with Tufts University and now principal economist at Synapse Energy Economics, in Cambridge, Ma., said the report would have benefited had the authors been able to use a consistent base year and discount rate in evaluating all of the different impacts.
How much do we value life?
Health impacts account for about three-quarters of the $224 billion per year total cost difference between the two scenarios. More than one-third of that total is attributed to an increase in heat-related deaths.
To estimate the increased health effects costs, the authors reviewed research detailing extreme heat deaths in 49 American cities that account for about one-third of the U.S. population.
In the high-emissions RCP8.5 scenario, about 9,300 more people in those 49 cities would die each year as a result of increased heat. With adaptation efforts like installing extensive and costly air conditioning, the number of deaths could be limited to 4,300.
In the lower-emissions RCP4.5 scenario, heat-related deaths would increase by about 3,900 per year (5,400 fewer than in RCP8.5), but could be limited to 1,300 with adaptation (3,000 fewer than in RCP8.5).
Those findings raise a thorny question: How to quantify the value and the cost of those lost lives?
The researchers, in their April report, address that question by incorporating the “value of a statistical life” (VSL), which EPA describes in a 2010 guidelines document as follows:
VSL is a summary measure for the dollar value of small changes in mortality risk experienced by a large number of people. VSL estimates are derived from aggregated estimates of individual values for small changes in mortality risks. For example, if 10,000 individuals are each willing to pay $500 for a reduction in risk of 1/10,000, then the value of saving one statistical life equals $500 times 10,000 – or $5 million. Note that this does not mean that any single identifiable life is valued at this amount. Rather, the aggregate value of reducing a collection of small individual risks is, in this case, worth $5 million.
EPA currently uses a VSL of $10 million, which this study’s authors adjust to $15.2 million for 2090. Their report thus estimates that saving 5,400 lives per year in 2090 in RCP4.5 as compared RCP8.5 is valued at $82 billion per year. Including adaptation efforts such as installation of extensive air conditioning, the difference of 3,000 lives yields an additional $46 billion cost for RCP8.5 as compared to RCP4.5, plus the added costs such as those associated with installing the necessary infrastructure like city-wide air conditioning.
Of course, any estimate of the value of life is ethically fraught. The challenge is that humans tend to most easily visualize and focus on economic impacts, but it’s difficult to quantify the costs of many climate change consequences like lost health and lives, trauma and suffering, or species extinctions and reduced biodiversity.
That dilemma brings to mind for some a comment that Robert F. Kennedy made in 1968 about the metric of Gross National Product: “It measures everything in short, except that which makes life worthwhile.”
Health, infrastructure, and other costs
The projected warming will lead also to 910 million more lost labor hours per year in 2090 in RCP8.5 than in RCP4.5 – a difference worth about $75 billion per year. This impact is highest in the Southeast ($24 billion in additional annual lost labor), Midwest ($16 billion), and Southwest ($11 billion), where temperatures are hottest.
Infrastructure is the second-costliest category of climate impacts. Under high-emissions scenario RCP8.5, an additional $26 billion of American coastal property would be lost annually toward the end of the century. That contrasts with the lower-emissions RCP4.5, plus an extra $12 billion per year in road damages. Higher electricity demand for cooling will cost an extra $5.8 billion per year. Flooding will cost an extra $3.8 billion per year, and an additional $2.2 billion in winter sports recreation will be lost in the high-emissions scenario. Lost freshwater fishing will cost another $1.4 billion annually.
One interesting aspect of the April analysis is that the economic impact on the agricultural sector is relatively small, with a nationwide cost difference estimated at $1.3 million per year more in 2090 under scenario RCP8.5 than under RCP4.5.
The Martinich-Crimmins report does not take into consideration impacts of worsening extreme weather events on crops, and it therefore underestimates agricultural losses. The research anticipates that although yields will decline for most staple crops – especially for barley, corn, cotton, and rice, but with the exception of wheat – farmers will adapt by using more farmland, changing the crops they grow, and increasing prices. As a result, most of the climate change impacts on the agricultural sector would be passed on to food consumers, in effect, to everybody.
“There are no regions that escape some mix of adverse impacts,” the authors conclude in their analysis. “Lower emissions, and adaptation in relevant sectors, would result in substantial economic benefits.”
Their study shows that limiting global warming to less than 5°F by the end of the century would save the United States a total of about $10 trillion from these 22 climate impacts as compared to an unabated 8°F warming, in addition to saving hundreds of thousands of American lives over those decades.
Big numbers those, dwarfing the billions that one-time Illinois Republican Senator Everett Dirksen is perhaps mistakenly said to have called “real money.” And that is in the context of the authors’ reminder that “this Technical Report captures just a fraction of the potential risks and damages that may be avoided or reduced” when comparing the two climate change growth scenarios … neither of which would achieve the higher of the two higher temperature global surface temperature averages that are at the heart of the 2015 Paris Climate Agreement agreed to by nearly 200 countries worldwide.
So pay the bill and be done with it. Seriously this kind of analysis is less than worthless as it implies that we can "fix" this by throwing tons of money at it now, or pay later. Both are flat out wrong.
This only goes to prove my comments that money is the #1 reason why we will either do nothing or the wrong things as long as we can all keep making money.
Jef, I have also considered whether money and the established economic system is the cause of the climate problem, and whether more of the same is capable of fixing the problem. However its simplistic to say capitalism is the cause of the problem. Taking just one example the soviet union still burned oil and used money. Even if we argue that the "industrial economy" is the cause of climate change, and this can be obviously argued, the alternatives like agrarian communities are not without their own problems.
And the trouble is radically different alternatives like alternative communities based on self sufficient living, bartered goods, and shared ownership have been tried for decades and have a history of failure, and it's clear few people want that sort of life. In addition, if you are suggesting we try to fix the climate problem with mostly just drastic reductions to use of energy, we will impoverish people and again its not realistic to me that it would ever happen even if we wanted it to.
The solution looks to me like we have to modify capitalism enough to make it less harsh on the environment. It's certainly clear enough that neoliberal capitalism is problematic and has to change. Finland's socio economic system is a viable alternative in some ways. Perhaps more use could be made of not for profit companies. We obviously need to accept the state has a legitimate, useful role in legislating environmental protection.
And obviously there is a realistic case to waste less energy, recycle more, and to be less materialistic. Anything else might sound nice, but you have to ask yourself can you seriously see people embracing it?
So in conclusion, therefore the only realistic way of mitigating climate change is probably to "throw money at the problem". The problem is fossil fuels, and realistic alternatives do actually exist, and that means spending money and working within the capitalist system, more or less. Not easy of course, but I would contend probably more likely to happen than everyone abandoning capitalism completely, or making radical reductions in energy use.
If climate change will cost the US only hundreds of billions US$ by 2090, this is peanuts and nothing will be done. It must cost hundreds of trillions, only then something will be done probably.
Nigelj,
I think you are wrong that "the only realistic way of mitigating climate change is probably to "throw money at the problem".
Many of the power plants in the USA are old and nearing the end of their lifetime. New ones need to be built to replace tehm. We have the choice: build new fossil plants or we can build renewable plants to replace them.
Many researchers have shown that it is cheaper to build out renewable energy than to build out fossil fuels. Our chice is to build out fossil plants and line the pockets of current oligarths like Rex Tillerson or build out renewable energy and all be much healthier since air pollution will be so much lower.
Sometime in the future the fracking industry will go belly up and gas prices will skyrocket. If we build out renewable energy it is already cheaper. In the future fossil energy can only go up in price as less remains in the ground. A significant part of coal's problem is that they have mined all the easy to mine coal and remaining coal is more expensive to mine. Mines in the American west and Australia are lower grade coal which is more expensive to mine for the same amount of energy.
Argue "Save money, build renewable energy" not "throw money at the problem".
sorry, was their any confirmation analysis that the USA as a political and economic enitity will exist in 2090? I agree this kind of analysis is overly conservative and fails to be cognisation of the inabililty to responded (even rich antions) when a nation gets hit by compounding catastrophic event i.e. health epidemic + crop failure/food scaricty + infrastructure collapse + population movement + hostilities/civil unrest/civil war + governece failure + new exrteme weather events on the back of all that.
There was an online futurecasting thing called "superstruct" IIRC many years ago at they had people look at extreme events in five or six seperate areas like health, farming/food, climate, population movments, war, resource scarity and even just a few combined could paralys many countries abililty to respond to new events. But when CC was put in the mix many professions in these fields and disaster responce were saying it was potentially catastrophic in major ways, serious break down of law and order, millions of deaths etc etc
@nigelj activist works as Greta says. changing the system is as important as actiing within the system, we need both, at the same time, in short order. All of the above when it comes to cliamte and even then who knows how bad it will get b/c of tipping points we may have already crossed, no cliamte scientist can be sure we havent. We just must do the best each of us can as limited humans in limited orgs and systems.
@nigelj 3
"The solution looks to me like we have to modify capitalism enough to make it less harsh on the environment. It's certainly clear enough that neoliberal capitalism is problematic and has to change"
Yup. A carbon tax would go a long way towards sorting out emissions and if the revenues were all fed back to the taxpayers, that would keep the right wing happier. For things beyond 'just' climate change, sorting out the whole 7-billion-people-want-a-good-lifestyle impact on the planet, I think 'full cost accounting', 'ecological economics', environmental 'economics' or some other variant of the idea which states that in a monetised transactional economy, things will only get valued enough if a price is put on them. A business will, indeed be forced to, pollute the environment external to its operations if it costs it nothing to do so. Put the cost of polluting 'externalities' onto the accountant's bottom line profitability of a company and free market pressures will steer companies to try and minimise those external costs to maximise their profitability. Far more efficient than passing laws to control pollution.
https://en.wikipedia.org/wiki/Environmental_full-cost_accounting
https://en.wikipedia.org/wiki/Ecological_economics
Nigelj- I never said capitalism or singled out any economic system.
Money, which is what every person on the planet needs so as not to suffer and die, is what 99% of the population spends most if not all of their waking hours doing everything and anything they can to get.
This simple fact is what accounts for 99.9% of all polution.
Money is, and is not, the problem. Behaviours and developed preferences, because of money games, are the problem. Examples of the problematic preferences and behaviours are:
The socioeconomic-political systems driven by competition for perceptions of status through power, popularity or profit are the problem, especially when the powerful science of misleading marketing can be successfully abused by people who harmfully immorally win undeserved perceptions of status.
The developed results of those fatally flawed socioeconomic-political systems are harmful unsustainable Egoism rather than helpful sustainable Altruism. The fatal flaws of the systems must be corrected in order for Altruism to effectively govern and limit what is going on. That is the only way to achieve the required corrections for the benefit of the future of a robust diversity of humanity fitting into a robust diversity of other life on this, or any other, amazing planet.
@2 NigelJ
You never defined "capitalism", a concept first coined by Marx, which is often bandied about as though it is self-evident what it means. Some think free markets (didn't ancient Egyptian farmers have pretty free markets?) whereas others hear "free markets" to mean legalized racketeering by favoured "legal persons" (incorporated collectives with special legal immunities). I will take a stab at a definition to start the thought process.
Capitalism is a historical development in human economic organization and production where all the surplus value created by various social partners accrues only to the private owner, thus fostering scarcity amid plenty in a ruthless competition between businesses involved for even more capital intensive efficiency, where social costs, ecological burdens and other "externalities" are artificially compartementalized outside of the profit and balance accounts, e.g., think of the paint factory that costs (the community) more to clean up once defunct and bankrupt than all the profits generated over the last 100 years of its existence.
In the run up to the recent presidential elections in America, when all the Democratic candidates were asked "What is the most important issue today", the only candidate that replied "Climate Change" was Bernie Sanders. He is running again this time.
M Sweet @5, surely you realise from the context that I meant by "throwing money at the problem" I loosely meant building out new and/ or replacement infrastructure? I said nothing to suggest it would be an expensive exercise, with no economic benefits. I agree with your other points.
Jef @9, I respect your opinions normally, but its none too clear what you are saying here. I have to guess that you are saying everything humans do leads to climate change and other forms of pollution, and so more of the same can only make the problem worse, so we are all doomed?
But isn't that a gross generalisation? Some things impact the environment more than others. For example industrial farming is harsher on the environment than organic and regenerative farming, although both have impacts and nothing is likely to be perfect. So don't we at least have choices? For example, renewable energy is less destructive to the environment than fossil fuels?
Or are you saying people are so short of money nothing is left to combat climate change?
And given what you say (whatever it is) what are your solutions?
JW Rebel @11, capitalism is defined in my dictionary as private ownership of the means of production combined with the profit motive. Limited liability companies are a typical although non essential component. I have no quibble with that definition, and its probably reasonably universally understood.
But definitions are indeed so important, and where we often end up talking at cross purposes where people are working with different definitions.
I think what you have done is given a good description of the serious problems capitalism can cause at least regarding capitalism in its pure, "laissez faire" form. This is less well understood. At the very least one could see this as the toxic side effects of capitalism. Monopoly capitalism seems like another problem to me, aka the giants like facebook.
The trouble is collective ownership of capital and the means of production does not have a great history. (fwiw I tend to favour a middle way version of capitalism as in Scandinavia that combines capitalist and socialist ideas in a practical way. I'm all ears if anyone has a better idea that is actually realistic.)
I also agree with Nick Palmers suggestions on full environmental cost accounting. There are many things like this that could bring some sort of private ownership based free market (as in free trade) economy into some fort of balance with the environment, or at least "minimise harm". It does mean a regulatory approach, but regulation makes sense in areas like environmental impacts where companies don't adequately self regulate. Of course its very hard work to get such ideas adopted, or into legislation, but alternative more radical economic reform, building completely new economic systems etc, is also hard work as well and carries risks and may not work.
Regarding the article is not entirely clear why "only a small portion of the impacts of climate change are estimated". Its also not clear if infrastructure damage includes more extreme weather as only sea level rise and associated flooding is mentioned.
nigelj@16,
I agree that the article could have added clarifying points regarding the statement that only a small protion of impacts are estimeated. But the following statements in the article indicate that the costs determined by study were based on a limited evaluation.
"examines 22 different climate economic impacts related to health, infrastructure, electricity, water resources, agriculture, and ecosystems."
"The challenge is that humans tend to most easily visualize and focus on economic impacts, but it’s difficult to quantify the costs of many climate change consequences like lost health and lives, trauma and suffering, or species extinctions and reduced biodiversity."
"The Martinich-Crimmins report does not take into consideration impacts of worsening extreme weather events on crops, and it therefore underestimates agricultural losses. The research anticipates that although yields will decline for most staple crops – especially for barley, corn, cotton, and rice, but with the exception of wheat – farmers will adapt by using more farmland, changing the crops they grow, and increasing prices. As a result, most of the climate change impacts on the agricultural sector would be passed on to food consumers, in effect, to everybody."