Thursday, February 28, 2013

Global Warming: Economists' Views

I recently came across a report of a random poll of economists done in 2005, from which it looks as though my views on global warming are not as far out as I had assumed, at least among my fellow economists. The piece can be found at:

The relevant table:

Table 1:
Impact of Greenhouse Gases

In comparison to a world in which greenhouse gas levels were stable, rising levels of greenhouse gases by the end of the twenty-first century will cause GDP per capita in the U.S. to be:

a. more than 10 percent lower. 12.5%
b. about 5 to 10 percent lower. 7.1
c. about 1 to 5 percent lower. 21.4
d. less than 1 percent lower or higher. 35.7
e. about 1 to 5 percent higher. 16.1
f. more than 5 percent higher. 7.1

So a substantial majority think the effect will be either tiny or positive.


Alan said...

The effect on the GDP of the US. There are other countries, there are other aspects of the economy, and there are things other than the economy that matter.

(I haven't read the survey.)

David Friedman said...

There are other countries--some of which will gain more than the U.S., some of which will lose more. I'm not sure what "other aspects of the economy" would undercut GDP per capita as a good rough measure of the effect.

But I think the public view, at least in elite opinion, takes it for granted that global warming has large net negative effects, economic as well as of other sorts, on the U.S. as well as elsewhere. I find that view unconvincing, and was surprised that a lot of my fellow economists apparently agree.

I should add that I still find the view unconvincing if extended to cover all countries. I have no strong views on whether non-economic effects, more precisely effects on other species, are on net large and negative, whatever "negative" means in that context.

Anonymous said...

I wonder how many quietly accept Freeman Dyson's view that the likely largest effect of increased CO2 is a 1/2" increase in North American topsoil. And what proportion of those would loudly claim to share Ellen Goodman's view that 'global warming deniers' are on all fours with Holocaust deniers.

Anonymous said...

So a substantial majority think the effect will be either tiny or positive.

That seems like a slightly weird framing of the results. Somehow I doubt you'd be comfortable with someone saying "A substantial majority think that the effect will be neutral to disastrous," even though the negative version is larger (at 76%) than your positive spin (at 59%).

It seems like the right thing to do is to take an average if you were going to characterize the set. Then you could think the consensus view is that there will be a 1.4% drop. That seems like a much stronger case for saying that the drop is small and not worth worrying about.

David Friedman said...

"even though the negative version is larger (at 76%) than your positive spin (at 59%"

The negative version is 41%. "Less than 1% lower or higher" isn't negative.

Aside from that, your statement and mine are both true. But the impression one would get from the public discussion is that practically everyone who has seriously considered the question thinks the effect will be large and negative, so my summary better describes what is surprising about the reported results. You don't see anyone arguing that we should encourage CO2 production in order to warm the world.

Mac said...

Here is a possibility matrix with comments.

X axis:
- a) Global Warming is real and catastrophic
- b) Global Warming is real and annoying but not catastrophic.
- c) Global Warming is real but benign (no significant effects either way).
- d) Global Warming is real and beneficial.
- e) Global Warming is not real.
- f) Global Warming is not real but additional CO2 is beneficial.

Y Axis:
- a) Expand use of fossil fuels.
- b) Do nothing
- c) Do essentially nothing (Kyoto or Kyoto like programs).
- d) Massive Nuclear plant construction (including thorium long term).
-- Accept reprocessing waste.
- e) Attempt to reduce CO2 with wind and solar.
-- Economically expensive alternatives (lowers GDP)
-- Energy storage problem not solved.
-- Will take many decades to implement - if ever.
-- Accept bird kills, pollution problems, erratic power, etc.
- f) Impose limits on CO2 generation (high tax, caps, etc.)
-- Accept smaller GDP (higher unemployment, more poverty, etc.)
- g) Impose drastic limits on CO2 generation.
-- Accept economic collapse (mass starvation, riots, revolution).
- h) Utopia: a workable fusion power plant is developed and widely deployed.
-- Don’t hold your breath.

My take on the second matrix

X axis

Comment: We have no reason to believe that the climate of the early 20th. Century is optimum. Yes, it was a livable climate, but that is all we can say about it.

I suspect that the most likely outcome is f. AGW is not real but the additional CO2 has a significant fertilizing effect on food plants. Additional CO2 also causes plants to need less water.

We have the historical experience of the medieval warm period which was a very prosperous time in both Europe and China. Therefore, it would seem that if AGW is real that d. would be the most likely outcome.

Nonetheless being an engineer I am disciplined to look at the worst case and doing a worst case analysis we do need to consider a and b, however implausible they may seem. After all we are betting the planet.

Y axis:

Obviously if AGW is not real then from purely a climate viewpoint a or b is optimal.

There are obviously geo-political reasons to wish to reduce oil imports as well as pollution reasons to reduce fossil fuel consumption.

If AGW is real and is annoying then we need to make a trade off between economic damage caused by AGW and damage caused by our programs to ameliorate it. These trade offs will not be easy to make. The political process is ill equipt to make them. We will likely end up with the worst of both worlds (Significant GDP damage with lots of CO2).

We currently get about 80% of our energy from burning fossil fuels. Nuclear provides just under 10%. Solar and wind are way down there, 0.08% and 0.34% respectively (2007 numbers).

If we were to attempt to reduce our energy use by enough to make a significant dent in CO2 generation we would probably end up losing millions of people to starvation and/or freezing to death. So this will not happen, at least not intentionally.

The only option which will have any hope of success is d. massive nuclear power. It is, however, very likely that the political environment will close off this option. We do not seem to be pursuing option h.

We need to remember that China makes more CO2 than we do and they are adding a new coal fired power plant every week.

Tibor said...

I think that in the next few years, the current mainstream political approach to global warming is going to change drastically, at least in Europe. Here, I think we are further down the "green way to hell" than you are in the US and the course is absolutely not sustainable. Few examples:

1) Mandatory portion of gasoline (2 or 5 percent I think) has to be "biofuel". That is the stuff that is planted, harvested, processed and made into gas. It is extremely inefficient, even the greenpeace and similar activists are against it, since it is harmful for both the economy and the environment. Yet there are good reasons to keep it - the agricultural lobby is particularly strong in the EU (especially France) and they make good money on this - they receive subsidies and have a guaranteed demand (forced by the state).

2) Solar power. Now, this is perhaps even "better". The solar powerplants receive massive subsidies, there is a mandatory demand again (I think 10% or something?) AND they have a fixed price, that is way above the market price of electricity (in czech currency it is about 15 CZK as opposed to the market price of 3 CZK). Especially the czech government subsidized it so much, that now we have the highest proportion of solar power in the EU (and one of the highest electricity prices). Fortunatelly they stopped subsidizing new power plants (or they scheduled stopping it in a year or so). Here, even the spread costs to the entire population are already so high, that there was a major opposition to this. Still it took 5 years to get rid of the subsidies (and the solar electricity forced demand and minimal prices stil hold, that is an EU invention).

3) Wind power in Germany. Wind is also subsidized in EU and also has fixed prices, but it is mostly widespread in northern Germany (where there are a lot of windy places). However, since the wind power has its transfer issues, this (atop of high electricity prices) might soon lead to blackouts and serious problems of that sort. Also, Germany (after Fukushima hystery) decided to close down all of their nuclear power plants (which now supply I think about 20-30% of all the power) by 2020 or so. That will increase the prices even further.

4) For some reason, EU forbids (or maybe its countries individually) collecting the shale gas, which could at least reduce the gas prices.

5) A week ago, the government of Bulgaria stepped down, because of massive demonstrations against the czech company ČEZ (that is a 60% state owned, near monopole energetical company), essentially against the high electricity prices. If the current trends go on, even people in countries where their income is currently high enough not to worry about the prices this much, will get angry. Hopefully that will stop this "green" madness. Or, in the worse case, it will lead to maximum electricity prices, blackouts and energy shortages.

The reason these "green policies" are so popular among politicians is that there is always a concentrated interest group that can make a fortune on this, a fortune that is virtually guaranteed by the state. Any global warming scarecrow is good for them. And some ecologists (most I think) are eager to play the role of "useful idiots" (that is what Lenin called the intelligence which supported his communist revolution). The only "positive" thing is that these programs are so insane, that they will lead to collapse very soon. And either that will happen and then they will have to be eliminated one way or another, or politicians will realize this goes even against their short term interests now and stop it soon.

Nightrunner said...

A million Americans claim to have been abducted by the space aliens. Any survey is garbage

Tibor said...

Nightrunner: I agree that surveys should be handled with extra care (since the "random sample" of respondents doesn't have to be all that random in some surveys), but these are two different things - one is people claiming something that happened to them (abduction by aliens), another is people expressing their opinions (or educated guesses perhaps). The other survey is not a "proof that global warming is not a problem", it is just saying that a lot of economists who undoubtedly use their professional skills to form an opinion on the subject, have these and these opinions. What you take from that ("economists are idiots who don't understand the world" or "well, maybe we shouldn't be so sure about the catastrophic scenarions") is up to you.

In a way the alien one is the same - the survey just show people's opinions. 1 million americans perhaps actually believe they were abducted (unless they're trying to look interesting). That is a fact, unless there was the "random sample" problem or the questions in the survey were compelling some set of answers. If you take that as a proof of alien abduction or a proof of a lot of people living in delusion is up to you.

Kosinsky said...

To alter a quote of Alexander Wendt: Climate change is what societies make of it.

Jack P. said...

I don't work with surveys, but I find it strange that the range is framed asymetrically. For such a question, you should assume zero as a null and provide choices for an equal range on the plus and minus sides.

I believe the survey question has a framing (or is it anchoring?) bias in the sense of Kahneman & Tversky that, if anything, will tilt the answers in favor of finding a negative effect.

Simon said...

Personally I don't think the impact will be significant but just for argument's sake, is it also possible that GDP is reflecting productive activity rather than welfare? Although the gdp is similar, it need not mean a small effect if a large part of the activity is taken up in moving cities towards that poles.

Chris H said...


The way of saying that in the same terms as the survey is that less than a third of one percent of Americans believe they have been abducted. If a survey of opinions states raw numbers and not percentages of respondents then it is definitely trying to trick you. When you say a million people that gives the impression of huge numbers, while if you say 1 in 300 people that is accurate and gives the impression of a small group of weirdos (which is a more accurate description of those who believe they've been abducted).

This survey is a weak form of evidence, it is a step removed from the more direct arguments in favor or against global warming as catastrophic, but it is a form of evidence. Expert opinions in general are more likely to be accurate than non-expert opinions and thus form a decent proxy for when examining an issue more directly is impractical. If you have such a closer examination then this survey is likely not particularly useful to you, but it could be a useful starting point for others.

Anonymous said...

Frankly, I don't think an 8 year old survey conveys any useful information. We now have 8 years more data, and it's pretty clear that for the last 15 years global temperatures have been declining. I would suspect that a survey of economists (assuming that it is of any real value in the first place) would be very different today.

Anonymous said...

Whatever the impact on GDP, it is of questionable relevance anyway. If we have to devote more GDP to mitigation than consumption, for example, we can be worse off even if GDP is higher.