Net benefits of cutting greenhouse gasses

The Kyoto treaty would have lit­tle impact on green­house emis­sions even if rat­i­fied by all; eco­nom­ic analy­sis sug­gests that if there is an urgent need to do some­thing it is to find means of cut­ting emis­sions oth­er than treaty “tar­gets”, includ­ing the use of more appro­pri­ate tech­nolo­gies. The net­ben­e­fits of emis­sion con­trols over the next fifty years or so, based on admit­ted­ly uncer­tain data, are sur­pris­ing­ly small. These are the main con­clu­sions of an eco­nom­ic eval­u­a­tion of cli­mate change data by a Com­mit­tee of the UK par­lia­ment My atten­tion was drawn to the House of Lords Eco­nom­ic Committee’s report on the “Eco­nom­ics of Cli­mate Change”:http://www.publications.parliament.uk/pa/ld200506/ldselect/ldeconaf/12/12i.pdf (500k PDF file) by my favorite busi­ness econ­o­mist “John Kay”:http://news.ft.com/cms/s/11d0debc-fd36-11d9-b224-00000e2511c8.html. It’s 80-or-so well-writ­ten pages reward an hour’s read­ing. But, for the impa­tient, here is a sound man­i­festo in one sen­tence fol­lowed by a cou­ple of “awful truth” extracts:  h4. How much risk should we avoid? bq. In terms of pol­i­cy on cli­mate mit­i­ga­tion and adap­ta­tion, the issue becomes one of how to behave in the face of uncer­tain­ty. Giv­en this uncer­tain­ty, the effec­tive irre­versibil­i­ty of cli­mate change, and the poten­tial for large-scale dam­age, a pre­cau­tion­ary approach is called for. But pre­cau­tion can­not be the right option at any cost. (p. 18) h4. The costs of mit­i­ga­tion bq.  … get­ting to the 550 ppm lev­el [gen­er­al­ly con­sid­ered an ambi­tious, but fea­si­ble goal for 2100] may cost the equiv­a­lent of $2 tril­lion to $17 tril­lion in present val­ue terms … As an annu­al flow, the sums are $78 bil­lion to $1141 bil­lion per annum … [or] 0.2 to 3.2% of annu­al cur­rent [world] income … [but] if the world econ­o­my grows at 2% per annum, then the “worst case” lev­el of costs (assum­ing all costs are borne in the next 20 years) would fall to some 2.3% of world income in 2035. If the costs are spread out over 50 years, the frac­tion would fall to 1.3% of world income (p. 44) h4. The ben­e­fits of mit­i­ga­tion bq. So, if we take, say, the Nord­haus esti­mates, these tell us that for a +2.5°C
warm­ing one might expect to see glob­al dam­age amount­ing to 1.5–1.9% of
world GNP … in terms of per­cent­ages of world GNP, dam­age is rel­a­tive­ly low, even for +2.5°C. The dam­ages are not even­ly spread. In gen­er­al, devel­op­ing coun­tries lose more than devel­oped economies. Some mod­els sug­gest no real net dam­age to rich countries.(p. 52) Bru­tal sum­ma­ry: the math looks like this up to the third quar­ter of this cen­tu­ry
* Uneven­ly dis­trib­uted dam­age amount­ing to 2% of world GNP
* Costs of mit­i­gat­ing this dam­age: 1.3% to 2.3% of world GNP
* Net ben­e­fits from mit­i­ga­tion: -0.7 to +0.3 of world GNP Impor­tant, but not scary, num­bers.

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