Selected category: Climate science

How climate policy can mitigate extreme weather's economic toll

 

This post was co-authored with Maureen Lackner

In the wake of hurricanes Harvey and Irma, Americans are coming together to support communities as they recover from the physical, emotional and economic toll after lives, possessions and livelihoods were washed away. Reestablishing daily routines, including work, school and regular commerce will take time, and for many, life may not return to what was once considered normal. But as we begin rebuilding what can be replaced, it is necessary to first gauge the scale and cost of the damage. It is also time to face the possibility that devastating weather events like Harvey and Irma may become the new normal

Harvey and Irma are among the most expensive hurricanes in U.S. history

Harvey and Irma have brought front and center the high costs of extreme weather-related disasters. While the damage is still being assessed, Harvey’s could cost as much as $200 billion, making it the most expensive natural disaster in U.S. history, surpassing Hurricane Katrina ($194 billion in 2017 USD). Estimates of Hurricane Irma’s economic damage are less certain, but the storm will likely also be among the most expensive weather-related disasters in the United States. (And we can’t forget that before reaching Florida, Irma caused damage to many Caribbean islands, which in some cases exceeded their GDP.)

While hurricanes tend to be the most dramatic, other types of severe weather also cause billions of dollars in economic damages. During the first half of 2017 alone, nine weather events including hailstorms, flooding, and tornados racked up $16 billion in damages across several states.

Climate change elevates the risk of severe weather events, and that comes at a cost

Climate change doesn’t cause hurricanes, but sea level rise and warmer temperatures make storms more destructive. Storm surges along the Texas coast where Hurricane Harvey hit are now about 7 inches higher than storm surges a few decades ago as a result of sea level rise, which can make a big difference in flooding. In addition, evaporation intensifies with warmer temperatures, which results in more moisture in the atmosphere and therefore higher rainfall amounts and flooding when storms make landfall. Warmer ocean temperatures also fuel hurricanes, making them more powerful. Hurricane Irma was a classic example of just how powerful a storm can get from increased ocean temperatures.

It is also possible that severe weather-related events overall are becoming more frequent. One recent EDF analysis shows that U.S. counties experienced, on average, a fourfold increase in the frequency of disaster level hurricanes, storms, and floods between 1997 and 2016 than in the 20 years prior. In the Southeast, this increase is even more pronounced; on average, its states experienced close to four-and-a-half times more disaster declarations over the same time period.

In the coming decades, risk of climate change-influenced severe weather will differ from region to region, but one thing is clear: if left unmitigated, the effects of climate change could come at serious economic costs, not just to those who lose homes and livelihoods, but to their insurance companies or to taxpayers. Other aspects of the economy could experience significant pain as well.

In the Southeast alone, higher sea levels resulting in higher storm surges could increase the average annualized cost of storms along the Eastern seaboard and Gulf Coast by $2-3.5 billion by 2030. In some areas, like Texas, where sea levels are rising faster than the global average, these increases even higher. Research published in Science suggests that even if storms themselves do not become more severe, direct annual economic damage could rise by 0.6 to 1.3% of state gross domestic product (GDP) for South Carolina, Louisiana, and Florida under median estimates of mean sea level rise. This translates into billions of dollars in additional economic damage every year for each of these states.

Hurricanes and severe storms pose serious risks to U.S. energy infrastructure

During Hurricane Katrina, the extent of the damages suffered by Entergy New Orleans forced the utility into bankruptcy. Hurricane Irma caused power outages in Florida that left over six million people without power.

Beyond these local impacts, these events can cause damage nationwide. Texas is home to about 30% of domestic oil and gas refining capacity, half of which was disrupted by Hurricane Harvey. This shut down 16% of the nation’s total refining capacity, spiked the average national gasoline price approximately 37 cents per gallon, and forced crude exports to drop from 749,000 to 153,000 barrels per day in the week after Harvey. As of September 10, 2017, more than two weeks after Hurricane Harvey made landfall, five Gulf Coast refineries remained closed, representing 11% of total Gulf Coast refining capacity and 5.8% of U.S. refining capacity.

The Trump administration should focus on adaptation and mitigation

In the short term, the Trump administration should maintain existing programs designed to enhance U.S. energy security and disaster response. For starters, the administration should stop dismantling EPA programs expressly designed to help communities respond to damage from storms.

In the long term, we need to build climate resilient communities and infrastructure, through efforts like wetland restoration and smart development. President Trump would also do well to listen to Miami’s Republican Mayor Tomás Regalado, and rethink his approach to climate policy. Instead of rolling back smart policies and regulations, or simply ignoring the impacts of climate change, we need to stop compounding the problem and mitigate the effects of a warmer climate through policy that sets aggressive emissions reduction targets. Such strategies will do much more than just protect our economy's bottom line—it will help ensure the safety, security, and well-being of millions of Americans.

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America needs critical energy data in a "post-fact" world: 2 quick examples

This post originally appeared on EDF's Voices blog.

We learned earlier this month that scientists are rushing to save critical climate data on government websites before the Trump administration takes over in January. They fear that such data may be deleted and forever lost, and it’s not hard to see why.

The incoming administration has announced plans to roll back existing climate change initiatives and there have been proposals to cut research programs that support a broad range of scientific expertise, such as weather prediction critical to farmers and to states vulnerable to major disasters.

In addition to science-based climate data, however, there is concern that other critical information and analyses under the purview of agencies such as the U.S. Department of Energy may be imperiled early next year. Unbeknownst to many – including, perhaps, to the president-elect and his circle of insiders – all these datasets benefit a broad range of sectors that rely on solid economic forecasting.

Here are just two datasets that are absolutely central to the work economists and analysts do to help industry and other decision-makers interpret energy opportunities and challenges in a rapidly changing world.

1. Energy forecasts: companies depend on them

The Annual Energy Outlook reports produced by the Energy Information Administration – a 30-year-old, independent office within the Energy Department – offers economic and energy forecasts with data invaluable to the transportation and manufacturing sectors, among others. Researchers, regulators and policymakers use them, too.

It includes data on economy-wide energy consumption and electricity prices all the way down to minute information such as carbon emissions from residential clothing dryers. Companies use the report to inform energy cost projections as they strategize and forecast business operations.

This way, an aluminum smelting company that uses a very energy-intensive process, for example, can anticipate changes in energy prices and make decisions accordingly.

We already heard about a proposal to cut NASA’s climate research funding, so it’s no mystery we also worry about how a report such as the Annual Energy Outlook could be affected by a wider crackdown on scientific and economic research and data generation.

Notably, EIA was part of a controversial questionnaire the Trump administration recently sent the Energy Department.

2. Cost comparisons: help investors be smart

The cost of renewable energy is a constant source of debate and has a direct impact on innovation and investment. A utility that needs to add generation, for example, must remain informed about how the operational costs of wind turbines compare with those of a natural gas-fired power plant.

The Energy Department’s prestigious National Renewable Energy Laboratory provides a terrific amount of research on the costs of this and other sources of renewable energy, feeding them into tools such as the Transparent Cost Database.

These estimates help investors as well as consumers evaluate the cost of renewable energy sources in direct comparison to fossil fuels in an unbiased way. The outcome is smarter and more informed decisions.

Our national labs would be overseen by Texas Gov. Rick Perry if he’s confirmed as the Trump administration’s secretary of energy. The governor, who lacks the science credentials of past energy secretaries, once said he would eliminate the agency altogether.

So why the panic over data?

We know that many of the people picked for the Trump cabinet so far openly question climate science, or science in general, and that several of the nominees who will oversee agencies producing such data have a history of putting the interest of the fossil fuel industry ahead of progress on clean energy.

Beyond that, potential budget cuts are looming. Government agency heads opposed to climate action or investments in renewable energy could easily starve the programs that maintain, update and share data with the public if such information no longer fits the administration’s agenda.

Scientists are thus taking steps to download data in preparation for the day when access may be interrupted.

But a country needs hard facts and sound evidence to make smart decisions about its energy and economic future. So we need to continue to lean heavily on the apolitical data that hardworking researchers in government produce for our industry, farmers, entrepreneurs, local and state policymakers, and world-renowned researchers.

Perhaps more than ever before, we must protect and defend this vital information.

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Statistics 101: Climate policy = risk management

Bjørn Lomborg reviewed my book, Climate Shock (Princeton University Press, 2015), joint with Harvard's Martin L. Weitzman, for Barron's over the weekend. He started it by stating that "global warming is real."

So far, so good.

But the book is not about whether the climate is changing. It is.

The book is about whether we are getting the order of magnitude of its effects right. Weitzman and I argue forcefully — in prose in the text, supported by a significant amount of research going into the 100-page end notes — that it's what we don't know that really puts the "shock" into Climate Shock. Lomborg asks how we can know that, if apparently we don't.

The answer is simple, and it's a statistical point that can't possibly be lost on Lomborg, a former lecturer on statistics. The set of distributions that most directly represent climate uncertainty — the link between concentrations of carbon dioxide and eventual temperature outcomes — is inherently skewed. We know, and Lomborg agrees, that adding carbon dioxide increases temperatures. (Back to 19th century science.)

So we can very clearly cut off the distribution linking a doubling of pre-industrial concentrations to temperatures at zero. In fact, we can cut it off at least at around 1 degree Celsius (almost 2 degrees Fahrenheit). The world, after all, has already warmed by over 0.8 degrees Celsius (around 1.5 degrees Fahrenheit), and we haven't yet increased pre-industrial concentrations by even 50 percent.

Reprinted from Climate Shock, with permission from Princeton University Press.

Reprinted from Climate Shock, with permission from Princeton University Press.

That skewedness of the underlying distribution is real. It's important. The correct response, then, to those who are too sure about where the climate system will go isn't to say, "cool it." It's to take the uncertainties seriously. Those, sadly, are skewed in one direction.

Climate risk is not our friend. It ought to prompt us to rethink not just how we talk about climate change. It should also inform our response. The burden of proof clearly rests on those who argue against these statistical facts.

First posted on Climate411.

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Climate Shock on FT McKinsey Business Book of the Year longlist

FT McKinsey Business Book of the Year 2015 longlist

"Business Book Award longlist: must-read titles of 2015" by Andrew Hill (Financial Times, 12 August 2015).

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What we know — and what we don’t — about global warming

By Gernot Wagner and Martin L. Weitzman:

Two quick questions:

Do you think climate change is an urgent problem?

Do you think getting the world off fossil fuels is difficult?

This is how our book “Climate Shock” begins.

In fact, it’s not our quiz. Robert Socolow from Princeton has posed versions of these questions for a while. The result is usually the same: most people answer “Yes” to one or the other question, but not to both. You are either one or the other: an “environmentalist” or perhaps, a self-described “realist.”

Such answers are somewhat understandable, especially when looking at the polarized politics around global warming. They are also both wrong. Climate change is incredibly urgent and difficult to solve.

What we know is bad

Last time concentrations of carbon dioxide were as high as they are today — 400 parts per million — we had sea levels that were between 20 to at least 66 feet higher than today.

It doesn’t take much to imagine what another foot or two will do. And sea levels at least 20 feet above where they are today? That’s largely outside our imagination.

This won’t happen overnight. Sea levels will rise over decades, centuries and perhaps even millennia. That’s precisely what makes climate change such an immense challenge. It’s more long-term, more global, more irreversible and also more uncertain than most other problems facing us. The combination of all of these things make climate change uniquely problematic.

What we don’t know makes it potentially much worse

Climate change is beset with deep-seated uncertainties on top of deep-seated uncertainties on top of still more deep-seated uncertainties. And that’s just if you consider the links between carbon dioxide concentrations in the atmosphere, eventual temperature increases and economic damages.

Increasing concentrations of carbon dioxide are bound to lead to an increase in temperatures. That much is clear. The question is how much.

The parameter that gives us the answer to this all-important question is “climate sensitivity.” That describes what happens to eventual global average temperatures as concentrations of carbon dioxide in the atmosphere double. Nailing down that parameter has been an epic challenge.

Ever since the late 1970s, we’ve had estimates hovering at around 5.5 degrees Fahrenheit. In fact, the “likely” range is around 5.5 degrees plus-minus almost three degrees.

What’s worrisome here is that since the late 1970s that range hasn’t narrowed. In the past 35 years, we’ve seen dramatic improvements in many aspects of climate science, but the all-important link between concentrations and temperatures is still the same.

What’s more worrisome still is that we can’t be sure we won’t end up outside the range. The Intergovernmental Panel on Climate Change calls the range “likely.” So by definition, anything outside it is “unlikely.” But that doesn’t make it zero probability.

In fact, we have around a 10 percent chance that eventual global average temperature increases will exceed 11 degrees Fahrenheit, given where the world is heading in terms of carbon dioxide emissions. That’s huge, to put it mildly, both in probability and in temperature increases.

Climate Shock graph. There’s at least about a 10 percent chance of global average temperatures increasing 11 degrees Fahrenheit or more. Source: Climate Shock (Princeton 2015), reprinted with permission.

Climate Shock graph. There’s at least about a 10 percent chance of global average temperatures increasing 11 degrees Fahrenheit or more. Source: Climate Shock (Princeton 2015), reprinted with permission.

We take out car, fire and property insurances for much lower probabilities. Here we are talking about the whole planet, and we haven’t shown willingness to insure ourselves. Meanwhile, we can, in fact, look at 11 degrees Fahrenheit and liken it to the planet ‘burning’. Think of it as your body temperature: 98.6 degrees Fahrenheit is normal. Anything above 99.5 degrees Fahrenheit is a fever. Above 104 degrees Fahrenheit is life-threatening. Above 109.4 degrees Fahrenheit and you are dead or at least unconscious.

In planetary dimensions, warming of 3.6 degrees Fahrenheit is so bad as to have been enshrined as a political threshold not to be crossed. Going to 11 degrees Fahrenheit is so far outside the realm of anything imaginable, we can simply call it a planetary catastrophe. It would surely be a planet none of us would recognize. Go back to sea levels somewhere between 20 and at least 66 feet higher than today, at today’s concentrations of carbon dioxide. How much worse can it get?

Do we know for sure that we are facing a 1-in-10 chance unless the world changes its course? No, we don’t, and we can’t. One thing though is clear: because the extreme downside is so threatening, the burden of proof ought to be on those who argue that these extreme scenarios don’t matter and that any possible damages are low. So how then can we guide policy with all this talk about “not knowing”?

What’s your number?

We can begin to insure ourselves from climate change by pricing emissions. How? By charging at least $40 per ton of carbon dioxide pollution. That’s the U.S. government’s current value and central estimate of the costs caused by one ton of carbon dioxide pollution emitted today.

We know that $40 per ton is an imperfect number. We are pretty sure it’s an underestimate; we are confident it’s not an overestimate. But it’s also all we have. (And it’s a lot higher than the prevailing price in most places that do have a carbon price right now—from California to the European Union. The sole exception is Sweden, where the price is upward of $130. And even there, key sectors are exempt.)

How then do we decide on the proper climate policy? The answer is more complex than our rough cost-benefit analysis suggests. Pricing carbon at $40 a ton is a start, but it’s only that. Any cost-benefit analysis relies on a number of assumptions — perhaps too many — to come up with one single dollar estimate based on one representative model. And with something as large and uncertain as climate change, such assumptions are intrinsically flawed.

Since we know that the extreme possibilities can dominate the final outcome, the decision criterion ought to focus on avoiding these kinds of catastrophic damages in the first place. Some call this a “precautionary principle”— better to be safe than sorry. Others call it a variant of “Pascal’s Wager” — why should we risk it if the punishment is eternal damnation? We call it a “Dismal Dilemma.” While extremes can dominate the analysis, how can we know the relevant probabilities of rare extreme scenarios that we have not previously observed and whose dynamics we only crudely understand at best? The true numbers are largely unknown and may simply be unknowable.

Planetary risk management

In the end, this is all about risk management—existential risk management. Precaution is a prudent stance when uncertainties about catastrophic risks are as dominant as they are here. Cost-benefit analysis is important, but it alone may be inadequate, simply because of the fuzziness involved with analyzing high-temperature impacts.

Climate change belongs to a rare category of situations where it’s extraordinarily difficult to put meaningful boundaries on the extent of possible planetary damages. Focusing on getting precise estimates of the damages associated with eventual global average warming of 7, 9 or 11 degrees Fahrenheit misses the point.

The appropriate price on carbon dioxide is one that will make us comfortable that the world will never heat up another 11 degrees and that we won’t see its accompanying catastrophes. Never, of course, is a strong word, since even today’s atmospheric concentrations have a small chance of causing eventual extreme temperature rise.

One thing we know for sure is that a greater than 10 percent chance of the earth’s eventual warming of 11 degrees Fahrenheit or more — the end of the human adventure on this planet as we now know it — is too high. And that’s the path the planet is on at the moment. With the immense longevity of atmospheric carbon dioxide, continuing to “wait and see” would amount to nothing else than willful blindness.

First published by PBS NewsHour's Making Sen$e with Paul Solman. The accompanying NewsHour report aired on July 16, 2015.

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When dealing with global warming, the size of the risk matters

Shortly after September 11, 2001, Vice President Dick Cheney gave us what has since become known as the One Percent Doctrine: “If there’s a 1% chance that Pakistani scientists are helping al-Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response.”

It inspired at least one book, one war, and many a comparison to the "precautionary principle" familiar to most environmentalists. It’s also wrong.

One percent isn’t certainty. This doesn’t mean that we shouldn’t take the threat seriously, or that the precautionary principle is wrong, per se. We should, and it isn’t.

Probabilities matter.

Take strangelets as one extreme. They are particles with the potential to trigger a chain reaction that would reduce the Earth to a dense ball of strange matter before it explodes, all in fractions of a second.

That’s a high-impact event if there ever was one. It’s also low-probability. Really low probability.

At the upper bound, scientists put the chance of this occurring at somewhere between 0.002% and 0.0000000002% per year, and that’s a generous upper bound.

That’s not nothing, but it’s pretty close. Should we be spending more on avoiding their creation, or figuring out if they’re even theoretically possible in the first place? Sure. Should we weigh the potential costs against the social benefit that heavy-ion colliders at CERN and Brookhaven provide? Absolutely.

Should we “treat it as a certainty” that CERN or Brookhaven are going to cause planetary annihilation? Definitely not.

Move from strangelets to asteroids, and from a worst-case scenario with the highest imaginable impact, but a very low probability, to one with significantly higher probability, but arguably much lower impact.

Asteroids come in all shapes and sizes. There’s the 20-meter wide one that unexpectedly exploded above the Russian city of Chelyabinsk in 2013, injuring mored than 1,400 people. And then there are 10-kilometer, civilization-ending asteroids.

Size matters.

No one would ask for more 20-meter asteroids, but they’re not going to change life on Earth as we know it. We’d expect a 10-kilometer asteroid, of the type that likely killed the dinosaurs 65 million years ago, once every 50-100 million years. (And no, that does not mean we are ‘due’ for one. That’s an entirely different statistical fallacy.)

Luckily, asteroids are a surmountable problem. Given $2 to $3 billion and 10 years, a National Academy study estimates that we could test an actual asteroid-deflection technology. It’s not quite as exciting as Bruce Willis in Armageddon, but a nuclear standoff collision is indeed one of the options frequently discussed in this context.

That’s the cost side of the ledger. The benefits for a sufficiently large asteroid would include not destroying civilization. So yes, let’s invest the money. Period.

Somewhere between strangelets and asteroids rests another high-impact event. Unchecked climate change is bound to have enormous consequences for the planet and humans alike. That much we know.

What we don’t know — at least not with certainty — could make things even worse. The last time concentrations of carbon dioxide stood where they are today, sea levels were up to 20 meters higher than today. Camels lived in Canada. Meanwhile global average surface temperatures were only 1 to 2.5 degrees Celsius (1.8 to 4.5 degrees Fahrenheit) above today's levels.

Now imagine what the world would like with temperature of 6 degrees Celsius (11 degrees Fahrenheit) higher. There’s no other way of putting it than to suggest this would be hell on Earth.

And based on a number of conservative assumptions, my co-author Martin L. Weitzman and I calculate in Climate Shock that there might well be a 10% chance of an eventual temperature increase of this magnitude happening without a major course correction.

That’s both high-impact and high-probability.

Mr. Cheney was wrong in equating 1% to certainty. But he would have been just as wrong if he had said: "One percent is basically zero. We should just cross our fingers and hope that luck is on our side."

So what to do? In short, risk management.

We insure our homes against fires and floods, our families against loss of life, and we should insure our planet against the risk of global catastrophe. To do so, we need to act — rationally, deliberately, and soon. Our insurance premium: put a price on carbon.

Instead of pricing carbon, governments right now even pay businesses and individuals to pump more carbon dioxide into the atmosphere due to various energy subsidies, increasing the risk of a global catastrophe. This is crazy and shortsighted, and the opposite of good risk management.

All of that is based on pretty much the only law we have in economics, the Law of Demand: price goes up, demand goes down.

It works beautifully, because incentives matter.

Gernot Wagner serves as lead senior economist at the Environmental Defense Fund and is co-author, with Harvard’s Martin Weitzman, of Climate Shock (Princeton, March 2015). This op-ed first appeared on Mashable.com.

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