Plumer/Klein versus Manzi on Global Warming and GDP, Let’s Go Camping

A few arguments I want to record for myself.  Jim Manzi, in his role as in-house critic at The New Republic, writes against current measure to combat global warming. Here’s the crux of the argument:

According to the IPCC’s currently-governing Fourth Assessment Report, under a reasonable set of assumptions for global economic and population growth (Scenario A1B), the world should expect to warm by about 3°C over roughly the next century (Table SPM.3). Even in the most extreme IPCC marker scenario (A1F1), the best estimate is that we should expect warming of about 4°C over roughly the next century. How bad would that be? Also according to the IPCC (page 17), a global increase in temperature of 4°C should cause the world to have about 1 to 5 percent lower economic output than it would otherwise have. So if we do not take measures to ameliorate global warming, the world should expect sometime in the 22nd century to be about 3 percent poorer than it otherwise would be (though still much richer per capita than today).

It won’t cost the world much in GDP to experience global warming according to current estimates. Brad Plumer responds:

I see a couple problems with this argument. The first is that Manzi is clinging way too tightly to the IPCC report. Yes, the IPCC puts out the best summary of scientific knowledge about our climate system. I rely on it all the time. But the 2007 report is also dated. Climate science is a rapidly moving field, and more recent research has suggested that things may be bleaker than was projected three years ago. What’s more, the 2007 report had some glaring holes in it. The panel avoided making predictions about how melting ice sheets would affect sea levels because, at the time, ice-sheet dynamics were too difficult to model. This isn’t me offering up a strained reading of the IPCC’s work—the 2007 report was explicit on this point. Given that sea-level rise is likely to be one of the costliest consequences of global warming by 2100 and (especially) beyond, this is a huge omission for any sort of cost-benefit analysis.

Second, it’s a bit too simplistic to use a single global GDP figure when talking about the effects of climate change. True, a 3 percent drop in global GDP may not sound so bad. We’ll all be much richer in 2100, we can take a hit. But that top-line figure can obscure some serious distributional issues. Climate change, after all, is expected to hit developing countries much harder than wealthier ones. And as Nate Silver once noted, you could completely wipe out the poorest 81 nations in the world, with a total population of 2.8 billion, and the blow to global GDP would “only” be about 5 percent

So does Ezra Klein:

There’s a range of likely outcomes from a tax on carbon, and we can handle most of them. There’s also a range of outcomes from radical changes in the planet’s climate, and we’ve really no idea which we can handle, and which we can’t. We don’t even really know what that range looks like. And although a tax can be undone or reformed, there’s no guarantee that we can reverse hundreds of years of rapid greenhouse gas buildup in the atmosphere. If you want proof, look at our inability to deal with an underwater oil spill, and consider how much more experience we have repairing oil rigs than reversing concentrations of gases in the atmosphere.

The government has proven quite poor at handling weather catastrophes, and if we end up with more of them in the future as a result of global warming we won’t experience it as a technocratic solution. Volatility is the key here – the government can handle obvious, stable and steady risks (it’s like a giant social insurance machine that way) and can presumably do so with calm steady state weather events as well. Is that how the future will go? It’s clear that another problem we’ll see as a result of global warming is the massive relocation of people, primarily from the 3rd to 1st world. The 1st world doesn’t strike me as ready to tackle that over the next century.

We know how a tax works.   We can, as Ezra points out, turn off a tax.   We can’t “restart” the Earth.   Cost-benefit analysis often has a “free disposal” quality to it;  if we build a road, and nobody turns out to use it, we can walk away from it, or demolition it relatively cheaply, and start over again at time 0.   “Starting over” in 2040 on the carbon problem to get us back to time 2010 isn’t free, unless we are willing to consider planet Earth a “sunk cost.”

Camping

I’m also fascinated whenever one set of models are placed over another set of models.   Modeling temperature growth over the next century is tough.  Modeling GDP based off the nature and distribution of temperature growth must be even harder.   Plus how do you measure non-GDP effects of it getting hotter outside in GDP terms?   It’s scorching in New York right now, but I’m still producing as much as I did in March though I feel miserable getting to work.

One of my favorite quantitative hand-waves I’ll bring up again:  From Warming the World, the modeling overview of the Nordhaus RICE-99/DICE-99 models used for these debates of the efforts of global heating on GDP that aren’t about production.   How do they deal with GDP costs of things that are not strictly GDP?

Migration and the movement of cities and people get a GDP cost. Health issues are examined using projections of what we know of previous temperatures (and not diseases from the mass ecology destruction and migration and conflict); an average American will lose .5 years off his or her life, an average sub-Saharan African will lose 11 years (!!!) off his or her life. But my favorite: All non-GDP time is leisure time, right?  From the book:  “The major economic component of (human) nonmarket activities is time use.  Comprehensive measures of national income have estimated that nonmarket time use has a total value close to that of all market activity.”

So anything that isn’t GDP can be accounted for by time use. So why not just ask people what they do for fun, in the form of time-diaries, and see if global warming will impact it? That’s what they do here, in what is the major non-GDP portion of their modeling and estimates:

Take some time to think about how the GDP argument is being constructed here.   One is that the United States heating 2.5 degrees C (or a 5.4 degree F) would increase our “amenity impact” of time experience 0.3% GDP, so a net gain here, because of mechanisms best described as “the gains to camping outweigh the time losses to skiing.”   They go on to argue:  “There are at present no reliable and empirically based amenity estimates for other countries.   For this book, we extend the estimates of nonmarket time use for the U.S.  This procedure is probably more defensible for outdoor time use than for many other sectors because the reactions of humans to outdoor temperatures are largely physiological and are unlikely to be affected by technological differences.”   (Woah.)

There’s something kind of oddly endearing to framing the future of how much carbon we are willing to put in the air and how much warming we are willing to experience as a population based on camping versus skiing time surveys from 1981.   For this cost-benefit analysis to work, we need to quantify everything, and the moment we step outside the world of the welfare of international industrial production to the world of our bodies and our lives the methods break down.

As JW Mason wrote at the slack wire discussing recessions:  “You can find the same thing in the also right-as-far-as-it-goes Stern Review on global warming. Tote up the costs in foregone output of climate change, tote up the costs of doing something about it, and compare to see if burning up the planet is a good idea, or not. The problem is, even the upper range of the costs — 14 percent of world GDP — is equivalent to just a few years’ economic growth. So, again, who cares?”   Indeed, given the arguments for growth and GDP, at what range of the earth burning up could we even begin to care about mitigating it beforehand?   Especially if we calculate GDP in such a manner that the future belongs to campers from moderately cold regions.

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2 Responses to Plumer/Klein versus Manzi on Global Warming and GDP, Let’s Go Camping

  1. The largest cost of global warming is in the catastrophes induced by it, not slow changes. If the ocean rises 10 feet, but it takes a century to do so, there’s no additional costs. Most buildings and structures will be upgraded/demolished/rebuilt at those time scales anyway. And production processes will change anyway. I suspect the changes in production processes due to changing tastes (richer people buy different things and who knows what new-fangled devices Apple will dream up) will largely outstrip the changes caused by the slow effects of global warming. Besides, the ski bums I know are easily converted to skateboarders.

    Slow changes resulting from global warming are swallowed up in the capital depreciation term. The real problem for installed capital and for the efficiency of labor, i.e. global warming’s affect on GDP, is sudden, unanticipated changes.

  2. Michael S says:

    Relocating vast world populations to deal with the hypothetical 10 foot sea level rise would certainly impose extra costs.

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