In 2009, Congressional Budget Office director Doug Elmendorf testified that “a relatively pessimistic estimate” for the economic impact of warming of 4°C by 2100 would be three percent of U.S. GDP. With even more radical warming of 6°C (11°F), the impact would be five percent, he said
In an exclusive interview with ThinkProgress’s Brad Johnson, leading climate economist Nicholas Stern found Elmendorf’s testimonyto be “ludicrous”:
I think that’s ludicrous. And it’s not clear what the real foundations of those kinds of estimates are. That would be saying that living in conditions which we haven’t seen for 30 million years on this planet would involve just minor adjustments.
Here’s the video of the interview:
Elmendorf based his testimony on a sectoral analysis of the impacts of climate change. Climate costs would primarily be felt, he argued, in fields like agriculture, power production, and infrastructure, which are a very small percent of US GDP. With future economic growth expected to be concentrated in areas like information technology and health care that are “relatively insulated from climate effects,” Elmendorf claimed that effects of climate change on the U.S. economy would be “small,” citing economists Dale W. Jorgenson, William D. Nordhaus, and Joseph Boyer. Stern described these arguments as “very narrow and misplaced view of the economics of climate change”:
I can understand the arguments. I’ve read them. But I don’t think they really stack up in relation to the huge changes that we’d be trying to deal with. You would likely have massive movements of population. You’d have potential sea level rises, although they come quite slowly of course, but they come inexorably, which would start to make many parts of the coast of the US untenable, just like other countries. You’d have potentially massive movements of population, in the case of the northern hemisphere, away from the equator and northwards, and potentially enormous world conflict.
And I simply don’t think that a sectoral analysis which extrapolates a little bit from the kind of temperature changes that we’ve seen gets to grips with the transformation of the world economy likely to come from 4, 5, 6 degrees C and the massive movements of people that are likely to be involved.
So running through the various sectors of the economy and knocking off a few percent here and there hardly gets to grips with the kind of transformation of the geography of the world. We have to see this as a whole-scale transformation of the relationship between human beings and the planet and the consequence of massive movements and potential conflict. We haven’t seen movements of the population of the kind we’re talking about here.
So, you know, a little bit of mucking about with a percentage here and there with this sector and that sector doesn’t really begin to come to grips with the magnitude of the kind of changes we’d be talking about. That seems to me to be a very narrow and misplaced view of the economics of climate change. It doesn’t get to grips with the magnitude of the risk. It doesn’t get to grips with the dynamic and unstable changes that would come as a result of all this. It’s a very narrow view of economics on the most optimistic of possible outcomes.
The failure of the economics profession to come to grip with the clear science of climate change is a scandal that far outstrips its cheerleading of the housing bubble and other financial disasters. As previously discussed in the Wonk Room, conventional economics not only fails to accurately assess the threat of global warming, but also totally misrepresents the economic impact of taking action. Economic textbooks promote utterly false myths about climate change.
Even climate economists like Lord Stern and Martin Weitzman, who together earned the Leontief economic prize last week from the Tufts University Global Development and Environment Institute for moving the profession away from utter denial, consistently underestimate the consequences of climate change that are already occurring.
– Brad Johnson in a cross-post.
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Stern is right, of course. This interview should be front page news.
Why does anyone listen to Nordhaus?
Is this Elmendorf an economist himself? Doesn’t matter really.
Anyone can contact an insurance company or a reinsurer exposed to risks in these various areas. They can give some seriously hard numbers on crop losses, flood losses, storm damage and just about every other thing you may never have thought of yourself.
It seems that some economists just like playing with numbers and computer programs without checking realities. Just like other people we’ve come to know.
The trick in these analyses is that AGW and Peak Oil are going to be putting drastically different torques on our economies. We’re going to be changing to a coal foundation for our economy at the same time that the climate is going to be changing. Petroleum is going to be staggeringly expensive which is going to make chemical fertilizers scarcer. Crop yields are going to shrink because of this and if the travelling drought happens to hit your corner of the globe that year, your crops are simply going to fail. If droughts are widespread, we’ll get the kinds of unrest we’ve seen in Egypt and Libya.
If sea temperatures in the Arctic are 4 degrees hotter by 2100, then this is probably sufficient to cause the complete disintegration of the methane clathrate deposits in the shallow waters of the continental shelf.
This in turn is liable to allow the release of whole gas fields of buried gaseous methane.
In the shallow waters of the Arctic, this will quickly cause methane saturation, and oxygen depletion. For the effects of oceanic anoxia, see recent coverage of the Gulf of Mexico…
There may even be sufficient methane vented to cause atmospheric anoxia. This would have an impact on the US economy greater than 3%, and much closer to 100%.
That’s always been the problem with economists in general; they live in a fairytale land of self delusion where only their statistical equations based on inane assumptions of an infinite, unchanging planet govern their made up reality. Sadly, economists have always had a greater influence on our policy makers than REAL scientists, and therein lies the basis for the dangerous, seemingly unsolvable problem in which modern humanity finds itself.
4 degrees will bring fourth a whole New Planet- with profound societal and economic ramifications.
anyone who says otherwise is a fool.
Every time someone in the US gets cancer, our GDP goes up.
A 20% increase in cancer (or diabetes) rates, despite the untold personal and family suffering it would create, would send our GDP through the roof. Just as relocating New Orleans, Norfolk, Manhattan, etc. might help bolster GDP (in the near-to-mid term) by creating lots of jobs and driving new infrastructure spending.
Respected economists are now predicting that the triple-disaster in Japan may actually help that country’s GDP in the long run. Hence those disasters are a good thing, right? The notion is ridiculous – worthy of ridicule.
GDP is not what we need to be maximizing here, folks. GDP is a poor (and in this case, perverse) proxy for what regular humans really care about – security, comfort, jobs, fairness, predictability, quality of life, happiness. And it’s hard to argue that any of those fundamental needs will be easier to satisfy with a 7-11 F increase in average global temperatures.
Re: GDP. They say that a rising tide lifts all boats. The problem is, most people don’t own a boat. Including me.
Indeed, if the water rises too fast, even the biggest of boats can be destroyed.
yay! future economic growth will be in health care! the health care industry revenues are going incr— hey wait a minute.
No, hang on, I get it.
I’m not even in the USA, but these guys are doing great work to increase the employment prospects for the mental health care industry worldwide.
Nurse! Nurse!
What’s the economic value of a species? How about a keystone species like phytoplankton? Lots of people think that the value of anything is its replacement value. How do you replace an extinct species? At what cost?
The economic analysis seems almost sterile in its ignorance of the biosphere in which we live. It’s almost that we, eco-man, live in a non-biological environment where economic analysis describes the world in its entirety.
Conventional economists define petroleum as a resource of energy. Have you ever heard anything so ridiculous. Petroleum is a lithosphere liquid, a phase of matter, a resource of material. Economists do not know the difference between matter and energy.
Based on recent paleoclimatology, economists have already dialed in the submergence of humanities greatest works, seaports.
Eco? No. Mist! Economist. Theocratic technocratist. A fraudster.