Essay by Eric Worrall
“… We find that climate change leads to a present value welfare loss of 31% and a Social Cost of Carbon (SCC) of $1,056 per ton of carbon dioxide (tCO2). …”
Economic damage from climate change six times worse than thought – report
A 1C increase in global temperature leads to a 12% decline in world gross domestic product, researchers have found
Oliver Milman
Sat 18 May 2024 00.00 AESTThe economic damage wrought by climate change is six times worse than previously thought, with global heating set to shrink wealth at a rate consistent with the level of financial losses of a continuing permanent war, research has found.
A 1C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), the researchers found, a far higher estimate than that of previous analyses. The world has already warmed by more than 1C (1.8F) since pre-industrial times and many climate scientists predict a 3C (5.4F) rise will occur by the end of this century due to the ongoing burning of fossil fuels, a scenario that the new working paper, yet to be peer-reviewed, states will come with an enormous economic cost.
A 3C temperature increase will cause “precipitous declines in output, capital and consumption that exceed 50% by 2100” the paper states. This economic loss is so severe that it is “comparable to the economic damage caused by fighting a war domestically and permanently”, it adds.
…
Read more: https://www.theguardian.com/environment/article/2024/may/17/economic-damage-climate-change-report
The abstract of the study;
The Macroeconomic Impact of Climate Change: Global vs. Local Temperature
Adrien Bilal & Diego R. Känzig
WORKING PAPER 32450DOI 10.3386/w32450
ISSUE DATE May 2024
This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought. We exploit natural variability in global temperature and rely on time-series variation. A 1°C increase in global temperature leads to a 12% decline in world GDP. Global temperature shocks correlate much more strongly with extreme climatic events than the country-level temperature shocks commonly used in the panel literature, explaining why our estimate is substantially larger. We use our reduced-form evidence to estimate structural damage functions in a standard neoclassical growth model. Our results imply a Social Cost of Carbon of $1,056 per ton of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost-effective for large countries such as the United States.
Read more: https://www.nber.org/papers/w32450?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg1
Why do they predict such extreme outcomes?
… Our estimate is six times larger than in previous work because we focus on a different source of temperature variation, one that captures the comprehensive impact of climate change: changes in global mean temperature. By contrast, previous work exploits variation in country-level, local temperatures. It turns out that global temperature has much more pronounced impacts on economic activity than local temperature. When we estimate the impact of local temperature on country-level GDP, based on the same empirical specification and using the same approach to construct temperature shocks, we find similarly small effects to previous studies. Econometrically, previous work that exploits localtemperature in a panel setting nets out common impacts of global temperature shocks through time fixed effects. Instead, we focus on these common impacts.
Why, then, does global temperature depress economic ativity so much more than local temperature? We uncover a novel relationship that rationalizes this difference. Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage: extreme temperature, extreme wind, and extreme precipitation (Deschênes and Greenstone, 2011; Hsiang and Jina, 2014; Bilal and Rossi-Hansberg, 2023). By contrast, local temperature shocks predict a much weaker rise in extreme temperature, and barely any rise in extreme wind speed and precipitation. This conclusion is consistent with the geoscience literature: extreme wind and precipitation are outcomes of the global climate that depend on ocean temperatures and atmospheric humidity throughout the globe, rather than outcomes of idiosyncratic local temperature realizations.
Consistently with heterogeneous exposure to extreme events, we find suggestive evidence that the impact of global temperature shocks on country-level GDP varies by baseline temperature. Warmer countries are more severely affected than cold countries, while high-income and low-income countries experience similar effects. However, these comparisons are imprecisely estimated and should be interpreted with some caution. …
Read more: https://www.nber.org/papers/w32450?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg1
Let’s hope the peer reviewers have a bit of fun with that piece of double speak.
As someone who lives in one of those “warmer countries”, and is preparing to cut 3ft of grass which apparently grew last night when I was asleep, I can personally assure you that warmer weather is no impediment to agricultural productivity.
The claim that global effects are more important than local is absurd, unless the authors are postulating everywhere in the world will suffer extreme weather simultaneously. The quality of extreme shocks only ever matters at a local level, except when critical outside supplies are disrupted. The harvest from farms in Idaho is not impacted when China experiences an extreme climate event, what matters for the harvest in Idaho is the weather in Idaho. A cyclone in Australia’s far North is just news in my part of Queensland, unless it takes a long trip south and wanders through my neighbourhood. Even a fifty mile miss is still a miss.
Claims of a significant future increase in weather extremes are likely unphysical. There is no future scenario in which extreme weather rises without limit, because fundamental physics imposes some limits. Global warming might cause a change in the distribution of the global weather event energy balance, but is unlikely to significantly alter the total energy available to drive extreme weather events. If one region suffers an uptick in extreme events, other areas will benefit from a reduction in extreme events – the total energy available to drive extreme events is rate limited by the sun’s ability to deliver energy to the Earth’s climate system.
Constrained work output of the moist atmospheric heat engine in a warming climate
F. LALIBERTÉ , J. ZIKA, L. MUDRYK, P. J. KUSHNER, J. KJELLSSON, AND K. DÖÖS
SCIENCE 30 Jan 2015 Vol 347, Issue 6221
Incoming and outgoing solar radiation couple with heat exchange at Earth’s surface to drive weather patterns that redistribute heat and moisture around the globe, creating an atmospheric heat engine. Here, we investigate the engine’s work output using thermodynamic diagrams computed from reanalyzed observations and from a climate model simulation with anthropogenic forcing. We show that the work output is always less than that of an equivalent Carnot cycle and that it is constrained by the power necessary to maintain the hydrological cycle. In the climate simulation, the hydrological cycle increases more rapidly than the equivalent Carnot cycle. We conclude that the intensification of the hydrological cycle in warmer climates might limit the heat engine’s ability to generate work.
Read more (requires registration): http://science.sciencemag.org/content/347/6221/540.full
There is also plenty of evidence warmer weather is good for the biosphere. During the Paleocene-Eocene Thermal Maximum, 5-8C hotter than today, fish were more abundant in the oceans, and our monkey ancestors made their debut in the fossil record, and spread through the world, only retreating when the extreme warm period ended and encroaching cold drove them from their new homes.
“… True primates appeared suddenly on all three northern continents during the 100,000-yr-duration Paleocene–Eocene Thermal Maximum at the beginning of the Eocene, ≈55.5 mya. …” according to Rapid Asia–Europe–North America geographic dispersal of earliest Eocene primate Teilhardina during the Paleocene–Eocene Thermal Maximum. Much of the world was covered with tropical forests bursting with fruit – perfect conditions for our small primate ancestors.
Coupled with the observed CO2 fertilisation effect which is greening our planet, and the paleo evidence that warm periods in the past turned the Earth into a Garden of Eden, bursting with life and abundance, conditions which allowed our monkey ancestors to thrive and populate most of the planet, the overwhelming evidence is further warming would improve climate conditions for humans.
That image at the top of this article – that actually comes from the study quoted above. It is difficult to imagine a more compelling illustration of the correlation between warmer temperatures and per capita economic growth, though obviously there are additional factors at play such as technological advances and CO2 fertilisation improving crop yields. The authors are effectively presenting this image, then telling readers not to believe their lying eyes. Perhaps they should have picked a different set of graphs.
That’s right, climate change policy is on course to wreck the economy.
Banning oil, coal and gas not to mention fertilizer will be an economic
catastrophe.
Sounds like just a typical year under Biden.
Yes. They apparently just plain forgot to add the word “policy” after climate change. I’m sure it was a completely honest mistake.
/S
You will be poorer…and you will like it….and you will not be able to afford an EV…..NO EV for you!
Time to invest in mules- which we’ll need for future shopping trips.
Unicorns have better manners than mules, and can be delivered with rainbows attached.
excellent, the rainbow coalition will love it /sarc
Well we can spend trillions to save the planet or potentially lose billions of there really is a clinate crisis.
I think that a rain check and grow poorer slowly!
True, 31% might even be low….. you can spend everything you have and everything you can borrow trying to change the weather.
I’m getting there from the extreme regular increases in insurance costs for insurance I would only consider buying because government regulations demand it
First they have they have world gross domestic product (GDP). measured in dollars.
But compare to those dollars purchasing power, and you are back to a straight line.
I’m confident we will be more than 31% poorer – thanks to overpriced “renewable” energy, carbon taxes, and inflation due to government spending on net zero policies that have no appreciable benefit for neither man nor beast.
appreciable benefit for those on the receiving end of those hundreds of trillions
By the year 2100 (75 years from now), just inflation at an average of only +0.5% per year, would reduce any monetary/spending value today (say a lifetime’s worth of savings sitting as cash in a bank) by 31% of its present value.
Prediction: in the USA, we will never in the future see inflation rates below 1% per year.
Advice: if you don’t want to see your savings evaporate via inflation, you must find after-tax investment returns greater than the current rate of real inflation (my estimate for that today is about 8% annually . . . to hell with the US government’s proclamation of it being only something like 3.4%). Good luck with that!
Trust the math.
These people are crazy.
Alarmist climate science is made up totally of speculation, assumptions and unsubstantiated assertions.
This particular alarmist climate study is all three.
This is just more climate change scaremongering based on nothing but biased alarmist speculation.
“These people are crazy.”
They are. But would anyone describe a member of any cult as rational? They believe.
Not to disagree at all with your conclusion—they are crazy—but they don’t arrive at conclusions based on speculations. They invent implausible assumptions and speculations based on the starting point that each new ‘study’ must find the harm of Climate Change ™ to be worse than previously thought.
This is and, at the very same time, is not at all funny.
“Climate Change Claim: People will be 31% Poorer by 2100”
This is a doddle.
Consider a world where utter lunacy hasn’t taken hold, where everything is progressing as it did, ie there’s no concern over weather or climate aside from the ordinary day to day reactions – and preparations; in case..
We would have no problem creating cheap, affordable energy even for Africa. They could be so much better off than they are – or allowed to be. Industrial progress is closely paralleled by environmental improvements – clean air acts etc etc etc. There isn’t the remotest possibility of a London Pea-Souper in this day and age. Do you know anyone using leaded petrol?
The only reason we will be poorer is because of climate policies delivered via smoke and mirrors. Take green jobs. We’re constantly told transitioning to ‘clean energy’ will create many green jobs. Orwellian as these times appear to be, it in fact means the complete opposite. Port Talbot and now Scu–nthorpe will testify to that. In Port Talbot, moving from blast furnaces to arc furnaces not only sacrifices the ability to make any kind of specialised virgin steel, it also sacrifices 3000 jobs in the ‘process’ – which is also costing the tax payer a coll £500 million in subsidy, too. There is no other [major] employer to take anyone on. State welfare – the tax payer again – will take the financial hit.
This is just the beginning.
“Do you know anyone using leaded petrol?”
_________________________________
General aviation in the US uses Low Lead 100
I didn’t know that.
I recall the days of Avgas 115 LL.
Of course, that’s a sea level measure of octane: it drops off with increasing altitude and ultimately limits the operational ceiling of piston engined aircraft. Calling it low lead is perhaps a slight misomer: though the blending was designed to minimise the amount of tetra ethyl lead required it was a bit more than for 100 octane fuel for your sports car.
Modern engine designs have helped to reduce the octane (and cetane for diesel) required for good performance. Hats off to the research engineers who achieved that, and a shame they are being forced out of business, because there is still a distance to go in improving fuel economy. It’s the Chinese who have just announced a diesel with over 50% efficiency, which equates to a lot lower fuel consumption, and a longer life for oil reserves..
I hate to say this, because they are murderous bastards, but one aspect of the Chinese dictatorship that is better than the practical dictatorships and oligarchies in the West, is that most of the leaders are engineers rather than lawyers and political scientists.
I’ll be 100% dead by then so I’m not too bothered. I imagine all these people making crazy predictions will be dead too so can’t be held to acount.
Some of my grand children might still be alive by then.
“I’ll be 100% dead by then”
Me too.
It is the next generations that will suffer most from all this anti-CO2 Net-Zero nonsense.
If they don’t wake up soon, they are destined for a shorter, more difficult life, without many of the benefits that current generation grew up with and currently have.
“When we estimate the impact of local temperature on country-level GDP, based on the same empirical specification and using the same approach to construct temperature shocks, we find similarly small effects to previous studies. Econometrically, previous work that exploits local temperature in a panel setting nets out common impacts of global temperature shocks through time fixed effects. Instead, we focus on these common impacts.”
The last sentence is jiberish. It reads like an AI generated sentence, grammatically correct but devoid of meaning. What are ‘temperature shocks?” So far, global temperature increases have been very slow and gradual. What is a “panel setting?” A bunch of people? What are “common impacts…through time fixed effects?” Are they saying that climate effects are instantaneous? What are “common impacts?” Common among what? The whole paper if littered with such jiberish.
“Temperature shocks” are a construct, as the article says.
Just like the global average temperature, which is also a construct.
And neither reflect anything that exists in the real world.
See, the first step in engaging with modeled climate “science” is to totally disconnect from the real world.
“Our results imply a Social Cost of Carbon of $1,056 per ton of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost-effective for large countries such as the United States.”
No. Decarbonization, whether unilateral or by global agreement, is not capable of producing a climate better than it would be otherwise. It is only capable of making it harder to live, move, produce, and enjoy being here.
And if your results differ by orders of magnitude from previous work – the consensus IPCC work, for that matter – then maybe the off-the-rails problem is on your end.
We need a new term, “social benefit of carbon”- then preach it to the world. No doubt some researchers are already developing the idea?
There’s already quite a robust socialist benefit of carbon.
Unfortunately it’s sending the rest of us to the poor house.
A good order of magnitude estimate is to divide the change in the median US standard of living between 1850 and 2020 by the change in tons of CO2 emitted.
Today’s illegal aliens have a higher standard of living than many 19th century nobility.
The more ‘carbon’ we use, the wealthier we become.
What’s more, the warmer it gets within the realm of the slight changes we’ve experienced since 1850, the easier it has been to produce so much food that obesity is a serious problem.
Social cost of carbon: bull shit!
Social credit of carbon!
I think they started with the B.S. social cost first, and then made up the word salad to fit.
Climate justice anyone?
This paper should be rejected even without pal review.
The authors base their headline conclusions on RCP8.5, “business as usual”:
Even the BBC recognises “business as usual is highly unlikely and has explained why the IPCC themselves consider RCP8.5 to be highly unlikely.
I look forward to seeing the paper rejected by the NBER (/sarc if any one thought otherwise)
I think anything that relies on RCP 8.5 should be marked
“For entertainment purposes only, and Hollywood scriptwriters”.
That applies to anything that uses any “climate model”.. regardless of scenario.
Glorified, low-level computer games.
Or anything that uses “global average anything”.
I’m sure Warren Beetof will be along to say it’s perfectly scientifically sound.
“Economic damage from climate
changehysteria policies six times worse than thought”Fixed it!
“these comparisons are imprecisely estimated and should be interpreted with some caution.”
OK, will do. 🙂
Social Cost of Carbon calculations are exercises in metaphorically pulling numbers from one’s nether regions. Such elements as what discount rate one assumes will change a cost into a benefit.
There is no “Social COST” to “carbon” (assuming they mean CO2?)
There is only social BENEFIT !
“The claim that global effects are more important than local is absurd, unless the authors are postulating everywhere in the world will suffer extreme weather simultaneously.”
The wrath of the climate green God for not obeying his commandments!
From Oliver Milman’s The Guardian article as quoted in the above WUWT article:
“A 1C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), the researchers found, a far higher estimate than that of previous analyses. The world has already warmed by more than 1C (1.8F) since pre-industrial times and many climate scientists predict a 3C (5.4F) rise will occur by the end of this century due to the ongoing burning of fossil fuels, a scenario that the new working paper, yet to be peer-reviewed, states will come with an enormous economic cost.”
Hmmm . . . just wondering if “the researchers” bothered to account for:
— the “greening of Earth” due to rise in average global temperature plus the rise in atmospheric CO2 concentration over the last 200 years or so (from about 280 ppm to today’s ~420 ppm), with the attendant increased production of food crops for mankind at little/no additional cost . . . I would WAG that global benefit to be several tens of $ trillions USD
— the health care cost savings/reduction in human suffering due to the reduction of cold-related excess deaths due to “global warming” over the last 200 years or so . . . cold-related excess deaths being about ten times greater than heated-related excess deaths on a global average basis . . . again, my WAG would be an equivalent global cost savings of several tens of $trillions USD over the intervening 200 years.
Of course, not meaning to imply that today’s “peer review” of “scientific” papers focused on climate change™ would uncover such missing considerations in establishing “enormous economic cost”.
More simply put: GIGO.
““A 1C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), the researchers found”
Now bang that through the Orwellian filter and you get “A 1C increase in global temperature leads to a 12% increase in world gross domestic product .
Actually, even a 12% increase is too low!
Real GDP tripled – 300% increase in real GDP/person from the fraction of a degree since 1950, and that was despite the homicidal idiots running communist countries during much of that time.
If only the current green homicidal idiots could be kept out of power, then the next 70+ years could easily see 400% growth or more.
Without extreme dampening due to government policy, the real economic results of another 1 degree of warming will almost certainly be similar to what happened during the last 1 degree of warming : a huge multiplication of benefits worldwide.
More global average nonsense. Temperatures across the globe do not rise and fall homogenously. Some places rise while others fall, and yet others remain relatively static.
Reject global averages!!
The average person globally speaking has one ball and one tit.
Has anyone ever met an average person?
The average of the integer “1” and the integer “2” is 1.5. But “1.5” is not an integer!
That’s magic to some.
Hmmmm . . . let’s see . . . I do believe the same situation applies to surface gravity, solar energy arriving from the sun that reaches earth’s surface, sea levels, Earth’s albedo, CO2 production around the planet, human production of energy and food crops around the planet, global births per year and global deaths per year, etc., etc., etc.
Sure, stop all references to global averages . . . they serve no purpose whatsoever . . . any “scientific” parameter must delineate each and every one of the data points that comprise it.
/sarc off
Everything’s going to get worse and worse forever and ever, unless Westerners give up all our comforts in order to reduce atmospheric CO2, which won’t make any difference anyway because China emits more than half the global total, and they’re indifferent to the “carbon-is-deadly-poison” moral panic.
MIght as well give up the ghost, throw in the towel, kiss our asses good-bye, and all that other gloomy stuff. Only a fool bothers to hope for better.
Reducing CO2 won’t make “climate” better. Even if every human on Earth was on board with the idea.
fish were more abundant in the oceans, and our monkey ancestors made their debut in the fossil record, and spread through the world, only retreating when the extreme warm period ended and encroaching cold drove them from their new homes.
A realistic comparison has to consider industrial fishing practices and the more extreme landscape changes only achievable with modern technology.
‘Double speak’ doesn’t start to describe this stuff.
As a combination of “making it up as we go along” and “seeing how far we can go before we’re sussed” this is in the Nobel category!
It flies in the face of everything we know about human social development over millennia and there is not one iota of a smidgin of credible evidence to support the proposal that another couple of degrees C would be anything other than beneficial to the planet and its inhabitants.
Outside of the Tropics, everyone has to spend trillions each year trying to keep warm.
Uhh, everyone? I don’t. And you don’t either.
I agree with your idea … but… I’ve told you a billion times this week to stop exaggerating !!
The entire purpose of the paper seems to be to support the false narrative that doing nothing will end up costing us more than massive spending toward a “net zero” outcome.
Motivated research toward a preconceived result.
From the Guardian article
“The paper follows separate research released last month that found average incomes will fall by almost a fifth within the next 26 years compared to what they would’ve been without the climate crisis. Rising temperatures, heavier rainfall and more frequent and intense extreme weather are projected to cause $38tn of destruction each year by mid-century, according to the research.
Both papers make clear that the cost of transitioning away from fossil fuels and curbing the impacts of climate change, while not trivial, pale in comparison to the cost of climate change itself. “Unmitigated climate change is a lot more costly than doing something about it, that is clear,” said Wagner.”
Would be interesting to know what Richard Tol and Bjorn Lomborg think of this (rubbish)
It’s much worse than we thought, Jim.
The reality here is that net zero policies are guaranteed to deliver extremely sharp falls in living standards, and are already beginning to do so. So this paper is what forwards in a rugby scrum know as “getting your retaliation in first”. The attribution is out there – however improper it may be – because they are concerned that their meme should get traction before the SHTF more obviously from net zero.
This is one of those cases that caused me to choose my online moniker: it really doesn’t add up to say that global weather will be much worse when this is not predicted for any location. It’s like claiming everyone is of above average intelligence.
Clearly the paper’s authors think everyone is of below average intelligence: but it seems they are.
From the preprint of the paper :
NB : The (“186 page) AR6 SYR does not contain either of the “business as usual” or “business-as-usual” character strings (and only 10 instances of the string “business”).
What the AR6 SYR does contain, however, on page 68, is :
_ _ _ _ _ _
From the AR6 WG-III (Mitigation) assessment report, FAQ 3.3, “How plausible are high emissions scenarios, and how do they inform policy?”, on page 386 :
Memo to Adrien Bilal and Diego R. Känzig : The IPCC says that it’s OK to refer to a “very high GHG emissions scenario”, as long as you do not present it as “business-as-usual” !
“Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage: extreme temperature, extreme wind, and extreme precipitation….
By contrast, local temperature shocks predict a much weaker rise in extreme temperature, and barely any rise in extreme wind speed and precipitation. “
This is not a logical reasoned choice of o possibilities.It is selection of the one that looks ‘right’. Wr have seen this with other researchers.
I thought the article was an April fools joke when I read the headline. It doesn’t take a genius to rune a simple regression correlating carbon emissions and per capita GDP to see that countries that emit more carbon dioxide also tend to have higher GDP per capita. It will take a little more work to show that cold weather countries achieved great economic growth as they were able to heat homes and factories with fossil fuels. Moreover, you can go to cities like Singapore, Hong Kong, Miami, Houston and Shanghai to see that warm weather is not a deterrent to economic growth in well managed economies. I continue to believe that as China and India, countries that are home to roughly a quarter of the world’s population, will put a break on the insanity that has become the religion in the developed world as they become mote prosperous. And, I pray that poor countries in Africa, Latin America, and South Asia follow their lead rather than accept the doomsday views of Western liberals.