Economists Find Flaws in Federal Estimate of Climate Damage

[one...two...tree 2,762]

Uncle Sam's estimate of the damage caused by each ton of carbon dioxide is fundamentally flawed and "grossly understates" the potential impacts of climate change, according to an analysis released July 12 by a group of economists.

The study found the true cost of those emissions to be far beyond the $21 per ton derived by the federal government.

The figure, commonly known as the "social cost of carbon," is used by federal agencies when weighing the costs and benefits of emissions-cutting regulations, such as air conditioner efficiency standards and greenhouse gas emissions limits for light trucks.

A truer value, according the Economics for Equity and the Environment Network, an umbrella organization of economists who advocate for environmental protection, could be as high as $900 per ton—equivalent to adding $9 to each gallon of gas. Viewed another way, with the U.S. emitting the equivalent of close to 6 million tons of carbon dioxide annually, the higher figure suggests that avoiding those emissions could save the nation $5.3 trillion annually, one-third of the nation's economic output.

A second, separate report released July 12 buttressed the argument, finding that the government routinely underestimates the benefits of avoiding climate change when conducting cost-benefit analysis on regulations aimed at reducing greenhouse gas emissions.

This second report, published jointly by the World Resources Institute, an environmental think tank, and the Environmental Law Institute, found that government models on climate impacts often contain "dramatic simplifications and assumptions"—such as when calculating the social cost of carbon—that underplay the benefits society gains by curbing emissions.

Together, the two reports suggest policy makers are looking at a distorted picture as they assess the economic impacts of climate regulations.

The issue has gained urgency as efforts to create a cap-and-trade system or impose a carbon tax have stalled in Congress and federal rules—via the U.S. Environmental Protection Agency—become the primary vehicle for reducing emissions.

"Based on what we know today, the government's current range of social costs is very likely a serious underestimation of what we think those costs will be," said Kristen Sheeran, executive director of the E3 Network.

"It does not reflect the urgency of the climate crisis," she added. "It could lead to a degree of inaction on climate change that frankly is not supported by either the economics or the science at this point."

A lower social cost of carbon—particularly when combined with an underestimate of the benefits of reducing emissions—makes justifying expensive emissions-cutting regulations much harder, advocates say.

But how to value the cost of climate change has proven to be a contentious issue.

Computer models attempting to assess the economic impacts of climate change are, in many cases, streamlined affairs that can only look at impacts broadly – at a scale of hundreds of miles, instead of, say, at a particular watershed, township, or even state.

Economists at the E3 Network, an umbrella group of about 200 economists, contend many potentially costly impacts are missed: Sweltering inland temperatures are averaged with cooler coastal weather. Or an intense, deadly rainstorm never shows up in a monthly average rainfall tally.

http://www.scientifi...-climate-damage

Edited July 13, 2011 by 8TBVBN

[Mr. Big Dog 10,747]

Viewed another way, with the U.S. emitting the equivalent of close to 6 million tons of carbon dioxide annually, the higher figure suggests that avoiding those emissions could save the nation $5.3 trillion annually, one-third of the nation's economic output.

How?

[mawilson 2,133]

How?

Sell carbon credits to India and China, so they can pollute and we get paid?

[Zero Sum 305]

I think they'd have to cut the emissions, not offset them, mawilson... for the numbers- IF TRUE- to add up. Maybe Steven can post the details fromn the study before we get the predictable barrage of cap and trade nutties talking about sending more money to obviously conspiring scientists.

I wonder how much of these emissions could be simply reduced by dramatically improving engineering efficiency. Sounds like a promising area to go into for engineers seeking a rewarding project to work on.

[Mr. Big Dog 10,747]

Sell carbon credits to India and China, so they can pollute and we get paid?

That would require a trading scheme in place, wouldn't it? Now, I know that there are carbon trading programs out there but not on these shores. Not anymore, anyways.

[one...two...tree 2,762]

How?

Not sure without reading through the report. Here's one report on it from the WRI:

The "Social Cost of Carbon" and Climate Change Policy

How does the government derive the social cost of carbon?

Economists use complex economic models that seek to mimic or approximate the real-world factors that impose both costs and benefits on society. By doing so, they aim to examine the economic processes at play. The models used for SCC are called "integrated assessment models" (IAMs) because they attempt to incorporate knowledge from a number of fields of study, such as engineering, technology, behavior, and climate science, with the purpose of deciding whether particular climate change policies are economically efficient. The IAM uses mathematical formulas to simulate the relationships between economic activity and measures to control emissions and the desired environmental outcomes. Judgments are distilled into equations in order to compare one against another³ and to capture interactions between different component parts.

One challenge is estimating future damages that might be avoided by acting now and translating these values into monetary damage.⁴ The damages are culled from a vast literature of climate science. Some of the anticipated damages are relatively obvious, such as increasingly more intense floods and droughts. But, since there have always been floods and droughts, the challenge is to estimate which of these can be connected to a changing climate. Where the modeler's task gets even harder is to identify and monetize the potential consequences of extreme weather events ranging from property damage through famine, dislocation, mass migrations, civil instability, potential conflicts and wars.

Economists estimating these numbers, by necessity, simplify how they represent impacts. Often, they use a proxy, which may not adequately represent the real harms being inflicted. For example, it is easier to assume that temperature rises equally around the globe, even though there will be geographic differences. Even if a model is able to represent differences in temperature increases regionally, it is much harder to integrate into their model that "the rise in average temperatures is not as important as the number of days above a temperature threshold, 32oC (90oF) or less for some major crops."⁵

Other types of simplifying assumptions are used to capture relevant factors, such as the severity of the damages from changing weather, details of the dynamic earth system, and distortions of carbon cycle feedbacks by anthropogenic GHG emissions. The models cannot accommodate the level of detail that would be needed to try to represent every detail of expected change in the climate system and the consequences of those changes. A few examples of factors the models have particular difficulty with include:

• the impacts of increased temperature that result from rising greenhouse gases altering the balance of incoming and outgoing energy in the Earth-atmosphere system ("radiative forcing");
• regional temperature effects (since different parts of the earth will react in different ways);
• changes in the climate system that occur in "non-linear" ways (such as feedback cycles, tipping points and cascading effects that are irreversible, as opposed to a smooth and steadily warming world); and
• possible economic, environmental and social impacts such as whether changing weather will lower economic growth (GDP) and human well-being in the future, or whether extreme weather changes will provoke social conflict due to human migrations from less habitable to more habitable parts of the earth.

Surprises and how they interact with other factors are particularly difficult to capture in modeling (whether science or economics). Climate science indicates the potential for unexpected events in the earth system (the cascading effects, feedback loops, tipping points noted above) that are unpredictable in terms of their timing and severity based on current knowledge. Likewise, human behavior is dynamic. Equations are not flexible enough to capture these events accurately, even though understanding the climate system and the possible impacts that changes to that system could have on human life is essential to estimating the SCC. Critics of economic modeling, such as scientists MacCracken & Richardson, question whether an IAM can capture problems "inherent to the complexity of the Earth system."⁶

Edited July 13, 2011 by 8TBVBN

[Ban Hammer 13,352]

Uncle Sam's estimate of the damage caused by each ton of carbon dioxide is fundamentally flawed and "grossly understates" the potential impacts of climate change, according to an analysis released July 12 by a group of economists.

no point in reading past that in bold.

[Zero Sum 305]

no point in reading past that in bold.

Who to trust in matters of economics then? Just curious.

[Mr. Big Dog 10,747]

Who to trust in matters of economics then? Just curious.

The cost seems largely inflated. There isn't a carbon market out there were a price of $900.00 is fetched.

[Zero Sum 305]

Could be. We need to see the details.