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Emission scenarios and economic impacts of climate change

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As requested by Michael Hardner, this is a thread to discuss emission scenarios and economic impacts of climate change. I’ll try to keep the original post relatively short, but I want to spend a paragraph or two on relevant aspects of this topic.

Climate Sensitivity: Equilibrium climate sensitivity (ECS) is how much global temperatures will increase in the long run after a doubling of atmospheric CO2 due to all but the very slow feedbacks (primarily albedo feedbacks that have decay times on the order of centuries or millennia). ECS is the most common measure of climate sensitivity and the IPCC’s ECS range is from 1.5 C to 4.5 C. However, more recent studies strongly suggest that ECS is in the lower half of this range (1.5 C to 3.0 C) and I would argue that empirically evidence all but excludes the possibility of an ECS greater than 3 C.

It takes a bit over a century to reach go from equilibrium and reach the new ECS after a doubling of atmospheric CO2. For shorter time scales, the transient climate response (TCR) is usually a better measure of how much warming you should expect due to CO2 doubling; the TCR is probably somewhere between 1.2 C and 2 C. The Earth System Sensitivity (ESS) is how much global temperatures change in the very long run due to a doubling of atmospheric CO2; ESS is probably between 2 C and 4C. Btw, radiative forcing due to CO2 concentrations is a roughly logarithmic function of CO2, which means the first doubling of CO2 concentrations causes roughly the same temperature increase as the second doubling of CO2 concentrations. You can see a more in depth discussion about climate sensitivity here: http://www.mapleleafweb.com/forums/topic/24202-what-is-the-correct-value-of-climate-sensitivity/

Uptake of CO2: After CO2 has entered the atmosphere, all of it doesn’t stay there forever. Some of it gets absorbed by plants, some of it gets absorbed by rocks, and some of it gets absorbed by oceans. By far oceans are the dominant source of up taking additional CO2. The behaviour of oceans roughly follows Henry’s law (https://en.wikipedia.org/wiki/Henry%27s_law), which basically means that oceans will try to be in equilibrium with the atmosphere with respect to how much dissolved CO2 the oceans hold. In the long run, Oceans absorb roughly 85% of emitted CO2, but in the short run the effect of oceans is only half. If one combines the effect of temperature increase due to emitted CO2 and the rate at which CO2 gets absorbed, maximal warming due to emitting CO2 occurs after roughly 1 decade (http://iopscience.iop.org/1748-9326/9/12/124002/article). Below is a diagram of the BERN model, which gives you an idea of what percentage of emitted CO2 remains in the atmosphere after a certain amount of time:

bern_irf.gif

Temperature-CO2 Feedback: As temperatures warm, oceans are less able to hold CO2 and permafrost melts, releasing CO2. As a result, warmer temperatures release CO2, which causes more warming. This is a positive feedback. Contrary to what the media may tell you, the strength of this feedback isn’t that large. Based on empirical data (be it Pleistocene ice core data or papers such as this http://www.nature.com/nature/journal/v463/n7280/full/nature08769.html)the strength of this feedback is very likely below 30 ppm/C.

Polar Amplification: Polar regions are expected to warm faster according to both empirical data and climate models. The polar amplification factor is roughly 2.5. Which means that if global temperatures increase by 1C, then the temperature of polar regions increases by roughly 2.5 C; by contrast equatorial regions increase in temperature by approximately 2/3 the increase in global temperature. Below gives you a rough idea of which regions of Earth warm faster:

GISS_temperature_2000-09_lrg.png

Hurricanes and Extreme Weather Events: There is a lot of misleading information out there about the relationship between extreme weather events and climate change. Climate change doesn’t necessarily cause an increase in extreme weather events. In fact, since the temperature difference between poles and equator is expected to decrease due to global warming, and weather events on Earth try to act as heat engines that transport heat from equator to poles, many extreme weather events will decrease in magnitude or frequency. For example, Tornadoes in Tornado alley are expected to decrease. Most of the increase in hurricane frequency from 1980-2005 is actually due to the Atlantic Multidecadal Oscillation (AMO), not due to increases in greenhouse gases.

Since studies discussing various extreme weather will likely be brought up in this thread, I would encourage skepticism about a study’s definition of extreme weather. Many studies will define extreme weather as any large deviation in observed weather/climate from the historic mean. These types of definitions are problematic because by definition any deviation (be it cooling or warming) from the historic mean is going to result in more extreme weather so these definitions don’t even satisfy the transitive property. These types of definitions would also suggest that a winter in Ottawa of -20C is less extreme than a winter of -5C, even though most people would consider -20C to be more extreme than -5C.

Jet streams: Jet streams are expected to weaken due to climate change since climate change lessens the Earth’s temperature gradient. This could lead to more static weather conditions primarily in the Northern Mid-latitudes. For example, an increase in global temperatures by 3C may cause an increase in the frequency of prolonged droughts in Northern midlatitudes by 28% due to this effect. A thread on this topic can be found here: http://www.mapleleafweb.com/forums/topic/23461-effectsimplications-of-climate-change-on-jetstreams/.

Precipitation Patterns: Contrary to what the media may suggest, climate change doesn’t mean that everything will become desert like. In fact it is arguably the opposite. As temperatures warm, air can hold more water (this follows the Clausius-Clapeyron relation which basically suggests that carrying capacity increases by 7% per 1 celcius). As a result, there is greater moisture transfer between oceans and continents due to climate change, so the continents get on average wetter even after taking evaporation into account as the Earth warms. This effect is clearly evident if one compares Earth’s vegetation today with Earth’s vegetation during the Last Glacial Maximum when global temperatures were 4 C cooler.

F1.large.jpg

However, things aren’t as straightforward as everywhere gets wetter. Due to how air circulates around the world, many deserts occur around 30 degrees North or South of the equator. Climate change may move this region poleward, which may cause places like California to become drier but Subsaharan Africa to get wetter. Also, depending on a place’s location relative to mountain ranges and land masses, places may become wetter or drier in response to changing wind patterns.

Sea Level Rise: Sea rise this century will be half a meter with a confidence interval of plus or minus a quarter meter. This result is from the IPCC’s fifth assessment report and is fairly robust across a large range of emission scenarios. In the very long run (like after a two millenia) sea level rise will be more (approximately 3 m per degree of warming according to sea level differences compared to the Eemian (the last interglacial)).

Ocean Acidification: As oceans absorb excess atmospheric CO2, they will become more acidic. There is a bit of a trade-off in that more ocean acidification means that there is less CO2 in the atmosphere so there is less global warming. Since the 18th century, Ocean pH has dropped by 0.11. It is expected to drop by about 0.25 by 2100. Even after the acidification, oceans will still be very alkaline in 2100 (pH of over 7.8). You can read more here: https://en.wikipedia.org/wiki/Ocean_acidification

CO2 Fertilization Effect: As one increases atmospheric CO2, one increases the CO2 available for plants to perform photosynthesis. As a result, increased atmospheric CO2 results in more plant growth. Optimal atmospheric CO2 for plant growth is 1000-1500 ppm (which corresponds roughly to the higher atmosphere CO2 levels that were seen for most of the past 600 million years; our low atmospheric CO2 levels are relatively recent geologically speaking). Some types of plants are more affected by CO2 fertilization than other plants. C4 plants like corn evolved to adapt to our very low CO2 environment so aren’t as affected by the CO2 fertilization effect as C3 plants like Rice.

co2-fertilization-re-hatfie_med_hr.jpeg

Discount Rates: In order to compare present costs/benefits with future costs/benefits, one needs a discount rate. A discount rate basically accounts for the fact that a dollar today is more valuable than a dollar tomorrow even after one accounts for inflation. The reason for this is that you could take a dollar today and invest it and get a return. For developed countries the social discount rate is generally considered to be between 3% and 7%; it is even higher for developing countries. The Canadian Treasury Board and the US Office of Management and Budget typically suggest a discount rate of 7% for cost benefit analyses.

However, many cost-benefit analyses for climate change will use absurdly low discount rates (usually 2.5% to 3.5%), although they don’t really give much basis for this. Using very low discount rates for climate change studies yet much higher discount rates of 7% for everything else seems really inconsistent to me. I suspect that one of the reasons climate changes studies use very low discount rates is due to people trying to dogmatically obtain a conclusion that favours mitigation policy. If you see a result in this thread that uses a very low or very high discount rate, please be skeptical. Based on studies I have seen in the past that try to obtain the social discount rate based on the saving-consumption behaviour of people in the US (which gives a discount rate between 5% and 6%) I think that a discount rate of 5% is reasonable.

2 C Target: Inevitably, this thread will likely bring up the 2 C target. Many people have this belief that we are safe if warming is below 2C relative to pre-industrial levels and then once we pass 2C all hell breaks loose and the world is doomed. This is not the case, the impact of climate change is not a step function, it is continuous; 2.1 C of warming will have slightly more impact than 1.9 C of warming, 2.3 C of warming will have slightly more impact than 2.1 C of warming, etc. There is no scientific basis or even economic basis for the 2C target, the 2C target is an arbitrary political target that was created 20 years ago because a German scientist (Hans Joachim Schellnhuber) felt that politicians were too stupid to understand all the nuance and complexity of climate change.

RCP 8.5: The representative concentration pathways (RCPs), which are emission scenarios created by the IPCC, will inevitably get mentioned in this thread. I want to clarify something about RCP 8.5. RCP 8.5 is NOT a REPRESENTATIVE business as usual scenario, despite what articles or even scientific papers may say. It technically a business as usual scenario, but it was creating using extreme assumption after extreme assumption so it is not representative. I’ll list 3 reasons why it is not representative.

Firstly, the RCPs are based on CMIP5 climate models. CMIP5 climate models have numerous problems (such as 30 W/m^2 zonal oscillations), but the biggest issue is that they are over sensitive. They have a median ECS of 3.2 C, which is inconsistent with empirical evidence, and the predictions made by CMIP5 models are very close to being falsified by recent data (as I explained in this thread http://www.mapleleafweb.com/forums/topic/24584-arcticantarctic-sea-ice-what-to-make-of-it/?p=1065868).

Secondly, RCP 8.5 clearly overestimates future CO2 emissions based on empirical data and barely shows any impact of the population slowdown/decline that is expected to occur midcentury. For example, if I expect global population to follow a roughly logistic trend (this probably overestimates future population since the UN predicts global population will peak midcentury) and emissions per capita follow a roughly exponential trend, I get that global CO2 emissions per year will be 15 Gt of carbon in 2100. However, the RCP 8.5 has global annual CO2 emissions in 2100 of 27 Gt of Carbon. RCP 6.0 more closely resembles what is expected to happen under a no mitigation scenario.

emissions-graph-rpc.PNG

Lastly, RCP 8.5’s predictions of CH4 and N2O emissions are grossly inconsistent with what one should expect based on empirical evidence. RCP 8.5 predicts very large increases in CH4 and N2O after a rapid acceleration in emission rates, yet emissions per capita of both CH4 and N2O are decreasing. Rate of increase of atmospheric N2O and CH4 have both plateaued. Given that these are the next two most important greenhouse gases, RCP 8.5 is grossly overstates future warming.
anomfit.jpg
cg_N2O.png

Realistically, the climate in 2100 should be approximately 2C warmer than current temperatures under a no-mitigation scenario.

Edited by -1=e^ipi

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No. Use math to your heart's content.

no, sorry... again, will this be an English conversant thread or will there be reams... and reams of unnecessary math wizardry presented?

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no, sorry... again, will this be an English conversant thread or will there be reams... and reams of unnecessary math wizardry presented?

I don't know. Depends where the conversation leads.

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I don't know. Depends where the conversation leads.

uhhh... does "conversation" lead you to your unnecessary math wizardry? :lol:

RCP 8.5: I want to clarify something about RCP 8.5. RCP 8.5 is NOT a REPRESENTATIVE business as usual scenario, despite what articles or even scientific papers may say. It technically a business as usual scenario, but it was creating using extreme assumption after extreme assumption so it is not representative.

Secondly, RCP 8.5 clearly... barely shows any impact of the population slowdown/decline that is expected to occur midcentury... since the UN predicts global population will peak midcentury)

huh! This is the second recent reference you made to RCP 8.5 being based on "extreme assumptions". The first time you made that claim I requested you provide those assumptions... for some strange reason you declined to take it up. Now here, you present unsubstantiated references. Just pulling out but one of your unsubstantiated references in regards to UN population projections, you speak to the UN projecting mid-century population "peak... decline"?: per the most recently released 2012 UN population projections

According to the 2012 Revision of the official United Nations population estimates and projections, the world population of 7.2 billion in mid-2013 is projected to increase by almost one billion people within the next twelve years, reaching 8.1 billion in 2025, and to further increase to 9.6 billion in 2050 and 10.9 billion by 2100 (figure 1). These results are based on the medium-variant projection, which assumes a decline of fertility for countries where large families are still prevalent as well as a slight increase of fertility in several countries with fewer than two children per woman on average

.

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Firstly, the RCPs are based on CMIP5 climate models. CMIP5 climate models have numerous problems (such as 30 W/m^2 zonal oscillations)

again! You truly are the King... of BS! You won't acknowledge your bonehead play in applying yet another of your broadest of broad brushes to the entire complement of CMIP5 models... again:

"as I said, it takes an investment in time to flush out your BS! You've made blatant, repeated across-the-board, all encompassing reference to CMIP5 models and 30 W/m^2 zonal oscillations. Of course, as it turns out, this was found in only 8 of 30 models... of those 8, the worst case was found in only one obscure model, with some of those 8 @ 24... and others @ 3... depending on the time-step being used. But don't let that stand in the way of your blusterbus! Of course, none of those 8 models are the profiled, mostly used models... but why let that get in the way of your blusterbus! Equally, per the paper author's own statement, this has no affect on the global temperature estimates... did you actually read the paper you're blustering about? :lol: More pointedly, for those 8 models it had no effect on any trends. Most pointedly, the affect averaged out and only has consideration for regional impacts... do you know of any CMIP5 models being used for regional weather observations? I kid, I kid!

more pointedly, as I now discover... that paper you hyped didn't actually bring forward anything new! A much earlier paper had relayed the same issue affecting a minimal number of those minor/unused CMIP5 models. No one bothered to adjust them... cause there was no need given their use (or rather non-use)!

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This is the second recent reference you made to RCP 8.5 being based on "extreme assumptions".

Assumptions such as how population will change over time, the rate at which the economy will shift to less CO2 intensive industries, the rate of technological progress towards greater efficiency per unit of CO2, etc.

population projections, you speak to the UN projecting mid-century population "peak... decline"?: per the most recently released 2012 UN population projections

Didn't the UN use to have two types of medium projections? Maybe they changed things since I last checked. Anyway, their projection for 2100 (10.83 billion is still less than what I get using a logistic trend for 11.24 billion).

Edited by -1=e^ipi

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Didn't the UN used to have two types of medium projections? Maybe they changed things since I last checked. Anyway, their projection for 2100 (10.83 billion is still less than what I get using a logistic trend for 11.24 billion).

2 types of medium projections? Oh my! Since the last time you checked? That projection I referenced has been out since 2012... just when did you last, uhhh.... check? :lol: So... let's dispatch with your claim about the UN population projection "peaking... declining... mid-century"... hey!

Assumptions such as how population will change over time, the rate at which the economy will shift to less CO2 intensive industries, the rate of technological progress towards greater efficiency per unit of CO2, etc.

seeing as we've dispatched your unsubstantiated claim about the UN population projection peaking/declining mid-century, just where's your substantiation to support the rest of your claimed assumptions... as being, as you said, "extreme assumptions".

.

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However, many cost-benefit analyses for climate change will use absurdly low discount rates (usually 2.5% to 3.5%), although they don’t really give much basis for this. Using very low discount rates for climate change studies yet much higher discount rates of 7% for everything else seems really inconsistent to me.

It is worth highlighting this point because it really show how all of these projections are based on assumptions pulled out of hat and the urgency of problem can change quite dramatically depending on these assumptions. It is also worth pointing out that economists have very bad track records. For example, how many economists predicted the drop in oil prices that we see today 5 years ago? Why should we give economic projections for the next 100 years serious consideration?

For me this means we can't really justify making any radical sacrifices today because sacrifices made today have just as much a chance as making the future worse than better. We need to be focused on actions that will be positive no matter what the future. i.e. if we grow the world economy they people will be more wealthy and better able to pay for whatever adaptations are needed. Investments in R&D for alternative energies are also important but that does not include mass deployment of technologies that cannot work in their current form.

Edited by TimG

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... if we grow the world economy they people will be more wealthy and better able to pay for whatever adaptations are needed.

considering it's the undeveloped, less wealthy countries that will bear the brunt of warming/climate change (with or without mitigation efforts)... exactly how will your "trickle-down" reach them to adapt... and then adapt again (since you don't accept mitigation on any level)... and again... etc.? Oh wait, are you an advocate for wealth distribution? :D

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However, many cost-benefit analyses for climate change will use absurdly low discount rates (usually 2.5% to 3.5%), although they don’t really give much basis for this. Using very low discount rates for climate change studies yet much higher discount rates of 7% for everything else seems really inconsistent to me. I suspect that one of the reasons climate changes studies use very low discount rates is due to people trying to dogmatically obtain a conclusion that favours mitigation policy.

of course it depends on your views toward policy... and whether or not you choose to favour/include social-welfare considerations... and a more significant ethical approach... within consumption. Gee, I wonder where you stand! (/snarc)

.

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So... let's dispatch with your claim about the UN population projection "peaking... declining... mid-century"... hey!

I wouldn't completely 'dispatch' the claim that populations will peak mid-century.

http://www.eea.europa.eu/data-and-maps/figures/world-population-projections-iiasa-probabilistic

Edited by -1=e^ipi

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I wouldn't completely 'dispatch' the claim that UN populations will peak mid-century.

http://www.eea.europa.eu/data-and-maps/figures/world-population-projections-iiasa-probabilistic

no - again, I provided the latest 2012 UN population projections ... IIASA is not the UN! Notwithstanding your linked graph annotation speaks to an IIASA 2007 probabilistic projection... based on a UN 2008 revision. Within the actual 2008 UN population projection, the projection only goes up to 2050 (unlike the 2012 projection which extends to 2100)... and the only scenario to that 2050 date that speaks to a "decline" is the low-fertility scenario. Also... within the 2012 projection, a fertility projection is also made... and aligns with the result I initially provided. You know, the one that punts your claim that the UN projects a "declining... peak... mid-century population".

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Meant to say populations, not UN populations.

Prior to the current projections their medium projections did involve peaking by mid-century and that was the 'consensus for 20 years'.

http://www.economist.com/news/international/21619986-un-study-sparks-fears-population-explosion-alarm-misplaced-dont-panic

Anyway, current trends are slightly less than what is expected under a logistic projection.

Edited by -1=e^ipi

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I read on Judith Curry's blog that Richard Tol made the top 10 list of most influential climate change authors (http://judithcurry.com/2015/07/10/which-climate-change-papers-matter/) and I decided to check out Richard Tol's wiki page (https://en.wikipedia.org/wiki/Richard_Tol). I noticed that it says that Richard Tol advocates a carbon dioxide emission tax of $20/ton, which in in line with the value of $22/ton I got in this thread (http://www.mapleleafweb.com/forums/topic/24202-what-is-the-correct-value-of-climate-sensitivity/?p=1069893). Although my value was in per ton of CO2 where as the wiki page is unclear if it's per ton of CO2 or Carbon (which is a difference of a factor of 44/12).

Anyway, if one compares $22/ton with carbon dioxide emission taxes around the world (https://en.wikipedia.org/wiki/Carbon_tax), it appears that many countries have very reasonable carbon tax levels around this value including Korea, Australia (before they scraped their carbon dioxide emission tax) and most of Europe. The only two countries that stand out as having absurdly high carbon dioxide emission taxes are Sweden and Norway. BC's carbon dioxide emission tax of $30/ton is arguably a bit too high, though not absurdly high. Alberta's rate of $15/ton (although it isn't as broad as a carbon dioxide emission tax) might be a bit too low.

Edited by -1=e^ipi

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it appears that many countries have very reasonable carbon tax levels around this value including Korea, Australia (before they scraped their carbon dioxide emission tax) and most of Europe.

You need to factor in the the existing excise taxes on fuel since they have the same effect as a new carbon tax. Once you factor that in the carbon tax on gasoline in Canada far exceeds reasonable estimates of the social cost of carbon.

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You need to factor in the the existing excise taxes on fuel since they have the same effect as a new carbon tax. Once you factor that in the carbon tax on gasoline in Canada far exceeds reasonable estimates of the social cost of carbon.

To be fair though, burning of fossil fuels has an external cost outside of its impacts via climate change. Pollution has impacts on human health, so a fuel tax can be justified in addition to a carbon dioxide emission tax. Whether or not the current fuel taxes are too high or too low, I don't know.

Obviously you have the whole issue of game theory. Even if it is in the world's best interest for a $20/ton carbon dioxide emission tax, that is unlikely the case for individual countries. So it might be better to use the threat of 0 mitigation policy to get the world to comply with a global pigouvian tax.

Edited by -1=e^ipi

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Obviously you have the whole issue of game theory.

The only way to win the game is to refuse to play. Perhaps the biggest argument in favour of adaption as the primary policy response is it only requires local action. No global agreement is required.

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I read on Judith Curry's blog that Richard Tol made the top 10 list of most influential climate change authors

bullcrappy! Influential? Is being "prolific and cited" necessarily a positive influence... how many of those cites are authors referencing... then discounting/disagreeing with Tol... you know, Tol... the guy aligned with the denier GWPF organization. But since he is one of the "do-nothing/delay" types, of course, fake-skeptics routinely pump the guys tires! Richard Tol and his "marginal impact of CO2 emissions" position... "meeting the marginal costs of climate change through a somewhat increased rate of investment in technology, along with corrected "externalities" through minimal government intervention"...

but hey now! Your guy Tol has been real 'food for blog fodder' over the years... lots of "gremlins messing with his papers"! :lol:

Richard Toll: "Gremlins intervened in the preparation of my paper “The Economic Effects of Climate Change” . . . minus signs were dropped from the two impact estimates . . . [also there were] two overlooked estimates . . ."

per Andrew Gelman (...an American statistician, professor of statistics and political science, and director of the Applied Statistics Center at Columbia University): A whole fleet of gremlins: Looking more carefully at Richard Tol’s twice-corrected paper, “The Economic Effects of Climate Change”

I think this is worth discussing because the paper has been somewhat influential (so far cited 328 times, according to Google Scholar) and has even been cited in the popular press as evidence that “Climate change has done more good than harm so far and is likely to continue doing so for most of this century . . . There are many likely effects of climate change: positive and negative, economic and ecological, humanitarian and financial. And if you aggregate them all, the overall effect is positive today — and likely to stay positive until around 2080. That was the conclusion of Professor Richard Tol of Sussex University after he reviewed 14 different studies of the effects of future climate trends.” Once the data errors were corrected, it turns out the above quote is incorrect: of the studies cited by Tol, all but one projected negative or essentially zero economic effects of climate change, with the only paper giving a positive estimate being an earlier one of Tol himself, so clearly no consensus of a positive effect—although the science writer could be excused for thinking that, based on the earlier published paper that had the errors.

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Perhaps the biggest argument in favour of adaption as the primary policy response is it only requires local action. No global agreement is required.

huh! Just a short while back... wearing your even present "Adapt-R-Us-Only" hat, weren't you a proponent of a flavour of "wealth distribution"? :D

... if we grow the world economy they people will be more wealthy and better able to pay for whatever adaptations are needed.

your "no global agreement necessary"... "only local action required" is certainly more in keeping with your die-hard "let them eat cake" sentiments towards developing countries! You know, those developing countries that are and will continue to be the most affected by developed countries driving climate change..... those developing countries that without an international global agreement will be significantly constrained in being able to, as you say, "pay for whatever adaptations are needed"!

.

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The only way to win the game is to refuse to play.

Why not a tit-for-tat approach?

No global agreement is required.

I don't think you would need to get all countries to agree, just the major ones (US, China, India, EU). Then all you would need is for the compliant countries to threaten sanctions or military action against the non-compliant countries.

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the guy aligned with the denier GWPF organization.

Could you explain how GWPF is a 'denier organization'?

Simply showing that 'people disagree with Richard Tol' doesn't discredit Richard Tol, nor his work.

You know, those developing countries that are and will continue to be the most affected by developed countries driving climate change.

Please prove your claim that developed countries will be the most affected by climate change. Developed countries are located further from the equator so will generally have larger temperature changes due to polar amplification.

Edited by -1=e^ipi

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After reading some recent articles on the issue of choice of discount rate for calculations of the social cost of carbon (example: http://instituteforenergyresearch.org/analysis/ombs-whitewash-on-the-social-cost-of-carbon/)I've been thinking more about the discount rate issue. Obviously it is inconsistent to use 3% discount rates for the social cost of carbon and 7% for everything else (the Office of Management and Budget in the USA recommends 7%, the Canadian Treasury Board appears to suggest 8% http://www.tbs-sct.gc.ca/rtrap-parfa/analys/analys-eng.pdf).

Though I want to highlight two issues that aren't discussed very often:

The real interest rate appears to be dropping over time: If one looks at empirical estimates of the real interest rate for various countries, there appears to be a global long term trend towards lower real interest rates (https://www.imf.org/external/Pubs/ft/weo/2014/01/pdf/c3.pdf). This means that the discount rate that made sense in the past may be too high to use for the future. This is especially concerning if you look at the justification for the 7% rate at the OMB website (https://www.whitehouse.gov/omb/circulars_a094).

"Constant-dollar benefit-cost analyses... should report net present value and other outcomes determined using a real discount rate of 7 percent. This rate approximates the marginal pretax rate of return on an average investment in the private sector in recent years."

What are 'recent years'? Well given that this is from 1992, this recommendation of 7% is 23 years out of date. So likely a lower discount rate makes more sense.

The real interest rate depends on the savings rate: If you have a higher savings rate, your real interest rate will become lower. Under the Solow model, the real interest rate should be roughly proportional to the inverse of the savings rate. The world savings rate is roughly 24% (https://www.imf.org/external/Pubs/ft/weo/2014/01/pdf/c3.pdf). However, under the 'golden rule', consumption is maximized when the savings rate is equal to physical capital's share of income (which is 1/3). So if the world had an optimal savings rate then the real interest rate would be ~72% of it's current level.

Both of these issues suggest that the current interest rate used for cost benefit analyses in Canada, the USA and elsewhere are likely too high.

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Simply showing that 'people disagree with Richard Tol' doesn't discredit Richard Tol, not his work.

no worries! Tol discredited himself... try re-reading my post again. There was this media blitzkrieg from the usual suspects pumping Tol's paper on through to the mainstream media... big time coverage of Tol's (failed) analysis and (false) claim that the positive effects of climate change far outweigh the negative. And imagine that, when Tol had to correct his paper (as he blamed "gremlins" for his errors! :lol:), there was nary a peep of coverage other than in blogs - go figure! Again: "Once the (Tol analysis) data errors were corrected: of the studies cited by Tol, all but one projected negative or essentially zero economic effects of climate change, with the only paper giving a positive estimate being an earlier one of Tol himself, so clearly no consensus of a positive effect"

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Please prove your claim that developed countries will be the most affected by climate change. Developed countries are located further from the equator so will generally have larger temperature changes due to polar amplification.

hey now! I thought you were the guy who didn't accept the impacts of polar amplification... wassup?

considering this is your economic focused thread, it's quite telling that you've chosen to take a most literal interpretation to qualify "most affected" in terms of, as you say, "larger temperature changes". Of course, an actual thinking person would view impacts and affects in terms of vulnerability, risk, mortality, economic loss, ability to adapt, readiness to adapt, etc..; notwithstanding past observations and future projections relative to regional impacts associated with the physical science basis of climate change. As but one example below, a graphic sourced from Germanwatch / Munich Re reinsurer: "of the 10 most affected countries (1994-2013), nine were developing countries in the low income or lower-middle income country group, while only one was classified as an upper-middle income country"

XaAPqIy.jpg

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