by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Within that larger narrative, Cass offers information that ought to help cool the heated rhetoric surrounding climate change.
The Obama administration’s own “Social Cost of Carbon” analysis, developed to demonstrate the enormous cost of climate change (and thus the enormous benefit of reducing carbon dioxide emissions), provides a perfect illustration. The analysis synthesized multiple efforts to quantify in economic terms the projected effects of climate change on everything from agriculture to public health to sea levels, looking all the way ahead to the year 2100. But how much worse off than today did it find the world will be by century’s end with no efforts to reduce greenhouse-gas emissions?
The world will be at least five times wealthier. …
… The Obama administration used three economic models to reach this conclusion, but let’s consider the one with the highest estimates for future climate costs: the Dynamic Integrated Climate-Economy (DICE) model, developed by William Nordhaus at Yale University. DICE estimates that global GDP in 2100 without climate change would be $510 trillion. That’s 575 percent higher than in 2015. The cost of climate change, the model estimates, will amount to almost 4 percent of GDP in that year. But the remaining GDP of $490 trillion is still 550 percent larger than today’s GDP.
DICE assumes the average annual growth of global GDP will be 2.27 percent if there is no climate change. With climate change, that rate falls to 2.22 percent; at no point does climate change shave even one-tenth of one point off growth. By 2103, the climate-change-afflicted world surpasses the prosperity of the not-warming 2100. …
… [The DICE] model produces estimates of cost due to climate change that are much higher than those of the PAGE and FUND models, which are also used in “The Social Cost of Carbon” analysis. Certainly, all three models suffer from an inability to assign economic value to every possible form of climate damage. But these models and methodologies are not the choice of partisans hoping to downplay the issue; they are the ones endorsed by an Obama administration intent on demonstrating large benefits from climate action. And their forecasts bear no resemblance to the frequently issued prophecies of doom.
What the models do show is that the threat of climate change cannot compete with the power of compounding economic growth over a century-long timescale. In concrete terms, a GDP increase of 500–600 percent implies a world in which most of the population is approaching the West’s current standard of living while the West advances as well. Transformations in infrastructure, public health, and food and water systems will greatly improve society’s resilience against potential climate costs. Against that backdrop, the exact cost of climate change is beside the point. Whether annual cost in 2100 equals 4 percent of that year’s GDP or 14 percent, the world in 2100 would be vastly wealthier than it is today. The cost is real, and represents a tragic drain on resources, but it sits comfortably within the margin of the costs and benefits associated with many policy choices when compounded for so many decades.
Once upon a time, “Obey the models” was a central demand of the climate movement. Faced with actual model output of costs that fail to support the movement’s apocalyptic rhetoric, the demand is now to ignore the models and focus instead on hypothetical worst cases.