Claim: 4C Global Warming Will Only Cost One Year of World GDP Growth – But Its Worse Than You Thought

Guest essay by Eric Worrall

Read the words of a financially literate reporter struggling to reconcile the almost immeasurably small UN estimated economic impact of global warming against all the horror stories he desperately wants to believe.

How much will climate change really cost? It’s getting even more expensive.

Sep 27 2018 at 8:11 AM
by Tyler Cowen

The potential costs of climate change, already the subject of heated debate, may actually be understated.

It’s not just the potential disruptions to weather systems, agriculture and coastal cities; it’s that we may respond to those problems in stupid and destructive ways.

Consider how poorly we have responded to many non-climate-related problems.

Similarly you might think that supporters of President Donald Trump have legitimate concerns about illegal immigration and US unwillingness to stand up to China.

Still, that did not require a presidential “remedy” that has brought chaos and corruption to the White House and US foreign policy alike.

In short, the world increasingly appears to be reaching for extreme and imprudent remedies to admittedly complex problems.

I am struck by the costs of climate change suggested in the UN’s Intergovernmental Panel on Climate Change report, hardly a source of denialism.

Its cost estimate – “1 to 5 per cent of GDP for 4C of warming” – is relatively reassuring.

After all, global GDP is right now growing at more than 4 per cent a year.

If climate change cost “only” 4 per cent of GDP on a one-time basis, then the world economy could make up those costs with less than a year’s worth of economic growth.

In essence, the world economy would arrive at a given level of wealth about a year later than otherwise would have been the case.

That sounds expensive but not tragic.

Unfortunately, that is not the right way to conceptualise the problem.

Think of the 4 per cent hit to GDP, if indeed that is the right number, as a highly unevenly distributed opening shot.

That’s round one, and from that point on we are going to react with our human foibles and emotions, and with our highly imperfect and sometimes corrupt political institutions.

The true potential costs of climate change are just beginning to come into view.

Read more: https://www.afr.com/business/energy/how-much-will-climate-change-really-cost-its-getting-even-more-expensive-20180926-h15x94

While we leave Tyler to wrestle with his inner climate skeptic, its fun to imagine other ways to visualise the horror of the UN estimated impact of 4C of global warming (AR4).

Compare US economic growth under President Trump compared with the growth rate President Obama presided over. According to Bloomberg, President Obama managed 1.9% economic growth per annum. So far President Trump has managed 2.7%. This means the total economic damage the UN estimates will accrue due to 4C of global warming is comparable to the difference between two terms of President Obama vs two terms of President Trump; 8 * 0.8% difference = 6.4%. (before anyone gets picky I know growth accumulates geometrically…).

Of course, we’re not talking about concentrated harm like 4C of global warming over eight years, or two actual terms of President Obama. But I think The Obama (equivalent 2C warming) is potentially a useful measure of UN estimated climate economic damage which we should all consider using in future, in honour of the President who made climate activism so central to his term of office.

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48 thoughts on “Claim: 4C Global Warming Will Only Cost One Year of World GDP Growth – But Its Worse Than You Thought

  1. A professor of economics at George Mason University should know better than assume that a post adjustment global economy will be able to grow at the same rate as a pre-adjustment one. They will be utterly different in their fixed costs etc, but then I am not an economist.

    • You know who would be hit hardest by 4C of warming? Farmers! Imaging trying to sell your product on the world market once the northern reaches of Canada and Siberia are fully brought online for grain production. Prices will drop through the floor!

  2. As there are absolutely no defensible evaluations of damage caused by “climate change”, all of the enormous costs are simply the Draconian, stupid, and political policies that the power that be want to impose on the world. The expenses are all on them and nothing or no one else.

  3. Let’s say sensitivity is absurdly high. Say 4 degrees per doubling of CO2.

    Let’s start with NOW. Why NOW? Because we have it absurdly good right now. Longest lifespan in human history, most food production in history, any metric you want, humanity has never had it better than RIGHT NOW.

    So RIGHT NOW we’re slightly over 400 ppm, going up by about 2 ppm per year.

    So this 4 degrees is then spread over 200 YEARS! Our rate of adaption exceeds that by orders of magnitude. And if the economic effect is only that small for an absurd 4 degrees, then NONE of the alarmist fear mongering can possibly be true. We can’t be exposed to both a scratch in the economy and the earth coming to an end at the same time.

    • What damage? 4 degrees warmer brings the ave. temp to 19C . Whats wrong with 19C? What damage will 19C do? The only way ; even the alarmists admit; that it would ever increase that much is that there would have to be a forcing of water vapour. That means more clouds with more precipitation and even more greening than now. Because temperature is a local phenomenon, there would still be a vast range of the diurnal temperature in almost every place. If the deserts are 4C hotter so what? No one goes outside in the desert in the the high sun part of the day anyway. The icecaps wont melt with it 4C hotter. In 95 % of the area of Greenland and Antarctica, it never even comes anywhere near 0C in their summertime. 8000 years ago Greenland melted for 3000 years and it was 5C hotter. It only lost 20 % of its mass. The reason wasn’t even because the earth was warmer by 5C. the reason was of the volcanic activity underneath and around Greenland. The volcanos were there 8000 years ago and they are still there now. Greenland doesnt melt from up top. It melts from underneath the same way it did 8000 years ago.

    • “None of the the alarmist fear mongering can be true.”

      This deserves to be a natural law. Proof: no alarmist future would be underestimated. In their science and analyses, they ‘methodology shop’ for the worst that can still be believable. I believe econometrics could be used to evaluate this proposition, its like marginal cost analysis. Ross McKittrick would have a field day with this.

      Look at the range of model types up to the worst case 8.5 circulation model and the range of ‘outcomes’.Match it with % belief in CAGW from polls, etc. See how the Temp projection figures have come down and how they hace had to impart more serious consequences to smaller temp rises (declining ECS’s).

      We have empirical evidence: Forecasts to date have anomalies~300% higher than actual observations prived to be. They’ve stretched the start date for measurement from 1950 to 1850 and lowered dangerous levels from 3-5C by 2100 to 1.5C. With a hundred yea4s more built in, we have already got 0.8C of danger. The 1.5C is just basically the same growth as last century added on.

      • Gary writes: “None of the the alarmist fear mongering can be true. This deserves to be a natural law.”

        The natural law is: Anything that disagrees with my preconceptions is wrong! This is called confirmation bias, and it applies to all of us. It means that we are incapable of learning anything new about our deeply-held beliefs. This returns us to the Dark Ages before the scientific Revolution when the Catholic Church persisted in believing the Earth was at the center of the universe for 500 years after Galileo.

        AOGCM hindcast about 50% more warming than has been observed, not 300%. If you don’t like RCP 8.5 as a worst case scenario, look at RCP 6.0 or somewhere between the two. No one argues that RCP 6.0 is unrealistic. Today we are at “RCP 2.5”.

        The choice of 1.5 C is arbitrary and absurd.

  4. Is this 4 % of the GDP to be spread over all nations, or only the so called rich Western nations. if the latter then obviously th figure of the “Taxation”to save the planet will be very much higher to those required to pay.

    Anyway what is to happen to this vast sum of money so collected by I assume the United Nations. Will it be spent in mostly Africa, on Green things like the various Presidents and Chiefs ?

    Perhaps a few promotions within the UN too.

    MJE

  5. From the article: “The true potential costs of climate change are just beginning to come into view.”

    Oh, really? What are the true costs of human-caused climate change? The answer is they don’t know because they can’t connect any part of the climate to CO2, so they don’t know if a weather event is connected to human causes or not.

    The True Costs of CAGW are the Trillions of dollars wasted on windmills and industrial solar, and the Trillions more that will be wasted continuing in this direction.

    • And now with the “Great Greening Epoch ^ тм” and bumper crops we know the CO2 is a huge net benefit. The GDP effect wilk be a couple of % by itself .

  6. “That’s round one, and from that point on we are going to react with our human foibles and emotions, and with our highly imperfect and sometimes corrupt political institutions.”

    Incredibly, this guy is absolutely correct.
    He notes that CC due to AGW is really a non-problem. Then he correctly notes that any developing situation will be made far worse by stupid and corrupt governments.
    He has identified the real threat posed by Global Warming.

    {Why does California suddenly come to mind?}

  7. ” it’s that we may respond to those problems in stupid and destructive ways”

    Clueless is a good description for this allegedly “financially literate reporter”; who appears clueless about the last twenty years of wasted faux climate research and wasted renewables construction boondoggles.

    Obama’s free gifts of immense sums of money for renewable firms that went belly up, are perfect examples of bad judgement that should have been well noticed by all financial reporters.

    “Similarly you might think that supporters of President Donald Trump have legitimate concerns about illegal immigration and US unwillingness to stand up to China.

    Still, that did not require a presidential “remedy” that has brought chaos and corruption to the White House and US foreign policy alike.”

    An intimation that the corruption to the Administration and Foreign Policy is Trump’s fault; whom is only trying to correct years of corruption from preceding administrations.

    Indicating another reporter with severe blinding TDS.

    Providing further proof that the alleged “financially literate reporter” is not. With a capitalized “Is not”.

    ” According to Bloomberg, President Obama managed 1.9% economic growth per annum. So far President Trump has managed 2.7%.”

    Ah yes, Mr. financially literate uses an untrustworthy source for 2017, from a news agency whose partisan owner is prepping for a presidential run.

    Meanwhile Mr. financially literate ignores what is required to achieve or maintain global 4% GDP growth.
    It only takes a few clicks to discover that global 4% GDP is based on developing countries building more fossil fuel energy generating facilities and producing goods for other countries via copious fossil fuel use.
    e.g.:
    https://milfordasset.com/wp-content/uploads/2017/06/Global-GDP-growth-2017-forecast.png

    Much of Europe’s countries are running at less than 2% GDP growth.
    Where financially astute reporters base an imaginary of 4% climate control fee on a global 4%, which includes Americas substantial GDP, then fantasizing how little of the GDP that is.

    Reality requires recognition that financial literate fantasy utterly fails to cover actual costs to a well developed country and their urban centers; especially when the costs include population reductions, less heating, less cooling, less transport, less goods production and less food.

    Reuters reports that in 2018:

    “U.S. second-quarter GDP growth raised to 4.2 percent”

    A huge reversal from the moribund economy inherited from his predecessor.

    Plus, Trump is actively fixing all of those pesky foreign policy nightmares left by his predecessors.

    Financially literate reporter?
    Is that because they can do basic sums?

      • Thanks for the clarification Walter.

        Though that insight, certainly does not improve the discussion.
        Alan Tomalty nails the problem, an experienced knowledgeable economics professor should know better.

        Leaving us wondering if Tyler Cowen has ulterior aims or motives for purposely misunderstanding or misstating facts. Starting with the url name for his blog.

  8. On the US economy with a $18.6 Trillion GDP in 2016; Obama’s last full year in office,
    If Hillary had won and US GDP continued at the Obama New Normal of 1.9%, by 2020 the US GDP would have been:
    1.019^4 x 18.6 = $20.05 Trillion (2020 Hillary GDP)

    With Trump 2.5% in 2017 and now above 4% (4.2% for the 2nd Quarter 2018), we can anticipate 3% growth.

    1.03^4 x 18.6 = $20.93 Trillion (Trump 2020 GDP)

    That is $900 Billion more in wealth generation over 4 years. That’s more than enough growth differential alone to fund the entire annual US DoD budget.

    If we run 2020 out to 2080 with a 1% GDP growth differential between “action on Climate Change” at 2% GDP growth, or let the economy and free market decide (Trumpian) at 3% GDP, the results are:

    Green blob economy @ +2%/annum = 35 year doubling time.
    1.02^60 x 20.93 = $68.7 Trillion dollar US economy.

    versus
    A free market economy @ +3%/annum = 23.3 year doubling time.
    1.03^60 x 20.93 = $123.3 Trillion dollar economy.

    Almost double the wealth. If the US population increases 50% in that time, your grandchildren will still be 50% more affluent than if we adopt Green Blob GDP killing economics as they approach retirement age in 2080.

    Kill the Green Blob. Do it for your Grandchildren.

    • Using average GDP over Obama’s 8 years of office and compare 2 years of Trump isn’t valid. The GFC held down growth for most of the first 4 years of those 8. To compare like periods it would the last 2 years of Obama with the only 2 years of Trump.

      • Even though Trump is an egotistical liar, Trump is doing things like challenging China; that Obama wouldnt have done in a 100 terms of office. Obama was a pussycat whereas Trump is a lion.

    • Obama is taking credit for the current economy. I wonder how much global warming is adding to the economy rather than subtracting from it. In times past when global temperatures dropped global economies tanked and new regimes came in. Oh, wait temperatures according to the IPCC have never dropped or gone up much because co2 levels never changed much….. as if.

  9. An “Obama” as a unit of economic damage? Mr. Worrall, very nice. We have two choices: skeptics, who are willing to chance the loss of 4% in 2118; or AGW believers, who want to throw 4% away this very day, and every year hence, to “save” that 4% in 2118. Hmmmmm, how to choose.

  10. I met Tyler when he was a teen, and I met his dad, Jim. Both are libertarians, which to means not likely AT ALL to be alarmists.

    So, I expect that what he meant in the quote was that while the IPCC’s low-ball estimate may seem to some as not a big deal – not completely destructive of the world’s economy – even that ‘lowly’ amount still is a very big deal, largely because of the necessarily unequal way the money is collected and spent and also because of the likelihood that it will turn out to be just an “opening shot” toward the real costs.

    I think that he is ‘accepting’ the alarmist claims of Armageddon only to say that the cure is worse than the disease.

    • If Tyler is saying climate change is not a big deal, or that our investments in renewables are what is going to do the majority of the economic damage, that wasn’t very clear from what he wrote – though I accept that interpretation is possible.

    • What on earth, is he talking about:

      “potential disruptions to weather systems, agriculture and coastal cities”

      “Potential disruptions to weather systems” – does that have any meaning at all? What if we (filthy apparently) humans were doing something that stopped land-falling hurricanes from hitting the US? Is that a disruption?

      Agriculture? It’s doing just fine thank you.

      As for coastal cities, google Miami new development and construction.

  11. So securitisation and the debt crisis (subprime loans etc), which cost so much it has killed growth for ten years, is TEN times worse than 4C rise?

    Hahahahahahahaaha!

    Gasp!

    Hahahahahahahah!

    • Not sure you understood my point which was if Lehman bros at a little over 1% of US GDP has as you say has “killed growth for 10 years” and brought on the GFC I’m
      asking what would 4% of world GDP do to the world economy??

  12. Doubtless one of our US contributors will correct me if I am wrong, but another important difference between the GDP growth rate in America under Trump as compared to Obama is who is benefiting from the growth – my impression is that under Trump poorer families, both black and white, are finding jobs, small town economies are slowly beginning to benefit and generally prospects are better for – dare I say it- ordinary people. No wonder the global elite are cross.

    Here in the U.K. we have a deranged idiot in charge of a political party hoping for power who thinks he can create 400,000 green jobs ( presumably putting up fences around wind farms to stop trespass by irate locals) . Or perhaps by creating thousands more jobs studying climate change by looking down microscopes for evidence. On the other hand globalism can get back to what it is good at – the globalised drugs trade, people trafficking, corrupt money flows, climate conferences etc etc

    • Corbyn is a Communist which history shows means liar. They have also never, ever once in many tries managed to successfully run an economy. And when things start to go downhill they respond with policies from the idiot playbook of Karl Marx, which rapidly and progressively make things worse.
      For evidence visit Venezuela.

  13. quote:the world increasingly appears to be reaching for extreme and imprudent remedies to admittedly complex problems.
    endquote.

    Yes. The definition of paranoia. Paranoia being the result of chronic chemically induced depression.
    and

    quote:we are going to react with our human foibles and emotions, and with our highly imperfect and sometimes corrupt political institutions.
    endquote

    Foibles and emotion is reference to Cronyism = friends in high places
    plus
    They are always corrupt. By definition. They are paid money for being politicians.

    A Perfect Storm**
    Chronically depressed people = muddled thinking + easily panicked + lacking confidence (hence the cronies, the computers and the consensus)
    There is No Other possible outcome

    ** =What’s coming to the UK this weekend – I saw snowplough on the A1 near Newark at 09:00 this morning – heading South!!!! Climate change eh – it was 25 degC here yesterday.

    …….what were you were saying about Trapped Heat……..

  14. The biggest mistake of skeptics is that they link climate change and catastrophe demographic data with political polarization. There is no correlation because the most important factor in these issues is the cleverness of people.

    • ????

      Skeptics?
      You have just described a primary claim and mistake of alarmists; along with they’re old, white, male, etc. etc.

      Polls document this, even as vague questions confuse answers and groups.
      e.g. “Do you believe the climate is changing?” A question that utterly fails to question catastrophic anthropogenic caused global warming, yet the alarmist marketing machine immediately connects a belief in changing climate to a belief in catastrophic anthropogenic global warming.

      Even the pollsters who add questions regarding severity and cause of CAGW “Catastrophic Anthropogenic Global Warming”, coach the questions into gross assumptions or cite falsified claims; e.g. any recent weather as caused by “anthropogenic global warming”. Questions that pander to emotion more than understanding.

      Nor do the polls accurately track respondents who refuse to answer, leaving a large cadre of people unpolled.

      “Partisan Divisions in Americans’ Views of Global Warming
      2017 2018
      % %
      Think the seriousness of global warming is generally exaggerated
      Republican 66 69
      Independent 32 34
      Democrat 10 4
      Say most scientists believe global warming is occurring
      Republican 53 42
      Independent 71 65
      Democrat 86 86
      Believe effects of global warming have already begun
      Republican 41 34
      Independent 67 60
      Democrat 73 82
      Believe global warming is caused by human activities
      Republican 40 35
      Independent 70 62
      Democrat 87 89
      Worry a great deal/fair amount about global warming
      Republican 36 33
      Independent 67 62
      Democrat 90 91
      Think global warming will pose a serious threat in their lifetime
      Republican 14 18
      Independent 45 45
      Democrat 58 67
      GALLUP”

    • I thought in climate science it was “no checks excepted”, though I guess they do it all through direct deposit and wire transfer now.

  15. If I understand correctly, the damage is supposed to amount to 1-5% of GDP every year. We spend about 10% of GDP on energy, mostly from fossil fuels. Now those fossil fuels will cost 11-15% of GDP each year when we include estimates of the damage they cause. If we could meet our energy needs mostly from returnables at twice the current price (20% of GDP), then we are wasting money trying to avoid costs of 1-5% of GDP per year.

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