What’s the Economic Impact of Climate Change? Pick a Number
By Nicole Heller, Climate Central, and Douglas Fischer, DailyClimate.org
See main article, Revised Figures Show Federal Economists Understate the Cost of Climate Impacts, for more coverage of this topic.
Predicting the economic impact of climate change is not an easy endeavor. Climate models trying to assess the future impact of global-warming greenhouse gases are already enormously complex. Throwing the economic impacts of the myriad physical changes taxes the processing power of even the most advanced computers.
Scientists work around this by merging simplified versions of physical and economic models into what's known in the trade as "integrated assessment models." Three versions are widely used and account for the bulk of the research on the topic. But other researchers have developed other models and approaches, and the field remains in flux.
Values are generally represented as a price per ton of carbon dioxide (CO2) emitted. The higher the price, the greater the perceived impact of carbon emissions on society, and the histogram here shows the central range of values (standardized to 2007 dollars) obtained by peer-reviewed and grey-literature studies. Estimates vary widely, resulting in a large uncertainty about the price; they employ different models; make different assumptions about the increasing value of money over time — the so-called "discount rate." Others have wildly differing views on damage estimates and the risk of catastrophe.
In general, estimates on the tail on the right side of the graph show a high economic impact from climate change, reflecting 1) low discount rates, suggesting strong ethical stances toward the rights of future generations and/or 2) greater sensitivity to damages and catastrophe. Numbers that fall on the left side of the curve show a low or even negative value, suggesting that a warmer planet represents either a minimal risk to society or even a net benefit. These estimates are driven largely by 1) high discount rates, suggesting an assumption that future generations will be better equipped to handle the challenges associated with climate change, 2) little sensitivity to climate damages, and/or 3) an assumption that adapting to climate change will be minimally disruptive.
The federal government's high, mid, and low estimates ($34, $21, $5, in orange) all fall on the left side of the curve. Even the government's "worst-case" value of $65 per ton of CO2 falls well to the left, suggesting the federal assessment is biased toward low climate change impact.
Each box of the visualization corresponds to the social cost of carbon (SCC) estimated from an individual study. Included are 258 estimates from 48 studies from 1982 to 2010. For visualization purposes, the most extreme estimates on the high-end (three values spanning approximately $1,000 – 3,300) are not included. The 2010 US federal estimates are indicated in orange (highlighted by searching for “US fed” in the Search>>). Scroll over the boxes to see the value and the study.