Shocker: study finds global warming may be net beneficial for the global economy

Royalty free image from kwest via Shutterstock

This recent study (h/t to Jim Simpson) comes from Australia and was published in late 2019. It studies the impacts of global warming on the U.S. economy. What the authors have done is used one the climate models (the FUND model) to look ahead at the impacts warming would have on other economic sectors besides energy. Now that the “worst-case scenario” RCP8.5 model has been put out of favor by a recent paper, the 3.0°C warming scenario they used is more in-line with the RCP6 and RCP 4.5 models that remain. The work replicates and improves upon earlier work done by Dr. Richard Tol in 2009 in The Economic Effects of Climate Change.

What they found is surprising; the overall economic impact of 3.0°C global warming would be beneficial nor just for the United States, but the entire global economy.

They write in the introduction:

There is a scientific hypothesis and political acceptance that global warming of 2 °C or more above pre-industrial times would have a negative impact on global economic growth. This hypothesis is supported by economic models that rely on impact functions and many assumptions. However, the data needed to calibrate the impact functions is sparse, and the uncertainties in the modelling results are large. The negative overall impact projected by at least one of the main models, Climate Framework for Uncertainty, Negotiation and Distribution (FUND), is mostly due to one impact sector – energy consumption. However, the projected negative impact seems to be at odds with empirical data. If this paper’s findings from the empirical energy consumption data are correct, and if the impact functions for the non-energy sectors are correct, then the overall economic impact of global warming would be beneficial. If true, the implications for climate policy are substantial.

From the conclusion of the paper:

This study tests the validity of the FUND energy impact functions by comparing the projections against empirical space heating and space cooling energy data and temperature data for the USA. Non-temperature drivers are held constant at their 2010 values for comparison with the empirical data. The impact functions are tested at 0° to 3 °C of global warming from 2000.

The analysis finds that, contrary to the FUND projections, global warming of 3 °C relative to 2000 would reduce US energy expenditure and, therefore, would have a positive impact on US economic growth. FUND projects the economic impact to be −0.80% of GDP, whereas our analysis of the EIA data indicates the impact would be +0.07% of GDP. We infer that the impact of global warming on energy consumption may be positive for the regions that produced 82% of the world’s GDP in 2010 and, by inference, may be positive for the global economy.

Figure 15. FUND3.9 projected global sectoral economic impact of climate change as a function of GMST change from 2000. Total* is of all impact sectors except energy.

The significance of these findings for climate policy is substantial. If the FUND sectoral economic impact projections, other than energy, are correct, and the projected economic impact of energy should actually be near zero or positive rather than negative, then global warming of up to around 3 °C relative to 2000, and 4 °C relative to pre-industrial times, would be economically beneficial, not detrimental.In this case, the hypothesis that global warming would be harmful to the global economy this century may be false, and policies to reduce global warming may not be justified. Not adopting policies to reduce global warming would yield the economic benefits of warming and avoid the economic costs of those policies.

The discrepancy between the impacts projected by FUND and those found from the EIA data may be due to a substantial proportion of the impacts (37% for the US and 67% for the world) being due to non-temperature drivers, not temperature change, and to some incorrect energy impact function parameter values.


Economic Impact of Energy Consumption Change Caused by Global Warming

by Peter A. Lang and Kenneth B. Gregory

Abstract

This paper tests the validity of the FUND model’s energy impact functions, and the hypothesis that global warming of 2 °C or more above pre-industrial times would negatively impact the global economy. Empirical data of energy expenditure and average temperatures of the US states and census divisions are compared with projections using the energy impact functions with non-temperature drivers held constant at their 2010 values. The empirical data indicates that energy expenditure decreases as temperatures increase, suggesting that global warming, by itself, may reduce US energy expenditure and thereby have a positive impact on US economic growth. These findings are then compared with FUND energy impact projections for the world at 3 °C of global warming from 2000. The comparisons suggest that warming, by itself, may reduce global energy consumption. If these findings are correct, and if FUND projections for the non-energy impact sectors are valid, 3 °C of global warming from 2000 would increase global economic growth. In this case, the hypothesis is false and policies to reduce global warming are detrimental to the global economy. We recommend the FUND energy impact functions be modified and recalibrated against best available empirical data. Our analysis and conclusions warrant further investigation.

Full open-access text of the paper is available here: https://www.mdpi.com/1996-1073/12/18/3575/htm#B4-energies-12-03575

49 thoughts on “Shocker: study finds global warming may be net beneficial for the global economy

  1. The alarmist narrative is usually that global heating, warming and/or climate change is always 100% bad, but no credit is ever given for any positive effects of warming. IMHO, even in a worst case scenario, it has to be at least a 50-50 chance that benefits are equal to detrimental effects. It can never be proven anyway, since how we will ever know what would have been had the planet not evolved differently with the advantage of fossil fuels. It is probably much more likely that the effects are 2/3 beneficial and 1/3 detrimental. Or more. It isn’t a black and white issue and if the truth of the matter is to be explored, then the benefits must be weighed equally with the negative aspects. When you analyze in general what would be better, warmer or colder, the obvious answer has to be warmer, within reason. The one thing we do know is that climate isn’t static and doesn’t stay the same and that climate change is the norm. The message should be that we adapt to whatever comes comes our way since the climate has never been beneign for long, and we are probably having the most stable climate beneficial to Man since the Holocene Optimum when/where the Garden of Eden myth came from. There certainly is no climate crisis and most rational people are getting fed up with that narrative.

    • Imagine how the hobgobliners are going to react when the climate turns from this blessed period we are living in. I am actually hoping for a lot more warming before the next Ice Age.

      I have come to understand this much, if the Propaganda Ministry (Media), as they are fed by the Swamp Creatures (Politicians, bureaucrats and government grant based scientists), Say “it might be” or “probably could be”, it won’t be and likely can’t happen. If they say “it is” you can bank on, it isn’t.

      That goes for everything. Not just climate change. We could fill a book. Eggs anybody? They have come off the naughty list. How about some real butter for that toast rather than hydrogenated, artery clogging, margarine.

      Government Hobgoblins are like the Mythical Hydra. For every hobgoblin slain two more grow back in its place. Sadly the masses are not rational and they are easy to move with daily pronouncements on network morning shows. Sheeple the populous is mostly made up of sheeple afraid of their own shadows. We breed sheeple in our Public Schools and turn them into Propagandists at University.

    • Matthew, I have an issue with your comment about CO2 fertilization. I was thinking about writing the IPCC to see if maybe they could convince all nations to reduce atmospheric CO2 to zero. A guy told me that CO2 makes plants grow faster, and a friend of a friend of mine has a brother in law who know’s a scientist who said CO2 plays an important part in the global food chain, but no one knows what the optimum CO2 level should be. This scientist guy said all plant life would die, and the food chain would quickly collapse if all the CO2 was removed. Who cares. I’m good with that. I hate mowing the lawn twice a week in the summer, and it would get rid of those pesky dandelions. Might be a bit hard on my rosebushes and blueberries, but we have a great food chain here called Walmart.

      • W can also easliy reduce emision to zero by providing electrical energy from wall outlets.
        I saw plenty of them in hardware store, they seems also easy to make.

  2. I am a total layman on this issue but from what I have read, most of the warming that has occurred so far has come in the form of higher night-time lows and overall higher winter temperatures. If I am correct in that understanding then I think it would generally be an unmitigated overall good. At the very minimum, it would mean the furnace ran less and this would put money in people’s pockets to spend elsewhere in the economy.

    • And that means I can grow peach trees where we couldn’t half a century ago because minus 30 F in the winter is the lower limit because it splits the trunk of the tree! We haven’t seen temperatures that low in 20 years!

  3. Most climate alarmists believe that the global average annual temperature going up means the earth is going to turn into a cinder. They believe that the average must be going up because maximum temperatures are rising, like turning the oven control up from 350deg to 375deg. Thus the unreasoning belief that crops are going to burn up in the fields, that air conditioning energy expenses are going to rise exponentially,and that droughts and hurricanes are going to multiply and make the Earth unlivable.

    Apparently none of them, including many PhD climate scientists, simply don’t understand that the average tells you absolutely nothing about what is happening at the edges of the temperature envelope. That global average annual temperature can go up just as much from rising minimum temperatures as it can from rising maximum temperatures. And rising minimum temperatures are good for crops, are good for reducing heating energy expenses, and could actually result in fewer droughts and hurricanes.

    I have come to the conclusion that focusing on average annual temperature is a losing proposition, especially on a global basis. Temperature is simply a very poor proxy for how much heat exists in the environment. Temperatures from around the world don’t seem to make any consideration for the fact that heat (enthalpy) is the sum of two factors three factors, h = (u + pv)/m. In other words kinetic energy of a unit volume, the pressure associated with that unit volume, and the mass of that unit volume. Temperature can only be used as a proxy for one of these factors, kinetic energy. Unless you know the pressure (e.g. altitude above sea level) and mass (e.g. relative humidity of the atmosphere or the salinity of water) of the unit volume you simply can’t compare the temperatures taken from two different sites , say one at sea level and one at 14000′, and come up with a meaningful value for average heat.

    Building engineers, who must size heating and cooling units, use a far better measure of reality, heating degree-days and cooling degree-days. Especially if these are calculated using an integration of the entire temperature record in a day. These two values will give you a *far* better understanding of what is happening in the reality we live in. It would be a HUGE benefit if the climate scientists would change their study focus from average temperatures to heating and cooling degree-days. A model that would tell me how many heating degree-days and how many cooling degree-days I can expect in 2050 would give me much more information on how to plan for the future than any kind of global average annual temperature in 2050 which actually tells me nothing I can use.

    Anyone want to bet on this ever happening? First, using the global average annual temperature is too useful for scaring money out of the uneducated that don’t understand that averages tell you nothing. Second, average temperature data is too easy to play with and its uncertainties can be easily ignored. Degree-day estimates don’t have the same ability to scare people and are much harder to actually create good models for!

    • “They believe that the average must be going up because maximum temperatures are rising”

      Ah, no.

      What fuels the daily average anomaly are higher night time temperatures and higher winter temperatures.

      • That’s what he said if you read the article. The cited passage is what he said most people believe.

    • Tim,
      I was always dubious about claims of a global 5 deg C increase / decrease etc. Measured with a rectal thermometer somewhere? But where? Thanks for your comment.

    • Tim,
      You are exactly correct. Temperature is really a measure of energy density, and thus by itself can’t tell us how much energy is in a volume of gas.

  4. Well I’m not going to jump for joy that inadequate models show the benefits of warming. The “Great Greening” and attendant bumper crops, expanded habitat for fellow creatures and peak population after mid century is enough of a messure of the good fossil fuel emissions ate having. Temperature under do-nothing will not reach 2C anyway, let alone 3C above 2000 temperatures. This is a testable proposition, long before mid century.

    • This is even more the case since the total warming is unlikely to exceed 0.5C. It will probably be less.

  5. The take-away is simple. The demonstrable benefits of a greening world overwhelm the overrated negative effects in others areas.

  6. Email of early this morning to Jim Simpson in the Land of Oz:

    Good paper, thank you Jim, Peter and Ken.

    I agree.

    “Regardless of the cause, the increase in CO2 is strongly beneficial to humanity and the environment.”

    Conclusion of Section 8 of
    CO2, GLOBAL WARMING, CLIMATE AND ENERGY
    by Allan M.R. MacRae, B.A.Sc., M.Eng., June 15, 2019
    https://wattsupwiththat.com/2019/06/15/co2-global-warming-climate-and-energy-2/
    Excel: https://wattsupwiththat.com/wp-content/uploads/2019/07/Rev_CO2-Global-Warming-Climate-and-Energy-June2019-FINAL.xlsx

    Regards to all, Allan MacRae

  7. “Figure 15. FUND3.9 projected global sectoral economic impact of climate change as a function of GMST change from 2000.Total* is of all impact sectors except energy.”

    If “Total” excludes “energy” then why does the “Total” graph line resemble “energy” so closely?

    • ATheoK, it appears by your question that you are confusing “Total” (the solid black line) and “Total*” (dashed line).

      Regards,
      Bob

  8. What’s also important about this paper is what 3 degrees of warming DOESN’T affect. Take a look at the lines for:

    Storms
    Sea Level
    Health
    Ecosystems

    These all lie nearly flat against the zero line.

    Not to mention that this is pretty much the same result as Nordhaus won the Nobel Prize for, and which IPCC AR5 (Richard Tol lead author) conluded. In fact, To’s results show that almost all the common changes on the horizon that may be a threat to humanity we can think of is larger or much larger than climate change.

    https://wattsupwiththat.com/2016/01/01/we-have-bigger-problems-than-climate-change-so-sayeth-ipcc-ar5/

  9. One can add that money would also be invested in “useful things” instead of being wasted in technologically useless PV and Wind-Farms. The 2 trillion dollars wasted by climate advocates is a great deal of money which would be much better used to solve more urgent problems, such as giving Africans access to cheap and abundant energy (see Sir Monkton).

  10. global warming may be net beneficial for the global economy

    Well duh. Reasonably intelligent & common-sense people already figured this out, despite the scare-mongering media, entertainment-industry, academia & leftist-politicians.

  11. I just had a Holy S*** moment while I was being dragged along by Princess Fenrir the 1023rd.

    The negative overall impact projected by at least one of the main models, … (FUND), is mostly due to one impact sector – energy consumption.

    The accompanying graph shows the effect of energy consumption to be less than 1% of GNP.

    So, to save us from a less than 1% effect on GNP, the greenies are proposing that we spend much much more on renewable energy. Even if wind and solar stood a chance of working, that has to be the stupidest idea … well, OK, there’s no shortage of really stupid ideas.

    Spending 10 or 20% of our GNP now to prevent a 1% cost in a hundred years is really really grindingly stupid. An elementary school student could understand the math.

  12. Another assumption/assertion exposed to solar illumination. Climate (i.e. 30 year sustainable) statistically significant change, maybe. Anthropogenic change, debatable. Catastrophic (i.e. progressive/monotonic), improbable.

  13. Good paper and certainly an improvement on our earlier work. Unfortunately, though, the analysis is limited to the USA. It is unclear how this extrapolates to the rest of the world.

  14. Arrhenius knew this 114 years ago. He wrote about it in 1906 (Swedish) / 1908 (English translation):

    Excerpt:
    https://sealevel.info/Svante_Arrhenius_p63_excerpt_touting_the_good_news_of_global_warming6_horizontal.png

    “By the influence of the increasing percentage of carbonic acid [CO2] in the atmosphere, we may hope to enjoy ages with more equable and better climates, especially as regards the colder regions of the earth, ages when the earth will bring form much more abundant crops than at present, for the benefit of rapidly propagating mankind.”

    Note that he even predicted Arctic Amplification (“especially as regards the colder regions of the earth”). He was quite a guy! He earned his Nobel prize back when they were only awarded to smart people.

  15. What a pity then that global warming seems to be over except in the fevered imagination of some people.

  16. Thats the spirit,just ask the Vikings, warmer is better.
    Funny thing in Northern Canada on Axel Heiberg Island are the frozen stumps of trees very similar to swamp cypress,which apparently grew1.4 million years ago.
    According to the same paper,University of Alberta (author temporarily forgotten),the Island was in the same geographical position at that time..
    Global Warming.
    All through Alaska and Siberia frozen remains of large mammals are found,evidence of a much lusher Arctic than we see now..

    It takes a willfull ignorance to remain a member of the Cult of Calamitous Climate.
    Such bone headedness should not go unrewarded.
    Here in Canada the Carbon tax must be working,how cold does it have to get before the parasites are happy?

    Stupid question of course,misery is their stock in trade.
    “We takes your money to make you miserable”

    otherwise called “Public Service”.

  17. Having a comprehensive cost/benefit analysis of global greening and all relevant tangible benefits of the past 2 decades would be extremely helpful if done by “real world” economists using tangible facts and information. Many academic economists have demonstrated a biased view of climate change and seem to be are more interested in projecting future negative cost impacts. They seldom, if ever, considered any CO2 benefits and base their estimations primarily on unreliable climate models. If we don’t have a thorough understanding of past economic climatic impacts how can we expect to project the future with any degree of accuracy? The results of each country would likely be different, relevant to their particular circumstances.

  18. Net beneficial for the biome, net beneficial economically, net beneficial for society, net beneficial, net beneficial, net beneficial. It’s for the children, you know.

    Goodbye fear and guilt, we hardly knew ye.
    =============================

  19. Anyone who understands human history, archaeology, and physical anthropology knows the following:

    Warming is good.

    Cooling is bad.

    Elemental. Humans and most animals and plants do much better when the climate is warmer and wetter.

  20. “may”, “if”. These used to be “weasel words”…
    Um, I thought you guys called yourself skeptics? Lapping this up without question…to be repeated as unassailable truth next week. “But, but its proven to be good for us…”

  21. It just doesn’t seem fair, does it? People here keep looking for a better standard of science than what we’ve so often seen in the past!

    Can’t they see that it’s much safer to just accept higher taxes and do as we’re told?

  22. –What they found is surprising; the overall economic impact of 3.0°C global warming would be beneficial nor just for the United States, but the entire global economy.–

    Ok. But Earth’s average temperature is not going to increase by 3 C.

    But were global temperatures increased by 3 C, then we are still in a Ice Age:
    Our oceans would still be cold and our polar ice caps would continue to remain frozen.

    It hard to imagine a more silly religion, in which it’s witless believers are frighten about warming- when they know, that they are living in an Ice Age.

    I don’t think there is any convincing evidence of Earth ever being Snowball Earth, but if wanted to know what Earth would sort of look like, being *somewhat close* to Earth being a Snowball Earth,, well, just look out the window.
    It is the warmer phase of being somewhat close to a Snowball Earth, or proper term is it’s the interglacial period of the Ice Age in which glacier periods has been pretty close to SnowBall Earth {less than 2 C away }.

    Most will agree that we have been in Ice Age for millions of years, and this Ice Age has been at the coolest, most recently.
    AND if extended the graph {to “predict” the distance future] one could make a wild prediction that Earth will become a Snowball Earth- perhaps within a few million years.
    [[Though simply extending a trend line is very poor way to predict the future.]]

    But, in my opinion, Earth is likely the closest {in geological time] it’s ever been to becoming a Snowball [or Slushball] Earth.

    It’s an incontestable fact that we are living in an Ice Age.
    And, if not consumed with too much religious fervor, there is no need to worry about Earth getting too warm, and in terms human lifetimes or for reasonable practical concerns, there also no need to worry about it getting much cooler than the present cool conditions that we are enjoying in the 21st Century.

    Our cold ocean has average temperature of about 3.5 C.
    To increase global average surface air temperature by 3 C, our cold ocean would need to warm by about 1 C.

    • I’m not convinced they know we’re living in an Ice Age! Hence they believe whatever propaganda is currently popular!

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