Paper Finds Global Warming Clobbers Third World — Heritage Looks For Silver Lining

A working paper on the economic effects of climate change presented at the American Economic Association annual meeting found that increased temperatures due to global warming over the past half century “show substantial negative effects on poor countries’ growth.” The authors, economists at the Massachusetts Institute of Technology and Northwestern University, looked for correlations in average annual temperatures and indicators of economic growth at the country level. They found that Third World nations have seen a marked, long-term decline in economic growth over the past fifty years due to global warming.

The Heritage Foundation’s Conn Carroll misinterprets their findings to claim “Study Shows Global Warming Will Not Hurt U.S. Economy.” Carroll bases this assertion on a passage in the paper that states, “In rich countries, changes in temperature had no discernable [sic] effect on growth.” This is a classic case of leaping from a limited, specific result — the lack of a significant correlation between economic growth and average temperatures in rich nations over the past fifty years — to a broad, unproven claim — that global warming will not hurt the U.S. economy.

Carroll’s leap is unsupported by this paper. In fact, the authors warned against jumping to such a conclusion:

Our results show that temperature per se has an important impact on national economic performance. The evidence thus rejects the hypothesis that climate does not influence national production. Moreover, the estimated impacts persist for at least a decade and are large in magnitude – in fact, more than large enough to explain the cross-sectional climate-income relationship between rich and poor countries. Our results do not rule out many other forces that may play important roles in economic development; rather, our contribution in this paper is to reject views that climate does not matter, show that climate’s effects are substantial, and identify a group of countries where climate appears to have large effects.

Carroll compounds his logical error by criticizing another paper on global warming’s potential economic impacts, one commissioned by the Natural Resources Defense Council, claiming it is “full of fanciful assumptions and its conclusions had no basis in reality.” The NRDC paper, also written by “actual scientists,” projected that just a few of global warming’s impacts could cost the U.S. $1.9 trillion annually (in today’s dollars) by 2100.

Carroll posits that the NRDC paper carries a different message than the AEA paper because it comes from “the left” who “love to scare monger.” In fact, the papers are perfectly consistent with each other. They simply answer different questions. The NRDC paper looks at effects of global warming not considered by the AEA paper, such as increased hurricane intensity and sea level rise.

Perhaps most importantly, both papers do not consider the possibility of catastrophic climate change, instead assuming linear increases in average temperature, projecting past effects to predict future results. These and most other economic analyses of the potential future impact of global warming — which show devastation of the Third World and massive economic impact in the First World — should be considered optimistic.