Or in a hundred year’s time, for that matter. Today’s Stern Review from the British government has been marketed as saying global warming means economic catastrophe if we do not decarbonize our economy now and is therefore being used to justify green taxes in the near future.
Well, let’s take a look at what the Review actually says. I applauded the announcement of the review because it was obvious that the economic assumptions on which global warming models are based needs to be questioned. Yet the review missed the point and just took these assumptions as read. Actually, they did even less than that. As Tim Worstall show, they only picked one economic scenario (IPCC SRES A2 for the cognoscenti) and measured the effets of global warming from that, before adding one with worse feedbacks than the UN “consensus” currently forecasts (see where this going?). That model just happens to be one with very high — 15 billion — population and low amounts of globalization, precisely the opposite of current trends. As Tim concludes:
Their entire report and justification is based upon the following:
1) Mitigating climate change will cost more than business as usual in the short term.
2) Mitigating climate change will cost less than business as usual in the long term, as the costs of mitigation will, in the longer term, be outweighed by the costs saved of adaptation (or to be more precise, the damage to economic output caused by climate change).
3) We need to make some unusual assumptions about discount rates to show this to be so.
OK, I was certainly willing to believe them, willing to give it a try. But, that appalling faliure in their own modelling: only taking a medium high emissions scenario and then one with further feedback mechanisms to do your sums on.
Here: Page 61 in chapter 3. Before I believe any more of this I’m going to have to have explained to me why projecting savings from a 15 billion people world, with a medium high emissions scenario, creating global GDP of $ 243 trillion, and being able to save 20% (or c. $50 trillion) by spending lots of money now is a better idea than other options such as A1 F1 (world markets, 7 billion people, $550 trillion….note that people are not two times richer here, they are four times richer than in the A2 scenario) or B1 or even B2….where we don’t spend any money now.
It’s almost as if that model were deliberately chosen isn’t it? The one that shows the lowest future wealth and thus makes the discounting make current expenditure look good?
Good question, A2 is clearly the outlier scenario, producing by far the worst results in terms of temperature rise at the end of the century. That’s an irresponsible choice of model.
Yet even under the A2 scenario, what Stern is saying is that, with all the negative consequences he has added on top of the scenario, the world will still be 4.25 to 9.5 times richer than it is now, instead of 5 to 10 times greater. Catastrophe canceled, if you ask me.
Meanwhile, Stern asks us to believe that stabilizing greenhouse gas concentrations at 550 parts per million (we’re at 430 now) would only cost 1 percent of global GDP. There have been huge numbers of economic studies looking at the cost of stabilization at 650 ppm and they suggest a cost of 2-5 percent. It’s inconceivable we could achieve 550 ppm for lower cost (there haven’t been nearly as many studies done at that level).
In short, Stern missed the point of his own review. Unless, of course, the whole point was to provide justification for a series of tax rises. Perish the thought.
Meanwhile, ConservativeHome has a wry take on the whole thing.
*cross-posted from NRO