How much is climate change going to cost us?

mo Its been a bit quiet around here. Don’t fear: a whole variety of things have wound me up recently, not least my colleagues inability to use perforce competently1. But none of them quite rose to the level of bothering to post. I was going to write something gratuitously offensive about the Charlie Hebdo stuff, but it seems like everyone is appropriating it to their own cause, so I won’t. Though I did think that it was wittily transgressive, in a post ostensibly defending free speech, to snip comments purely because they offended the diva.

But this post is about How much is climate change going to cost us? by David Roberts, which appeared on my FB feed. Or rather, its about Temperature impacts on economic growth warrant stringent mitigation policy3 by Moore and Diaz, Nature Climate Change (2015) doi:10.1038/nclimate2481. This is, perhaps somewhat contrary to my initial impressions and prejudices (and my irritation with parts of DR’s write-up), quite a decent paper (caveat: IANAE). Unlike the press release which is, as you’d expect, appallingly un-nuanced, saying “We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton,” said study coauthor Frances Moore. Its perfectly clear from the paper itself that uncertainties prevent any statement this definite. That paper, itself, is heavily reliant on Temperature Shocks and Economic Growth: Evidence from the Last Half Century by Dell, Jones and Olken (Moore and Diaz, in the academically approved fashion, lard their paper with many references; but the vital numbers come from Dell et al.). This last paper (we’re at the bottom of the stack now, fear not) contains lots of words and many numbers; naturally, I only skimmed it. But figure 2 is very interesting:


As they say:

our estimates show large, negative effects of higher temperatures on growth, but only in poor countries. In poorer countries, we estimate that a 1◦ C rise in temperature in a given year reduced economic growth in that year by about 1.3 percentage points. In rich countries, changes in temperature do not have a robust, discernable effect on growth.

There’s also a strong relation between GDP and absolute temperature, which we’re all fairly familiar with. There’s an uncertainty of how to interpret that, for the future: does being rich make you more resistant to temperature “shocks”? M+D call that the “resilience mechanism”. I’d say yes. Or do we expect GW to push more countries into the poor-because-hot basket? M+D: “temperature mechanism”. I’d guess no. I’d also guess that temperature “shocks” are easiest to see in agriculture, and the richer you are the smaller a fraction of your wealth comes from ag.

Moore+Diaz put Dell’s numbers into a version of DICE (ah, I’ve glossed over the whole point there, haven’t I? Read Roberts if you like; the idea is to put effects that reduce growth rates into DICE-a-likes, rather than simple damage numbers), and discover that it makes bugger all difference to the rich world2, but reduces the poor world’s growth by 40% by 2100, based on some scenario or another.

Given that the rich world is massively richer than the poor world, I think that the wealth-weighted reaction to all that would be negligible, though I don’t have any numbers to demonstrate it.

Moore+Diaz consider the different effects that occur if you believe the “temperature mechanism” or the “resilience mechanism”. Unsurprisingly, it makes a huge difference. Browsing their figure 3, in 2080 its the difference between a social cost of carbon (SCC) of ~$1000 per ton, or a number too small to distinguish from zero on their scale.

Before ending, there’s one more picture I’ll show you from Moore+Diaz, because I don’t understand it:


This shows the effects, on emissions optimised “to maximise global discounted social welfare” (DICE-2R (red) is std DICE, I think; gro-DICE (blue) is their fudged version). As far as I can tell, they don’t explain what that is. I understand that their version is going to increase carbon costs, so blue lower than red for emissions makes sense. But given the (fairly low, in the std case) damage from warming, I don’t understand why emissions drop so much for std-DICE. Perhaps there are some assumptions in there that I don’t understand.

Anyway, there you go. Interesting stuff. Hopefully someone with more patience will read the papers more carefully and point out the bits I’ve missed.


1. Well, really, its more a fundamental understanding of version control than perforce; how changes propagate, why integrate -f is generally a bad idea, why being profligate with reverts is likewise unhelpful and doomed to cause pain.

2. There’s a small piece of dishonesty in M+D that the referees should have picked up: they’ve used a small negative value from Dell: as M+D say “smaller effects in rich countries”. But Dell really find no discernable effect at all; the correct value to use, based on that, for rich countries, is zero. Worse than that, if you look at the figure I’ve inlined, the effect is actually positive for rich countries. Quite how M+D turned that into a small negative I don’t know.

3. My access via DR to that paper in Nature comes with a “referrer_access_token”, so I think this is the all-new Nature sharing mechanism that JA was so scathing of. However, its worked for me, here.

* Enchanted Necromancer Brings Life Back To Once-Dead Argument – thanks Hank
* I Am Not Making This Up; Venezuela Bans Queues To Beat Product Shortages – Timmy in Forbes, demonstrating that its possibly to totally fuck up your economy without GW.
* More FB feed stuff: I may take this one on next: That Was Easy: In Just 60 Years, Neoliberal Capitalism Has Nearly Broken Planet Earth, featuring Transgressing a boundary increases the risk that…

26 thoughts on “How much is climate change going to cost us?”

  1. FWIW, every economic estimate of damage from climate change says it is the poor countries that will get it in the neck.


  2. I do believe it is those who have worked most with DICE who have said that the optimal strategy is enriching poor countries.

    Now they may be wrong–the Nordhauses, Tols, Pielkes and Lomborgs. And productivity indeed has always been lower in tropical countries.

    But the Tiger Economies of the late 70s and 80s included hot and humid climates. Something about air conditioning may have had something to do with that…


  3. I thought one of the main points that the paper was trying to illustrate was that most IAMs assume that economic growth is a given and then determine damages in a way that doesn’t influence subsequent economic growth. I thought that one of the DICE models (the fudged one, I guess) was an attempt to link damages with economic growth and that that was why it increased the SCC. I could, as always, be wrong 🙂

    [I think you’re right (I did hint at that). If it was just using it for illustration that would have been better; its not clear they are. I do admit that I’m astonished that the IAMs don’t already do this; it seems pretty bleedin’ obvious -W]


  4. [ I do admit that I’m astonished that the IAMs don’t already do this; it seems pretty bleedin’ obvious -W]

    Yes, I am too. It does seem amazing that anyone can really think that it’s reasonable to assume that climate damage and economic growth are somehow independent. I can understand that it might be very difficult to do this properly, but it would seem to be something that would at least have been attempted more than it seems to have been done. Admittedly, I’m no expert at this and the only economist I regularly encounter who does this kind of thing seems reluctant to put any real effort into explaining IAMs in any great detail 🙂


  5. I’m convinced that climate game will lead to growth, initially. However, it’s likely to be in the disaster response and rebuilding sectors rather than improving the lot of humanity.


  6. # 1

    Not all of our contemporaries are living in the same time–
    some still aspire to move on into the 19th century, when to a first approximation, emissions were the economy

    which is why Eli is right.


  7. You graphs look very optimistic as the most countries are forecasting a 6% fall in food production for every 1 C increase in temperature. When you add in the loss of infrastructure with just one metre of sea level rise it all starts to look pretty grim.

    [They aren’t my graphs they are Peer Reviewed Research graphs. And at 6% fall per 1 oC increase, food production is still going to be going up in aggregate, because Tech etc is increasing it faster than 6%-per-20-years -W]


  8. see also from the Financial Times, which I won’t link because they claim doing anything on their site gives them the right to build apartments in my yard, store their diary on my hard drive, and eat my children — but just the headline says it all:

    Energy bonds at risk as bank loans ebb
    Finance availability is limited by the fading collateral value of oil assets

    [I have no fear; the link is That looks to me just a variant on “as the oil price goes down, various oil producers will have problems”. Those problems will be exciting and varied, no doubt, and will act in the long term to reduce the supply and hence up the price somewhat. Presumably all the folks involved are busy trying to guess if the downturn in price is short enough for them to survive -W]


  9. “googly-eyed frothing rants”

    What’s puzzling is that five years ago, Lewis Page wrote mostly even-handed, reasonably objective articles on AGW. His boss at El Reg must have sternly admonished him to be more of a team player.


  10. I’m guessing some of this difference is due to world trade disparities rather than purely local-to-each-country climate effects?

    I’d like to see that weighted for — besides currency hiccups — something about the relative advantageous or disadvantageous weather for the years concerned at each trading partner.

    For example I recall Alabama being almost singularly blessed by a steady or slightly cooling climate for a decade or so, relative to, oh, almost everywhere else except maybe Iceland. Seems to me that any place not messed up by climate change will have an advantage economically to drive those already hurting further into a world of hurt, aka market power.


  11. Matt Ridley starts out in a reasonable vein in his new london Times piece, but about thalway through, something akin to stress creep sets in , and runs away into deformation professionelle as the overhanging weight of owning ten million tonnes of coal settles down on the poor man– the piece ends in a paean to those great and mighty statistical wizards, MacIntyre & McIntrick

    Unpaywalled at GWPF:


  12. Re 12, 15: What is it with El Reg and climate change?

    I’m not a frequent reader, but as far as I understand they’re more or less an IT industry gossip site. So why are they so warped on climate? Is it because they see themselves as iconoclasts, so they go against the accepted wisdom even when the accepted wisdom is correct? Or is there something political there?

    [Dunno. I don’t read them much; partly because they aren’t worth reading. It may be because its just one guy with weird ideas. Might be worth a post, now you mention it… -W]


  13. Re #18: That’s a good question, and one I’ve pondered before. I suspect it’s either a matter of flattering the prejudices of (at least the most vocal subset of) their readers, or of the political leanings of their ownership or senior management. I used to read it very regularly quite a number of years ago, but I gave up when I couldn’t stomach the lunacy any more. As I recall, there was a fairly noticeable change in their editorial slant, and they apparently recruited some, shall we say, “people with interesting views”, specifically to write about environmental matters. Also as I recall, this roughly coincided with the introduction of their first commenting system.


  14. There’s something wrong with a financial system that works by always moving the money in the same direction — toward the denser concentrations of money — while claiming to have provided ample jam yesterday and promising plenty more jam tomorrow.

    There’s no hydraulic model in which you can endlessly pump water toward one end of the system is there?

    I mean, besides the water balloon, and other cases where Stein’s Law sets the limit.

    Tenants never take as much care of property as owners do, and owners never take as much care of property as communities do, at least if they’re paying attention and watching out for predatory scammers.

    Can the “one percent” really be smart enough to maintain the whole planet, now that they own the majority of it?

    [The worlds poor – the bottom 80%, globally – have got significantly richer over the past 50-whatever years -W]


  15. IAM=Integrated assessment model, the GCM of the economists. Supposedly all the costs and benefits in one wrapper, but there are issues, there are issues.


  16. > got significantly richer over the past 50-whatever years

    Sure. Lots of money to be made, many resources were dirt cheap or free, and a lot of rebuilding was going on.

    Using that for linear extrapolation may be optimistic, however, considering overshoot and the increasing cost and limited availablility of environmental services. “The best things in life” like air and water are not free these days.

    A lot of the increase in food supply was fertilizer and pesticide; a lot of the increase in agricultural productivity and average human lifespan was antibiotics. Both could have been managed rather than marketed, but weren’t.

    The overshoot is the most exhilarating part of the thrill ride, as we zoom up so fast we feel almost free of gravity.
    We produce plenty of food and waste a third of it along with much topsoil.

    90 percent of the big fish are gone. You’ve seen the pictures, decade over decade, right?

    Richer, yes, but also poorer.
    Getting those two indices — economists, and ecologists — onto the same page is a challenge.


  17. and in other news:

    “To resolutely declare war against pollution is a forceful demonstration of China’s image as a big and responsible country. China’s CO2 emissions rank high in the world. The international community, especially developed countries, demands more responsibilities for the environment of us. Some developed countries have not only benefited from China’s exports and environmental deficit, but also played up China’s environmental pollution to defame China. China supports one fifth the world’s population with only 9% of the farmland and has become one of the earliest countries to meet the target of UN MDG to halve its people in poverty. We are able to solve environmental problems as what we did to address poverty.

    The main direction of fighting a tough war against pollution is to get prepared for the three battles against air, water and soil pollution. We will strictly control pollution from sources and manage it in the whole process and any actions leading to consequences will be punished severely. We will strengthen pollution control with an iron fist and rigorous regulations ….”


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