COSTS AND BENEFITS OF CLIMATE CHANGE - David D. Friedman transcript

this issue for me goes back a little more than 50 years as none of you remember but some of you may know 50 years ago population growth played essentially the same role in the public discussion that climate change does now that population growth was the looming catastrophe which would do horrible things to the world unless we did drastic things to stop it and I got interested I was asked by the population Council to write a piece from a prom Market standpoint which nobody was doing analyzing the population issue and I did uh it's on my web page if people are curious and what I was trying to do was as an economist to think of this as an externality question when you have one more child what negative and what positive effects do you have on another person on other people and I tried to figure out what the net externality was because everybody was talking about the ways in which population growth made the world worse it seemed to me there were also ways in which it made it better and that what you wanted was the net and I concluded that the there were both positive and negative effects and they were sufficiently uncertain that I could not sign the sum I could not say whether on net it made us better off or worse off we still don't know of course but what we know what is that what was the conven ventional view them was wrong because that conventional view made predictions in particular it predicted that unless something drastic was done to hold down the population of especially poor countries poor countries would get hungrier and poorer in fact the population of poor countries continued to grow still growing in Africa and poor countries got strikingly less hungry and strikingly less poor so in that sense uh they were wrong whether was right we don't know uh so when when climate became an issue I looked at it from that standpoint uh that the previous experience raised two things with me one of them that you really wanted to think about net externalities not about whether there were any negative effects and the other was that you could not trust the fact that you were told all the experts knew what the answer was since that had been the case the previous time and I knew that they had been wrong then uh so there are basically I think two ways of trying to approach the question of whether climate change is bad for us and if so how bad uh one of them is AR priori you could say are there reasons to expect that climate change will make us substantially worse off and actually try to estimate the various effects and what their costs and benefits are the AR priori case is pretty weak uh climate was not designed for us uh nor were we designed for it uh that humans live across a wide range of different climates the earth's climate has changed pretty radically over our species history because there have been uh recurrent GL glaciations followed by interglacials uh the only AR priori argument I can think of is that humans are currently optimized against their current environment that when you're deciding what uh kind of house you want the question of how hot it's likely to be may affect whether you want air conditioning insulation and uh a furnace and so forth when you're trying to decide what crops to plant you ask what are the crops that are best in my current environment and so forth uh so we have for the economists in the room sunk costs uh in optimizing against our current environment and they're different in different parts of the earth uh so if you change the environment either hotter or cooler there are going to be some negative effects because what you now have is not optimized for your your new environment and I think those could be substantial for Fast Change but if you look not at the sort of newspaper oratory but the actual estimates the ipcc makes it looks as though what we're talking about by the end of the century is a temperature two or three degrees higher than the temperature was a century ago roughly a little more than a century ago uh that's a pretty small change over roughly a hundred years in fact over more than a hundred years since part of it's already happened uh the sea level rise the current estimate suggests that by the end of the century sea level will be about half a meter higher might be more than that might be less than that but somewhere around there the rough figure I happen to have come across a figure for the Us East Coast of how much sea level rise changes the coast Coastline and the rough rule of thumb is that the coastline moves 100 feet for every foot of sea level rise so that means that if sea level goes up by half a meter uh the coastline will shift that particular Coastline will shift by about 50 metters which if you think in terms of a map is a pretty trivial change it's not as if we're losing large amounts of of coastal land now it'll be more than that in some places I think when I tried to use a a online source that let you look at the effects uh it looked as though the Nile Delta was about the most vulnerable place in the world uh and there you really would lose noticeable amounts of land but on average you're talking about very small effects uh and those effects over that long a time uh it seems to me are not likely to involve very substantial costs that that after all farmers in the next Century are going to change their crop variety probably a dozen times as people's tastes change as new varieties are introduced and so forth uh and at least in the US maybe not in Europe the average house probably won't be around 100 years from now it will have been replaced by something else and if the climate is a little warmer it's going to be a little less likely to be insulated to keep it warm a little more likely to have air conditioning or insulation to keep it cool uh if it's very near the coast it'll be rebuilt 50 meters farther in but you're not talking about very large effects on the other hand mly large effects for other species because I've been talking in terms of human optimization which is done by sort of rational choice but other species are optimized by Evolution and it is at least possible that for some of those species even a change that slow might have serious costs uh I don't think there's good evidence uh that it would but it's by no means impossible especially if you think of something like trees trees evolve very slowly because they have long generations and they move very slowly they do move if you think about the Forest Area dying off at one Edge and spreading at another Edge but that's a very slow process so there certainly could be costs of that sort uh but I as I say I think the only real argument AR priori is the sunk cost argument what if you look at uh actual costs and try to estimate how big they are uh sea level rise is a certain cost but a very small cost uh for the reason I just described uh heat waves uh are going to result in more people dying from Heat than before uh those are I think the only two fairly definite costs there are then some possible costs going back to the question of other species what is referred to is acidification of the oceans and that's a very misleading term because the oceans are basic so acidification the effect of uh carbon dioxide getting dissolved in the ocean and turning into carbonic acid is to move move the ocean towards neutral people use the term acidification because it sounds scary but what you're in fact doing is neutralizing the ocean a little bit it's not it's very small effect uh but it might be the case that some some ocean sees are currently adapted to their current pH and even a fairly slow change might impose costs uh that's I think the the the largest possibility in the sense of the one that I have really no handle on how large it is but it's certainly a POS possible cost uh the effect on agriculture there are possible effects in both directions uh their the general projection is that you will have more rain but it will be less even so that means on the one hand water more available especially if people have uh dams and ponds and ways of storing it but on the other hand possibly more floods that's a argument against it on the other hand if you actually read the ipcc report instead of reading the summary for policy makers which is all that the reporters generally read one of the very odd things you discover is they think it's possible that climate change could result in Greening the Sahara and the and the Sahel that's one which some projection shows some don't uh but it's an example of the sort of thing you never come across in the newspaper stories because they are trying to make it all sound horrible uh and it in fact isn't the the effect on tropical Cyclones is sort of interesting uh if you read the summary for policy makers it tells you truthfully that the projection is that the ratio of high-end Cyclones to low-end Cyclones will go up what they don't tell you is that the reason the ratio is going up is that the number of lowend cyclones is going down that if you actually read the body of the report when it discusses tropical Cyclones the projection is that the number of highend which is categories four and five Cyclones will stay about the same the N now I should say it also is that the average strength of those four and five Cyclones will go up a little bit so there is a negative effect there the effect that causes the ratio to go up is the decrease in the small Cyclones which is actually a benefit which always gets reported as if it were were a a cost this is one of the reasons I don't trust the summary for policy makers as far as I know it says nothing untrue but it gives you a very biased presentation of what is true uh what about benefits there is one big benefit that is almost the most certain effect we have other than maybe sea level rise and that's CO2 fertilization carbon dioxide is an input to uh photosynthesis there have been extensive experiments on the effect of increasing the C CO2 that crops are growing on and roughly speaking uh doubling the CO2 concentration of the atmosphere increases the yield of C3 crops I'll explain that in a minute by about 20% doubling is roughly what the ipcc projects for the end of the century so we're talking the there are two well there there are more than two but there are two important mechanisms for photosynthesis called C3 and C4 most crop plants use C3 C4 the important C4 crop is mazee what Americans call Corn uh and there are some others as well uh rice and wheat are both C3 for some reason C3 responds to increased CO2 C4 doesn't uh in yield both C3 and C4 however increasing CO2 reduces water requirements and the mechanism there is very straightforward in order to do what it's doing in order to produce the crop or grow it whatever a plant needs carbon it gets the carbon by passing air through its leaves the higher the CO2 concentration the less air it has to pass through its leaves and the less air it has to pass through its leaves the less water it loses by evaporation so that's an effect for both both C3 and C4 crops and the basic experimental result is that if the crops are water constrained then the yield of C3 and C4 both goes up if they are not water constrained then C3 crops yield increase and C4 probably doesn't or Not by very much uh so that's the reason I say that's the most certain is that almost all of the the projections of the effect of climate change involve a series of causal links that somebody says all right we have more CO2 what will that mean it means that less of the infrared coming up from the earth uh gets through and that means the Earth gets warmer you then need further arguments in order to uh conclude that there will be more rain or the rain will be more uneven or any of those effects how however the fertilization is a effect of the CO2 increase so that's the very first logical step in the process doesn't depend anything else doesn't even depend on warming uh so in that sense I think that's that's a very clear one uh a more General effect of the same sort is The Greening of the earth and again if you actually read the ipccc report I don't think this point is ever mentioned in the summary for policy makers but the report says that the Earth is Greening that the total area of leaves is going up and that the probable cause is CO2 fertilization because it doesn't just affect uh crop plants it affects trees grass everything else uh you will have more extreme heat but less extreme cold now I should say there is a literature on the effect of temperature on mortality uh it's not a very good literature uh not because they people are incompetent or dishonest but because it's a very hard problem uh what they what they try to do they've got massive data day by day on the temperature in a city and the number of people who died on that day in that City and they then say all right if temperature at some level increases or decreases mortality it's not necessarily going to kill people instantly so we will do a regression a statistical process in which we say how is the temperature on day x related to the number of deaths in the next 20 days and you can then run that calculation and you conclude that uh there is an for any particular location there is an optimal temperature a temperature at which you get the lowest mortality uh and both above and below that mortality goes up and there are a number of interesting features of this literature which mostly don't get reported one of them is that the problem at least according to their figures is not extreme temperatures that the extreme temperature mortality is a small fraction of the total because extreme temperatures are very uncommon so that what's going on is if it's a few degrees above the optimum but very often that kills more people than being 15 degrees above the optimum you know one day a year or whatever it is uh and the other interesting thing thing is that deaths by cold are much larger than deaths by heat uh and this is again a fact that usually it's not get reported but that is reported in that literature I should say one thing in that literature is somebody tried to use that process to calculate the effect of climate change so far it reduced mortality uh now that doesn't mean it'll keep doing it uh the the basically what the literature suggests is that climate change will increase mortality over time uh and what's going on there I'm not sure it's right but those are their calculations is that although total mortality is larger from cold marginal the effect of raising it uh you basically have a curve which which goes steeply up at the high end and only gently down at the low end and therefore when you raise it uh you get AIT more than proportional increase here so I'm not at all sure it's right if people are sufficiently curious I had a couple of substack posts in which I analyzed uh the a couple of the articles in that literature and tried to figure out what was happening and tried to correct what were by their own accounts uh simplifications in particular as far as I could tell they were not allowing for adaptation that is they were assuming that when your city gets 3 Dees warmer the relation between temperature and mortality stays the same but you would expect that if your temp if your city over a century gets 3° warmer you are going to be less a little bit less likely to go out on hot days uh you are more likely to install air conditioning in your house there will be a bunch of of adaptations and as far as I could tell they weren't they weren't accounting for those and I tried to do a very rough estimate which concluded that that would at least significantly reduce though not eliminate the the net mortality uh there's one of I should say one of the things people also don't mention is the pattern of greenhouse warming is biased in our favor that if you look at the ipcc maps showing projections one of the things you notice is that warming is greater near the poles than near the equator and what's going on is that water vapor is also a greenhouse gas the more of one greenhouse gas there is in the air the less the effect of adding another you can't eliminate more than 100% of the infrared coming up off the Earth so that means there's more water vapor in warmer climates hence that the effect of uh adding CO2 to the air is greater in cold places than in hot places as a general rule warming is a good thing when it's cold and a bad thing when it's hot so that means that the pattern of warming is in fact bi in our favor uh another fairly large effect which You Don't See Much discussed is the increase in the habitable area of the Earth if you look at a temperature uh average temperature map of the Earth and population density map of the Earth one of the things you notice is that heat does not result reduce population density that is to say human beings live in noticeable numbers between about 10° centigrade and 30° Centigrade uh average temperature over a range of about 20 degrees and you have some of the highend areas of that are some of the very densely populated areas the Philippines for example is one example where you don't see people is where it's cold so what happens when you raise global temperatures especially especially when you raise global temperatures most towards the poles the answer is the temperature Contours shift towards the poles that the if ask what was the line that showed where average temperatures were 5 degre Centigrade or 8 degrees Centigrade or whatever it is that line in the north is going to move towards the pole that means that if you say well temperatures average temper below so and so such and such looking at those Maps almost nobody lives there the area which is of which that's no longer true is gone up now you might say yes but all that means is you've got a whole bunch of land which is just barely good barely warm enough to live on instead of not quite warm enough to live on that's true but just south of that you've got land that used to be just barely warm enough to live on that's now a little bit more than barely and just south of that so if you think about it you can roughly estimate the effect by saying what is the total amount area of land which shifts from too cold for people to live on to barely warm enough to live for people to live on and represent that as the area of good comfortable land that's increased when you allow for the effect down it I did that calculation that's another one of my substack posts it's a very rough calculation what we sometimes refer to uh as a back of the envelope calculation roughly speaking you increase the useful at least the temperature usable area of the Earth by roughly the area of the United States so it's not a trivial trivial effect it's quite a large effect which is very rarely included so the conclusion I'm offering is that there are quite large positive effects there may indeed be substantial negative effects as well so I don't want to say that I'm confident that we're better off with climate change but that in fact It Is by no means clear that we're worse off with with climate change uh let alone badly uh badly worse off uh why does everybody believe the opposite and a lot of the answer is a very biased uh presentation for a variety of reasons uh oh let me the I mentioned the ipcc summary for policy makers uh and the effect of uh the way in which they without without lying distort the effect on tropical Cyclones the other thing that struck me is the summary for policy makers has this nice map of drought and it says here are the regions of the Earth where drought is increasing or decreasing and they then say well here are the ones where we're pretty sure it's due to climate change change and here are the ones where we're not sure if it's due to clamp most of them the odd thing is that they show almost all of the regions drought is increasing uh one or two it it's decreasing despite the fact that the body set of the report says that the Earth is Greening why is this their definition of drought they're defining it by the amount of water in the soil but one of the effects of uh uh of of of CO2 fertilization is that plants need less water so if the relevant Criterion is not what is the water in the soil but what is the effect on plants the former is going to overstate the amount of drought I do not know whether that I've not not made any attempt to correct for that I don't know if I have the information to do it but it struck me as another case in which they were giving a somewhat uh distorted picture uh there is an article that was published in nature uh oh in the last year which I went over in some detail and wrote a rebuttal to which nature did not publish of course uh and the article was an attempt to estimate the total cost to humans of an extra ton of of carbon dioxide they were running this estimate for 300 years or at least for the next three centuries until until 2300 you ought at that point to say then it's probably fraudulent that is to say not that it's going to be high or low but just that we so much is changing due to technology let me give you one example almost half of their total mortality was due to increased mortality when temperatures go up they didn't mention that they were assuming no medical progress for 300 years all right because when in so far as as temperatures too high or too low uh increased mortality they do it by people dying of something well the better the medicine is the less people are going to die of things they were ignoring that effect uh the the article had uh I think a couple of paragraphs at the end discusses reasons why their estimate of the total cost of carbon might be too low there was not a word about reasons why it might be too high although as as I say that particular one is clearly a a very strong reason why it's why it's too high since it goes through mortality and mortality is going to go down with with h medical progress uh I did I in my article sort of critiquing it which you can find on my one of my substack posts uh a version of it uh I gave at least some examples uh of the scale of the effect because you can you can ask uh how much has the mortality effect uh changed over the last 30 years say and the answers are quite large uh I didn't memorize it so you'd have to read it to to get my my my effects uh another another third third thing that I also analyzed was a Elementary textbook in climate science uh called modern climate change by a man called desler who is quite active online and he has a chapter on the consequences of climate change it does not list a single positive con consequence it is true that elsewhere in the book he does mention that you will have fewer people dying of cold uh but he then says more people die of heat than of cold uh he does not give any source for this it turns out that the uh people in some of the people who work for the federal agency that deals with diseases uh did actually do a calculation and and they did it by reading uh death certificates and they concluded that about twice as many people die of cold than of heat in the US however you don't even have to do that that is a graph of of mortality by month does that pattern suggest that people are killed more by cold or more by heat this is Northern Hemisphere right this is the US and I think the answer is pretty clear that mortality is up in the cold months and down in the warm months and that at least ought to be a reason to suspect that uh warming will reduce mortality rather than than increase it uh let me give a another bit of my critique of desler I should say the point of my critique is that this is an elementary textbook in its Third Edition any mistake in it has been taught to large numbers of people by large numbers of professors if there is a clear mistake either no Professor ever noticed it or desler refused to correct it and that I think suggests that climate science is not really a science at present that it's uh essentially become ideological let me give you another example uh and that is a he he asserts in one chapter that uh if you take the midpoint of the IBC projections for 2100 9% of Flor of the land area of Florida will be flooded containing 10 % of the population and I I thought I didn't think that sounded right from what I had seen about effects of sea level rise so I checked his Source his Source was not in fact a scholarly article it was a report commissioned by the environmental defense fund that is to say an activist group however that Source cited its source which was a journal article by two people Titus and Richmond if you followed it through uh destler's sea level rise that he said had this effect was 60 cm the environmental defense fund when they gave their figure was using 68.6 cm and the actual published article it was from was 80 cm what's going on I should say what what makes this less absurd than it seems is what they were doing was calculating at the highest high tide of the year what would then reach the uh the elevation of an area so they were asking basically the highest high tide of the year uh if sea level rise goes up by 80 cmers uh which is a fairly High estimate as it happens but it's not impossible uh how much of Florida will be underwater uh but I was also a little surprised by the claim that the percentage of population who were in The relevant area was larger than the percentage of the area because generally low-laying places tend to be swampy and they aren't where people choose to live so I looked at I I found the map in the article that their Source was drawing on which showed where the flooding was and I found a population density map of Florida online it was quite interesting if you superimpose them yeah this one shows it you will notice that the areas most of the flooding is in fact in the Everglades that's that bit at the southern tip of Florida almost nobody lives in the Everglades uh and the red areas are the areas which have high population density and with one tiny exception up north none of them are in the flooded area all right I'm using those those black lines are showing the boundary of the flooded area uh and the color you can see over there there's a a key to to this so in fact it is quite unbelievable that uh flooding that area could uh flood an area with that number of people living in it I have pointed this out to desler I will find out whether he is dishonest or only biased when the next edition of the book comes out my guess is that he will keep saying the same thing but I could be I could be wronging he would have a polite exchange uh but his polite exchange led to the conclusion that he knew what the right answers were and was quite confident of them uh the all right so let me see if I can say make some general points uh about the this the the basic issue I'm raising is an externalities issue the basic issue is if putting extra CO2 in in the air results in raising global temperatures which it very likely will I think there's good reason to believe that's happening uh what are the effects on humans and what are the net effects on humans uh it's a complicated question and it's a question where you're going to make a whole lot of judgment calls if you know what the answer ought to be you are going to make all the Judgment calls the same way you're going to say well I'm not sure about that let's let's safe let's pick a high number you are likely uh if you notice any positive uh effects uh to make conservative estimates for those for the same reason and you were likely not to notice some of the positive effects because you're not looking for them uh there's a economist who got a Nobel Prize for his work trying to estimate the costs of of climate change and it's quite interesting because if you look at his state it sounds as though he thinks climate change is a terrible thing then you look at his numbers like that the effect if we do Nothing At All by the end of the century will be about equivalent to lowering the GNP of the World by 3% uh not that the G&P of the world at that time will be 3% lower than it now is but it would be 3% lower than it would have been if there were no climate change it'll be like 200% larger as the that is the the general estimates assume conal growth uh the that that's nous is the person I'm describing and he has an there was a oped in the Wall Street Journal this is some years ago uh by a group of scientists who were basically arguing that climate change was not the sort of emergency situation that required drastic action and he wrote a rebuttal and it was really quite funny if you if you if you looked at his numbers versus his uh his words because what he asked was according to his estimates if you waited 50 years to do anything about climate change how much worse off would you be than if you took the optimal policies starting tomorrow all right so that's sort of an upper upper bound as it were of the costs of waiting uh and he said the cost of waiting would be $4.1 trillion Wars have been started over more this is $4.1 trillion spread over about a century and over about the entire globe that works out to be about 05% one about 12th of 1% of global GNP over that period of time so if you look at his numbers the effect of waiting for 50 years is Trivial if you look at his rhetoric uh it it's large uh oh I I just noticed I have this the quote here his his estimate of the effect of climate change if you do nothing will be two and a half percent of of world G&P of world output per year by the end of the century uh couple of other other things uh worth worth noting uh one of them some people talk as though the temperatures we have are about to have are unusually high and that's what period of time you're looking at that there are comments about uh this is the highest it's been in the time of human civilization might be true but it's not clear why that's relevant that after all human civilization did not was not subject to the average temperature of the globe human civilization existed in a variety of different places Egypt is a pretty warm place for example uh however a lot of people talk as though it is warm not just in terms of human civilization but in terms of time in general and that is as it happens not correct uh I came across this graph this is a graph of estimated Global temperature over a very long period of time as you can see uh goes back 500 million years and you will notice that we're at the low end of it not the high end of it that blue color is ice ages uh people often confuse ice ages with glaciations uh a glaciation is what happens when the glaciers go down from the poles and start covering nice places you'd like not to have glaciers an ice age is a time when there is ice on one or both of the poles that's the geological definition we've been in one for about 3 million years now uh and an ice age consists of alternate glaciations and interglacial periods uh so in fact this is relevant to the people who say well look maybe there's a tick Tipping Point maybe if the temperature gets a little higher then it'll somehow will get turned into Venus or something it'll get much much hotter but we know that the temperature has been I think about 100 million years ago it was roughly 13 degrees Centigrade above what it now is and no Tipping Point occurred there uh for a lot more see those sources uh I should also mention since I think we've I'm not I'm I don't think I'm quite out of my time uh one sort of neat thing I came across that if you're being skeptical about this one of the things that might occur to you is that global warming might be a good thing because after all we're in an interglacial it's an interglacial that's been going for unusually long time so maybe it's global warming that's the only thing that's keeping the the the the glaciers from moving moving south again it turns out there is in fact a respectable theory of this but the global warming in question is not due to the tech to the Industrial Revolution it started 8,000 years ago with the invention of agriculture and there is it's quite neat because if you look at at graphs of a a series of interglacials the normal pattern interglacial is that during the interglacials the amount of CO2 is going down and eventually it goes down enough so that things get colder and you have another glaciation this interglacial is different it starts going down and then turns around and starts going up well what happens when you cut down a large fraction of the Earth's trees in order to plant crops because you've just invented agriculture so that's the theory this is what's what's referred to as the early anth ogenic hypothesis and Sir somebody came up with it about 20 years ago maybe a little more than that and sirious Scholars have debated it back and forth it it's not really an argument at all about what we're now doing uh but but it does suggest that if we hadn't had the early anthropogenic warming the next glaciation might be just beginning that's what the attempts to look at the intial that looks most like ours in its starting conditions uh when when it ended all right so anyway if you want to see more about this uh you can look at my substack uh on my I was I was planning to do this from my laptop so that I could then show you uh what what the actually I bet this thing is connected I wonder if is that gonna g it work yes it's working aha that's my web page you will notice that it has a link to my substack post sorted by topic as you can see climate is a large topic but there are a whole bunch of other weird topics uh discovering truth is one of the important ones uh but also economics and education and libertarianism and so forth and I also have on the web page at the suggestion of a commenter on my substack a search bar so you can search all of my substack posts all of my blog posts and a large part of my written articles and books uh using Google uh to do it for you which is sort of neat but if you look here you will see there is a link to my books uh most of my books in some version or other are available you read for free uh in some cases the final version in some cases a late draft uh that's my first book Third Edition and it's a free pdf from the web page I also have if you happen to like this talk I got a link to my web talks and interviews and there are a lot of them so if you happen to want to amuse yourself for a year or so listening to my talks they're there