Economists defend estimates of climate cost

Putting price tag on climate change is key in spurring politicians into action, say economists, lawyers and scientists

Source: Flickr/foto43

Source: Flickr/foto43

By Gerard Wynn

Governments need estimates for the cost of climate change, to prod them into taking action to curb emissions, US climate scientists, lawyers and economists will say this week in a comment article in the journal Nature.

The experts defended the notion of putting a dollar cost on the expected damages from climate change, a week after the Intergovernmental Panel on Climate Change (IPCC) poured cold water on the idea, saying that such estimates could be limiting and overly deterministic.

The IPCC last week released the second in its three-part series documenting the threat of climate change, focusing on impacts including droughts, floods and rising seas.

Estimates of monetary cost of climate damage were “difficult”, given the problem of unexpected impacts, especially if greenhouse gas emissions and global average temperatures continued to rise, said IPCC lead author Stanford University’s Chris Field.

The US experts countered that costs estimates were still needed, to guide policymakers in their efforts to cut greenhouse gas emissions, in a comment article released ahead of formal publication on Thursday in the journal Nature.

“As legal, climate-science and economics experts, we believe that the current estimate for the social cost of carbon is useful for policy-making, notwithstanding the significant uncertainties,” said the economists, lawyers and climate scientists from New York University, Stanford University, Rutgers University, the University of Virginia, Princeton University and the University of Gothenburg.

The IPCC will publish its third and final instalment on April 14, focusing on the policy options for cutting carbon emissions, and will include estimates for the cost of such emissions cuts.

The experts writing in Nature argued that such costs had to be compared with the cost of climate impacts, to help policymakers draw the line between carbon mitigation and adaptation.

“Governments, agencies and companies use such estimates (of the cost of unlimited climate change) to guide decisions about how much to invest in reducing emissions.”

“Yet the social-cost benchmark is under fire. Industry groups, politicians — including leaders of the energy and commerce committee of the U.S. House of Representatives — and some academics say that uncertainties render the estimate useless.”


The IPCC is an intergovernmental body currently with 195 countries as members, established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988 to provide the world with a clear scientific view.

Representatives of its member governments convene in Berlin, Germany, this week to approve the IPCC’s final report.

The report describes the recent trajectory of rising carbon emissions, and the considerable challenge for cutting emissions, both from industry including transport and energy generation, and the wider economy, including cities and homes.

Global growth in carbon emissions has accelerated over the past decade, underlining the scale of the task to cut emissions while the world population and global living standards grow.

The experts writing this week in the journal Nature said that estimates of the cost of climate damage could jolt governments to take action.

“The leading economic models all point in the same direction: that climate change causes substantial economic harm, justifying immediate action to reduce emissions,” they said.

“In fact, because the models omit some major risks associated with climate change, such as social unrest and disruptions to economic growth, they are probably understating future harms. The alternative — assigning no value to reductions in carbon dioxide emissions — would lead to regulation of greenhouse gases that is even more lax.”

“A broader programme involving more people exploring more phenomena is needed to better estimate the social cost of carbon and to guide policy-makers. Otherwise policies will become untethered from economic realities.”

The authors quoted a US analysis last year which estimated the cost of climate change at $12 to $64 per tonne of carbon dioxide emitted in 2020, depending on assumptions about how future damages are valued in today’s money. They said that such a range could be an underestimate, however, given the danger of severe climate changes and of long-lasting impacts on global economic growth.

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