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Author: Peter Hannan
Source: The Age
Date: 31 March, 2014

Climate change sceptics are never happy with Intergovernmental Panel on Climate Change (IPCC) reports. They have a special cause to dislike the latest one.

“Human interference with the climate system is occurring, and climate change poses risks for human and natural systems,” so begins the Impacts, Adaptation and Vulnerability tome, the second instalment of the IPCC’s Fifth Assessment Report.

Thirty chapters follow, outlining the scale of the threat from a warming planet, ranging from the impacts already evident in sensitive coral reefs and arctic eco-systems to fragile communities made more so by rising sea levels and the likelihood of more frequent and intense weather events such as heat waves, droughts and floods.

But most governments have long accepted climate change is real even if they haven’t mustered the will to do much about curbing their nations’ greenhouse gas emissions that is driving the warming – or preparing for the impacts.

Rather, what will irk the climate change doubters is the missed opportunity to trumpet a few lines that were added late in the process – after reviewers had completed their review – that downplay the economic costs from climate change.

Hot debate

Tallying the damage bill has long been hotly disputed among economists and scientists. In a paper last year, Professor Robert Pindyck from the Massachusetts Institute Technology concluded the so-called integrated assessment models used to combine climate science with economics have “crucial flaws that make them close to useless as tools for policy analysis”.

On the one hand, science has to deal with potential feedback trends unleased by global warming – such the run-away melting of the arctic permafrost releasing massive amounts of the potent greenhouse gas methane – that are essentially “unknowable”, Pindyck wrote.

On the other, the underlying assumptions economists use to guess how much climate change will cost are “completely made up”, he said, likening the task faced a generation earlier by those trying to estimate the cost of a nuclear conflict between the US and the Soviet Union during the Cold War.


Imagine the glee, then, that the sceptics (and their strident backers in the media) had when the final draft IPCC report landed for governments to pick over for approval.

Despite the litany of risks, economic costs were assessed to be a modest 0.2-2 per cent of gross domestic product. And that range wasn’t just at the 2 degree “guardrail” increase in temperatures the world’s leading nations had pledged to keep within, but at 2.5 degrees above pre-industrial levels.

However, in what passes as a slapdown in the diplomatic niceties of the United Nations overseeing the IPCC, the 0.2-2 per cent range by the final report is “presented in a way that is much more nuanced, and I believe, much more useful”, co-chair of the report, Stanford professor Chris Field, told Australian journalists.

The nuance, it has to be said, is not very subtle. The section on economics in the Summary for Policymakers starts with an added qualification: “Global economic impacts from climate change are difficult to estimate.”

It goes on: “Economic impact estimates… depend on a large number of assumptions, many of which are disputable, and many estimates do not account for catastrophic changes, tipping points, and many other factors.”

And the nuanced bit: “With these recognised limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0 per cent of income.” (Italics added).

“Losses are more likely than not to be greater, rather than smaller, than this range. (Italics in the original.)

In other words, there are good reasons not to read much if anything into ranges thrown up by economic models.

As Nicholas Stern – the UK economist who compiled the Stern Review of the economics of climate change in 2006 – noted in a paper last year that one of the standard models used to calculate costs produced only a 50 per cent reduction in GDP if global temperatures rose 19 degrees.

“This illustrates both the modest nature of damages and the perils of such extrapolation – it seems possible or likely that such temperatures could involve complete human extinction, indeed at much lower temperatures than that,” wrote Lord Stern, now at the London School of Economics.”

Managing risks

As a whole, though, the latest IPCC report is about risk management, including dealing with outcomes that have a low probability now (and increasing if emissions continue to climb) but potentially catastrophic consequences.

“It tends to take attention away from this idea that oh, we don’t need to do anything about climate until we know exactly what’s the temperature going to be in 2033,” Field said.

The IPCC co-chair likens it to the precautions people take when buying a new car to ensure it has decent brakes and air bags – except that this is a car currently on a certain collision course.

Read article at The Age