Chris M. sent me the following article reference the other day:
New Report Shows Arctic Melt Could Cause $24 Trillion in Damages by 2050 | Inhabitat
“If the threat of rising seas and altered ecosystems isn’t enough to convince lawmakers we need some serious climate legislation, maybe the financial bottom line will. A report released today indicates that Arctic melting could cost global agriculture, real estate and insurance anywhere from $2.4 trillion to $24 trillion by 2050!”
Let’s take off our evil global warming denier goggles for now and accept all of this as perfect certainties. Why do I make such an assumption to start my comments? Well, because it prevents me from asking questions like:
But let’s not bother ourselves with these inane questions. Let’s take these new findings at their face value, and then let’s double the most scary estimates. In other words, let’s assume that artic melting WILL cause $50 trillion of damages by the year 2050. Let’s think a little harder about what that means.
Just two comments on language.
It’s top-notch analysis like this that makes you the professional, and me the crank. 😉
I’ve argued that a lot of the environemntal economics courses I’ve taken did not include economics. Most of them say global warming is a man-made problem and we must do something about it, so here are policy options X, Y, and Z. But this misses the most interesting questions, as you point out. I’ll even assume that global warming is real and is man-made for the sake of arguement, but hardly anyone ever talks about present value discounting of the damage. Nor does anyone talk about what else we could be doing with that money, such as other liberal causes like poverty reduction, health, or my conservative version of me keeping the money and giving it to the charitable things as I see fit.
Making the assumption that the estimate of total economic loss is correct still leaves problems with your analysis. First you assume that the losses will be distributed uniformaly through time and equally distributed across the entire world. Neither of these assumptions are proven or necessarily reasonable.
The world wide loss of $24 Trillion will be relatively small if it occures, as you assume, across the next 35 years the world economy can absorb such a shock. However, if the majority of the loss is felt in the last five years of the projected time frame the impact on the world economy will be far less benign. The same is true of the location of the loss. If the locations suffering the loss are spread out over the entire world individual nations and economies can absorb the loss. However, if the loss is concentrated in primary food growing locations the loss will have very dire consequences.
Another problem with your analysis is the assumption that the losses will stop in the year 2050. Considering that the loss of a growing areas is likely to be more or less permanent due to salt warer intrusion or tidal inundation the losses will continue indefinitely. Basing a decision about what actions should or should not be taken on a relatively near term cost benifit analysis may have more or less fatal consequences.
Super post, tienen que marcarlo en Digg
Gracias
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