Writing about this is definitely outside my comfort zone, so this post should not be seen as something from which others could learn but maybe a way for me to learn via the comments. There have been various claims that there is a net benefit to around 2 degrees of warming, relative to pre-industrial levels. In a recent Wall Street Journal article, Matt Ridley says
Most experts believe that warming of less than 2 degrees Celsius from preindustrial levels will result in no net economic and ecological damage. Therefore, the new report is effectively saying (based on the middle of the range of the IPCC’s emissions scenarios) that there is a better than 50-50 chance that by 2083, the benefits of climate change will still outweigh the harm……
Up to two degrees of warming, these benefits will generally outweigh the harmful effects, such as more extreme weather or rising sea levels, which even the IPCC concedes will be only about 1 to 3 feet during this period.
So, Matt Ridley at least thinks that the benefits of a 2 degrees warming (relative to pre-industrial levels) outweigh the risks. There are, however, plenty of other articles (here and here) suggesting that we shouldn’t be looking forward to a rise of 2 degrees. That even 2 degrees will have a damaging impact.
What I was interested in is if there was any evidence that there could be a net benefit from 2 degrees of warming (relative to pre-industrial levels). In a comment on a recent post, Martin linked to a 2008 paper (actually an ESRI working paper) by Richard Tol called The Economic Impact of Climate Change. The paper is really a review of 13 studies (and 14 estimates) that have considered the economic impacts of climate change. The basic result is shown in the figure below. It shows the percentage change in GDP for increases in global surface temperature (relative to today) of up to 3oC. There is a suggestion that a rise of 1oC (i.e., almost 2oC relative to pre-industrial times) could be beneficial, but anything beyond 2oC (relative to today) seems likely to be detrimental.
So, maybe this is the evidence that Matt Ridley was referring to, although maybe there is something newer. There are two immediate issues, though. One is that (in 2008 at least) this result appears to depend quite strongly on one study (which turns out to be Tol 2002) that suggests quite a substantial benefit from 1oC degree of extra warming. I’m not suggesting that there is anything wrong with this study, simply that one should be cautious about a result that so strongly depends on one study. The other is that we’ve probably already locked in about 1 degree of extra warming. Whatever we do, we’re likely to get to a temperature 1oC higher than today, so what we should be considering is whether or not we should act to prevent temperatures rising much beyond the 1oC level. The paper appears to actually acknowledge this point, saying
Even if, initially, economic impacts may well be positive, it does not follow that greenhouse gas emissions should be subsidized as the climate responds rather slowly to changes in emissions. The initial impacts cannot be avoided; they are sunk benefits. Impacts start falling at roughly the same time emission control affects climate change (Hitz and Smith, 2004; Tol, 2002b; Tol et al., 2000). The fitted line in Figure 1 suggests that the turning point is at 1.1oC warming, with a standard deviation of 0.6 oC. Even though total impacts of 1-2oC warming may be positive compared to today, incremental impacts are negative.
So, this would suggest that if we were concerned about the economic impact of climate change, then we might want to consider avoiding a warming much in excess of 1 degree (relative to today). I do have the impression that some equate the results from some of these studies as indicating the cost of adapting, and hence argue that if mitigating were to cost more than a few percent of GDP we might as well simply try to adapt. Ignoring the moral aspects of such a view, my understanding is that this is not correct. These studies indicate the percentage change in GDP, which reflects changes in economic activity. A net decrease in GDP does not indicate how much it would cost to adapt, as spending money adapting can still drive economic activity and doesn’t necessarily imply a reduction in GDP. Similarly for mitigating, as far as I can tell at least.
There was another very interesting quote in the paper
The initial benefits are partly because more carbon dioxide in the atmosphere reduces water stress in plants and may make them grow faster (Long et al., 2006). Another reason is that the global economy is concentrated in the temperate zone, where warming reduces heating costs and cold-related health problems. At the same time, the world population is concentrated in the tropics, where the impacts of initial climate change are probably negative.
If I’ve understood this properly, there is a chance that there could be net economic benefit (in terms of GDP/economic activity) but that this would mainly be in the temperate regions where economic activity is concentrated. In the regions where most people live, however, the impact could be negative. This, in my opinion, suggests a remarkable moral dilemma. The countries that have likely contributed most to climate change could actually benefit at the expense of those who’ve contributed least.
Anyway, that’s all I was going to write. As I said, not my area of expertise so feel free to comment and enlighten me and others. As an aside, while writing this I ended up in a rather odd Twitter exchange with Richard Tol. I’ve almost finished reading Joseph Stiglitz’s new book called The Price of Inequality. I’ve found the book very interesting, but have worried that it so gels with my own thinking that I’m essentially suffering from a form of conformation bias. I, hence, asked Richard (via Twitter) if he could recommend another book that might present different economic ideas. This then ended up as a confrontation that I still don’t quite understand. Either Richard thought my question had some hidden meaning (it didn’t) or he thought that my question was irritatingly ill-posed (possibly) or Richard is simply incapable of having a pleasant discussion with anyone who regularly disagrees with him (understandable maybe). I thought I would just add this aside to make it clear that my writing this post at the same time as such a Twitter exchange was entirely co-incidental. Also, in case it wasn’t clear, I found Richard’s 2008 paper quite interesting.