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Sandia Labs study: “It is the uncertainty associated with climate change that validates the need to act protectively and proactively.”

By Climate Guest Contributor on March 8, 2011 at 4:29 pm

"Sandia Labs study: “It is the uncertainty associated with climate change that validates the need to act protectively and proactively.”"


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Rainfall uncertainty imperils $1 trillion in U.S. GDP and 7 million American jobs by 2050 alone

We want to reemphasize that the methods of this study reveal how compelling risk derives from uncertainty, not certainty. The greater the uncertainty, the greater the risk. It is the uncertainty associated with climate change that validates the need to act protectively and proactively.

That’s from the conclusion of a 259-page study last year by Sandia National Laboratories, “Assessing the Near-Term Risk of Climate Uncertainty: Interdependencies among the U.S. States.”  The lead author, Dr. George Backus, works in Sandia’s Discrete Mathematics & Complex Systems Department.  He explains the results in this Science Progress cross-post.  Interspersed are some of my comments.

What we don’t know about climate science can really hurt us. So says a study conducted by researchers at Sandia National Laboratories.

One common argument used by those opposed to action on climate change is that there is simply too much uncertainty about the science to warrant any action. Even those policymakers supportive of efforts to address climate change feel hampered by an inability to make its risks palpably relevant to their constituents. Since any decision whose consequence plays out in the future contains some uncertainty “” be it planning for retirement, evaluating a business venture, or fighting terrorism “” there are many ways already known to contend with uncertainty. The challenge is to do so in a down-to-earth manner. This report uses everyday concepts already in use in the insurance industry to help policymakers better understand the risks associated with the uncertainty around climate science.

In response to discussions with DOE Secretary Chu, Congressmen Jeff Bingaman, Tom Udall, and Mark Heinrich during a visit to Sandia National Laboratories, our team worked to establish the near-term risk from climate change at the level of U.S. states for voters and businesses. The study finds that contrary to popular rhetoric, greater uncertainty about the impacts of climate change means greater economic risk, not less. Specifically, within an envelope covering 98% of the climate uncertainty as it pertains to rainfall alone, the U.S. economy is at risk of losing between $600 billion and $2.0 trillion and between 4 million and 13 million U.S. jobs over the next 40 years. Let’s examine how the study arrives at these estimates.

JR: The results of this study are quite conservative. They stop in 2050, whereas far more serious consequences face the nation and the world post-2050 on our current emissions path. Also these costs are just from uncertainty about rainfall alone.  This is one of many climate change impacts–albeit probably one of the biggest.  But, for instance, the report has entirely left modeling out the wildfires, which are an inevitable outcome of reduced rain and other climate impacts (see here). For a recent summary of the recent drought literature, see here.

Insurance, uncertainty and risk

People expect that their house will be the same tonight as it was in the morning before going to work. Nonetheless, they have insurance to protect them from a large array of risks. The risks are a combination of probability (uncertainty) and consequence. The insurance cost is dominated by events only relatively less common than the day-to-day expectations. These risks stem from the low-consequence events with intermediate probabilities, such as cracked windows or a leaking roof after a storm. The insurance premium is not strongly affected by the high-consequence events with low probability, such as the house being destroyed by a runaway bulldozer. Nonetheless, all probabilities and consequences contribute to the calculation of the premium. In all instances, the insurance company uses the best, albeit imperfect, understanding of those probabilities and their consequences.

There are many types of risks associated with climate change uncertainty, from increased disease to rising ocean levels. The Sandia study looked at the uncertainty and consequence associated solely with climate-induced precipitation changes through the year 2050. The equivalent premium to insure against adverse rainfall changes over that period for the United States would be over one trillion of today’s dollars. In more personal terms, the risk amounts to nearly 7 million lost full-time jobs. Moreover, it is certain that the quantified risk over this near term future is small compared to the exponentially growing risks from climate change in the years beyond 2050.

In opposition to popular conjecture, the study demonstrates that the greater the uncertainty, the greater the risk. This finding is consistent, for example, with the perspective that taking a commercial flight on Virgin Galactic’s SpaceShipTwo spacecraft is considered to have a relatively high risk because of a lack of information about its reliability.  Risk derives and increases from “not knowing.”

The efforts of those skeptical of climate-change projections to demonstrate limitations in the accuracy of climate-change analyses may cause climate scientists to change the priorities of their research, but the real effect of emphasizing limitations is to accentuate the level of uncertainty in future climatic conditions. Rather than justifying a lack of response to climate change, the emphasis on the uncertainty enlarges the risk and reinforces the responsibility for pursuing successful long-term mitigation policy. If those skeptical of climate change want to halt government initiatives in climate policy, they must act to reduce the uncertainty and demonstrate that the future climatic conditions will remain below dangerous levels.

Economic impacts due to changes in precipitation

The Sandia study analyzed how consumers and individual industries adjust to the changing economic and physical conditions created by climate change. These responses attempt to lessen the economic impacts that would otherwise occur. The methodology underlying the analysis is based on historical response patterns of industries and consumers””how real people in business and as individuals have behaved in the past to changing economic conditions, policies, and events. The study uses historical real-world behavioral experience because evidence indicates it is a more realistic approach than simulating the choices people make based on the commonly used economic assumptions of optimality and perfect knowledge of future conditions.

The study used precipitation precisely because it is one of the most uncertain outputs from the computer models used to estimate the climatic future. Further, the availability of water directly affects a large segment of economic activity and human wellbeing. The Sandia risk assessment considers economic losses exclusively in the absence of any climate change mitigation policies””in other words, we only consider what might happen if no action on climate is taken.

The analysis uses the concept of exceedance probabilities to describe the various levels of uncertainty. “Exceedance probability” is an intimidating-sounding term that has a very simple meaning. It measures the likelihood (or chance) a particular consequence of climate change will exceed (be greater than) the value reported for that probability. For example, a 25% exceedance probability means there is an estimated 25% chance an impact will exceed the expected value (for example, in dollars of lost GDP). The range of exceedance probabilities extends from 100% (the maximum realizable precipitation) to 0% (the minimum realizable precipitation). The body of the full report for this study (see Further Reading below) provides a detailed discussion of the analysis process and a thorough explanation of the results.

Figure 1 shows the estimated reduction in the U.S. GDP over the period 2010 to 2050 at various levels of exceedance probability. The values on the solid red line represent the total cost over the 40-year period. Note how fast the losses accelerate at the lower probabilities. The dashed lines represent the uncertainty of the best-estimate exceedance-probability values. For any given point on the best-estimate line, it is highly likely that the impact will lie somewhere between the corresponding values on the enveloping dashed lines.

Figure 1. U.S. GDP impacts (2010-2050)

Figure 2 presents the summary-risk losses for the GDP for individual states. This information conveys the impacts of climate change with which state-level governments and business are likely to contend. The colors represent the relative nature of the impacts. In Figure 2, only six states, those colored green, experience apparent gains in the GDP as a result of climate change. The GDP losses exhibited by all the other states indicate what it would be worth to avoid climate change even within short-term planning horizons — that is, if mitigation is possible. In Texas, for example, there is a risk of losing about $137 billion over the 40-year period. In lower exceedance probability conditions, only the three states of Washington, Oregon, and Idaho could realize “net” benefits.

Figure 2. GDP risk (2010-2050) in billions of dollars at a 0% discount rate.

JR:  Another conservative feature of the study is that it doesn’t appear to model the fact that the places that are going to see more precipitation are going to see it come down in more intense deluges (See “Two seminal Nature papers join growing body of evidence that human emissions fuel extreme weather, flooding that harm humans and the environment“). So it really means that even the places that will see more rain are likely to suffer losses, too.  A key point is that while we know we are going to see more extreme droughts and floods — most parts of the country will always have extreme uncertainty as to when the extreme weather will hit, how severe it will be, and how long it will last.

Economic impacts due to water availability and migration effects

The study also considered the population migration across the states as unemployment and water-availability conditions evolved. The map of population migration would look similar to the GDP map of Figure 2, expect that migration from the southern states to the northern states are more disproportionate than the GDP change indicates. Changes in employment generally follow changes in GDP, but due to variations in employment by industry, some states experience greater unemployment than the GDP impacts imply. The employment losses indicate the pressures to minimize the impacts of climate change that policy makers are likely to experience from voters.

A more detailed example may help in understanding the analysis displayed in Figure 2. Despite suffering relatively greater drought conditions on average relative to the rest of the nation, California shows improvements by 2050 because its economic impacts are estimated to become relatively less than those of other states. Populations from other affected states migrate to California and stimulate its economy. In the near term and at higher exceedance probabilities, California does incur largely negative impacts. Note that the impacts for many states change sign over time, that is, many states alternately experience gains (positive sign) and losses (negative sign).

The Pacific Northwest states show some improvement with climate change due to expected increased precipitation and population growth through migration. It is possible, however, that the damage to this region from climate change may be understated. Because the analysis is limited to the annual resolution of precipitation levels (other than capturing the monthly variation for agricultural assessments), it does not capture the impact of seasonal phenomena such as snow. In the Pacific Northwest, the dam system is not designed to accommodate significant changes in the timing of when and how fast snow melts. Consequently, the positive impacts shown could be an artifact of our simplifying assumptions.

Expected urban population growth and an expanding economy in the eastern United States will stress existing water supplies in the future even in the absence of climate change. Consequently, the Northeast and the Southeast experience negative impacts from climate change, even though reductions in long-term precipitation may be minimal. Areas such as Colorado go from having adequate water and benefits in high-exceedance-probability simulations to experiencing losses from reduced water availability in the low-exceedance-probability simulations. Other than in the Pacific Northwest, the uncertainty in climate change tends toward decreased water availability in the continental U.S.

Economic impacts felt by industry

The Study estimated the risks from climate-change uncertainty on 70 industry sectors. Companies generate the jobs and are also the actual entities that must produce the goods and services that allow the population to adapt to climate change. At the national-revenue level, retail trade, mining, and food manufacturing each have risks in the range of $300 billion through the year 2050. Due to construction, especially of power plants to augment lost hydroelectric capacity, positive effects in terms of economic value are experienced by utilities, electric equipment, and other manufacturing. Construction itself experiences a decline because of the overall national decline in economic growth. Transportation experiences a net zero economic impact, despite an overall reduction in economic activity, because of the added need for interstate trade, especially for food. Many professional services, including medical, suffer a decline because unemployment constrains additional spending. Agriculture-dependent industries, such as the chemical industry, encounter disproportional declines. Like agriculture, climate change strongly affects the mining industry because of the mining industry’s relatively rigid dependence on water.

The study further addresses the dynamics of the impacts and the responses due to the volatility of climate change across the years. Figure 3 illustrates an example of the annual impacts on the national GDP as a function of varying exceedance probabilities for reduced water availability. As shown, greater losses are evident in succeeding years, and the lower exceedance probabilities are associated with greater impacts on the GDP. In this example of volatility (having approximately a 10% probability of occurrence), the trough of 50% exceedance-probability impact near 2030 exceeds the crest of 50% exceedance-probability impact near 2050. Volatility brings the impact of future “average” climate change into the present. The recent Pakistan floods and Russian heat wave may be examples of the “here from the future” climate change. The detailed, time-dependent approach used in the analysis shows the additional early consequences of the volatility in climate change.

Figure 3. Annual U.S. GDP impacts from climate change.


To reemphasize, the methods of this study reveal how compelling risk derives from uncertainty, not certainty. The greater the uncertainty, the greater the risk. It is the uncertainty associated with climate change that substantiates the risks to the economy and society. Policymakers will most likely need to make decisions about climate policy before climate scientists have resolved all relevant uncertainties about the impacts of climate change.

From a policy perspective, the incentive to act comes by comparing the risk (cost) of inaction with the cost of action to successfully mitigate climate change. The study finds with 98 percent confidence that changes in rainfall patterns will cost the economy between $600 billion and $2 trillion over the next 40 years unless action is taken to prevent climate change.

Despite perpetual prospects for improvement, the current study does establish a process for superior and more-meaningful risk assessments of climate change than is currently presented. The impacts across the 70 industries and 48 states demonstrate interrelationships that produce consequences different from those consequences that would be indicated by the analysis of individual states or economic sectors in isolation.

The risk-informed approach used in this work relates physical climate science to the societal consequences and thus, the study offers a systematic foundation for policy debate. Uncertainty induces debate. In the presence of absolute certainty, there are no facts left to debate. This analysis used the current understanding of climate-change uncertainty to unambiguously quantify risk. The future evolution of climate change policy will necessarily rest on continuing improvements in the quantification of uncertainty for both climate change and its consequences.

–George Backus is the lead author of the Sandia climate-assessment study.

JR:  Our ability to change the climate trajectory through, say, 2040 is limited (unless the nation and the world act very swiftly and aggressively). The point of mitigation now is avoid the impacts that become increasingly huge post-2040. Look how big they get in the chart above after 2040.

For a global analysis of the costs of climate change, see Scientists find “net present value of climate change impacts” of $1240 TRILLION on current emissions path, making mitigation to under 450 ppm a must.

Further Reading

Adler, R., “National Lab Calculates State by State Climate Change Risks, Jul 24, 2010, http://americanaffairs.suite101.com/article.cfm/national-lab-calculates-state-by-state-climate-change-risks

Backus, G. et. al., (2010). Assessing the Near-Term Risk of Climate Uncertainty: Interdependencies among U.S. States. SAND 2010-2052. Albuquerque, NM: Sandia National Laboratories. https://cfwebprod.sandia.gov/cfdocs/CCIM/docs/Climate_Risk_Assessment.pdf.

Backus, G. et. al. (2010), Executive Summary for Assessing the Near-Term Risk of Climate Uncertainty: Interdependencies Among the U.S. States, SAND 2010-2200. Albuquerque, NM: Sandia National Laboratories. https://cfwebprod.sandia.gov/cfdocs/CCIM/docs/Climate_Risk_Exec_Summary.pdf

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23 Responses to Sandia Labs study: “It is the uncertainty associated with climate change that validates the need to act protectively and proactively.”

  1. Robert In New Orleans says:

    A copy of this report should be given to the governor of New Mexico.

  2. Mulga Mumblebrain says:

    In Australia this would be met by ‘The Fundament’ (aka The Australian), Murdoch’s flag-ship, doing a ‘Cut and Paste’ and discovering some ‘quote’, taken out of context, from some tenuously relevant personage, ‘refuting’ this latest ‘alarmist’ scare. Perhaps a couple of snide comparisons to the ozone layer and Y2K ‘hoaxes’, will be added for dramatic effect. The denialist babblers and drivelers will weigh in accusing the authors of lying, scaremongering etc, all part of the Al Gore-led conspiracy of watermelons. The Fundament has two fairly typical examples in its letters pages (ever a morass of idiocy) today, with one genius declaring CO2 a ‘plant food’ and no risk to anyone, and another little Einstein declaring that predictions of sea-level rises are just hypotheses, and must be tested in real life, which I presume means letting the sea-level rise before we declare the science sound. I’m sure that they think that only proper in Bangladesh, Holland and the Nile delta.

  3. Scrooge says:

    Looking at what facts and evidence tells us sure gets depressing. If I didn’t have grandchildren I would probably find it easier to stick my head in the sand like congress does. Its nice to see the bread basket holding its own. Surprised Nebraska is not a desert. Thought florida might be better than shown.

  4. Joan Savage says:

    The Sandia study’s Hydrological Impacts section (p. 90) uses two assumptions that severely limit the scope of the estimate of variability and therefore the estimate of risk.

    One assumption is that a constant proportion of precipitation becomes surface water. The other is that “evaporation remains essentially a constant fraction of precipitation.”

    The first assumption assumes a continuity of familiar ranges of intensity of precipitation, ground cover, soil absorption and evapo-transpiration. Those ranges may not hold for deluge conditions or in locales of vegetation die-off.

    The second assumption ignores that evaporation increases with either temperature or wind speed. Neither temperature or wind speed can be counted on to stay in familiar ranges.

  5. paulm says:

    excellent post.

    I can tell you that here in the NW its not just the intensity of the precipitation but also its changing variation that is affecting local agriculture big time.

    For example we have been having heavy rain when crops should be planted which has disrupted this activity and effectively wiped this season. Local farmers have been hit badly and will have to be subsidized or many will go bust.

  6. paulm says:

    Bad weather hits Barossa harvest
    Parts of the Barossa Valley have had unwanted storms as harvest time begins.

    Heavy rain has been bad news for grape growers already battling problems including disease and locusts.

  7. GFW says:

    Not that I agree with them (definitely not!) but I think the denier meme of uncertainty does not work like such a well defined uncertainty as in the Sandia report. Their way of thinking is that the uncertainty is centered on current conditions, and therefore resembles weather.

    If we want to effectively counter that meme, we need to explain how the centroid/ensemble mean is known to be likely to shift. For example, we have a good estimate of how the tropical convergence zone (aka tropical rain band) moves in response to average global temperature, and we know how wide the Hadley cell to the north of the convergence zone is, so we can predict a northward movement of the arid zone currently laying across northern Mexico.

  8. Aaron Lewis says:

    Nor does the Scandia study address the issues raised in ARkStorm (http://soundwaves.usgs.gov/2011/01/research2.html), http://pubs.usgs.gov/of/2010/1312/ where historically rare “atmospheric river” storm events become more common as a result of global warming.

    A few degrees of Pacific Ocean warming will make such ARkStorm events more common. If we include such more frequent ARkStorm events, then the Sandia report dramatically understates damages.

    In short, ARkStorm is a good description of what extreme weather resulting from global warming will look like and what we should be doing to plan for it.

  9. David B. Benson says:

    Dry up and then wash away.

    Rinse and repeat.

  10. Robert says:

    Slightly OT, but I noticed the price of 8W spiral CFLs in Tesco UK supermarkets had gone up from 10p (16 cents) last week to £3.00 ($4.80) this week. There was a small notice saying government subsidies had been scrapped. It’s something to do with this:


    The Conservatives were elected as “the greenest government ever”.

  11. Peter M says:

    Here in New England we fair badly according to the map- not surprising. Massive floods hit western Connecticut a few days- and more rain on the way- up to 4″.

    I suffered 6-7 thousand dollars damage to my house due to water coming in from the January snow and ice.

    Only the beginning.

  12. David B. Benson says:

    Yes, the uncertainty is probably still understated.

  13. paulm says:

    maybe health vectors and not food will be first….

    Madagascar malaria forces hundreds of Filipino miners home
    Over 500 Filipino miners in Madagascar have been forced to return home after a serious malaria outbreak on the island nation.

    Labor officials say a total of 900 Filipinos have left Madagascar and returned to the Philippines since February because of the health threat.

  14. David B. Benson says:

    All four horsemen will ride…

  15. mike roddy says:


    Brings back memories. I got malaria in Madagascar in 1985- the local strain is resistant to quinine. Almost died.

  16. Villabolo says:

    @13 paulm:

    “maybe health vectors and not food will be first….

    Madagascar malaria forces hundreds of Filipino miners home”

    I think the number of deaths from famine will exceed that of disease throughout the next 40 years.

  17. paulm says:

    “Homeownership, predicated to a significant degree on affordable energy prices, is becoming more expensive.”

    Also predicated car ownership, throwaway consumer society, round the world air travel for all, high protein, sumptuous diets etc. ie mostly everything we have today.


  18. paulm says:

    mike @15
    Ouch. Not Nice. Lets hope that that strain stays confined to the island.

  19. Dr.A.Jagadeesh says:

    A case of “Heisenberg uncertainty principle”!?

    Dr.A.Jagadeesh Nelore(AP),India

  20. Prokaryotes says:

    Any substantial harm to the environment should be dealt with seriously. When in the past military protected a nation, in the future they have to advance to protect the biosphere, our habitat the air we breath.

  21. Joan Savage says:

    The term “compelling risk” appears only once in the Sandia report, yet it seems pivotal. I’d like a fuller understanding of its use.

    Compelling risk/reward situations appear amidst the chaos of price fluctuation. Compelling risk factors can show up in a family medical history.

    It looks like “compelling risk” is a kind of decision-maker certainty that develops from fuller understanding of “uncertainty” conditions.

    That evokes a Jack London short story, “To Build a Fire,” about a relative newcomer to the Yukon who underestimated his compelling risks. It’s about cold, not heat, but the insights about how we make decisions are probably similar to how humans might survive or not in an unfamiliar climate-changed environment.

  22. Sime says:

    Scrooge @ 3

    “If I didn’t have grandchildren I would probably find it easier to stick my head in the sand like congress does.”

    Apparently some of those in congress have both grandchildren and children… Which speaks volumes about both the ethics and the morals of the kind of vile creatures that are currently infesting congress does it not.

    The simple fact that these individuals are willing to risk their own offspring with this GOP denialist crusade crap, demonstrates in no uncertain terms to each and every single one of us on this planet, exactly how little they care for the well being your children or anyone’s come to that, and they should be treated with the contempt that they deserve.

  23. It’s so sad what we are doing to the Earth!