Volume 2 of the Fourth National Climate Assessment (NCA4), a document of more than 1,500 pages examining the expected future economic cost of climate change, was published online on November 23, 2018.
The media reported its release with great fanfare, with the Atlantic, CNN, and NPR describing it as “dire,” CBS News calling it “alarming,” Wired describing it as predicting “collapse and ruin,” and Gizmodo saying the report demonstrates “we’re screwed.”
Admittedly, the tone of NCA4 is consistent with these apocalyptic descriptions, describing unending fires and hailstones, storms, and floods, all the while showing riveting, full-color pictures of mountainsides blazing at dusk and houses being washed into the sea.
But despite all the doomsday descriptions, the projected costs of climate change found in the report are actually paltry in the big picture of things. Even assuming all its projections are accurate, the damages portrayed in the report are far too small to justify costly and disruptive actions such as those proposed in the Green New Deal.
NCA4 purportedly provides “a thorough examination of the effects of climate change on the United States.” NCA4 estimates the damage the nation will experience from climate change in the year 2090, because the 1990 Act establishing the NCA required predictions for the next century. Predicting anything seventy years into the future is normally considered a fool’s errand, but such prognostications are routine when considering climate change.
Any future harm depends on actions the United States and other countries take between now and then to mitigate the effects of climate change. The report discusses several possible types of actions countries could take to limit their carbon dioxide emissions.
Scenario RCP8.5 (8.5), the scenario NCA4 publicizes, assumes the United States and the world keep increasing carbon dioxide emissions through the end of the century, approximately tripling their current yearly level. The Trump administration criticized NCA4 for focusing on this worst-case scenario, although it should have welcomed the findings given how small the expected damage is.
NCA4 estimates the dollar value (in 2015 dollars) of twenty-two different categories of potential damage in the United States from global warming in the year 2090.
The 22 categories include damages due to rising oceans, mortality due to excessive heat or poor air quality, damage from additional diseases such as West Nile Virus, and repair costs for roads and bridges damaged by floods or erosion.
NCA4 assumes both that the economy grows during the next 70 years as a result of increases in population, productivity, and technology, and that none of the technological improvements in the next 70 years mitigate climate change to any serious extent.
NCA4 provides a figure and table (reproduced here) summarizing the damages under 8.5 and the reduced harm under RCP4.5 as a result of greater mitigation efforts.
Surprisingly, the total cost of the 22 rows of estimated harms is never summed up so as to show the total dollar value of climate-induced damage. Nor are those damages ever compared to the 2090 GDP predicted by NCA4.
Projected Damages and Potential for Risk Reduction by Sector
When the rows are summed, the total damages are shown to be $507.6 billion, as seen in the accompanying table.
A value of $507.6 billion seems huge to individuals unfamiliar with large economic magnitudes (such as GDP) and appears to have most journalists virtually fainting from fright. For most people, such a number has to be put into some sort of perspective before they can grasp its importance or lack thereof. The simplest way to put the number in perspective is to compare this predicted 2090 loss with the predicted 2090 GDP, as is done in the last row of the table, leading to the clear result predicted climate change damages in 2090 represent slightly more than 0.7 percent of U.S. GDP.
Table: Adding Up the Damages and Comparing to GDP
Damages as share of $70 trillion GDP
Thus the damage from climate change in NCA4’s worst-case scenario, according to our “best scientists and experts,” is less than 1 percent of U.S. GDP in 2090. The ratio would be even lower if any of the advanced technologies certain to be created in the next 70 years were used to help reduce carbon emissions.
Is a reduction in GDP of 0.7 percent really something to get frantic about? I think the question answers itself. Would a stock market loss of 1 percent cause people to throw themselves out of windows? How many stores run advertisements proclaiming their 1-percent-off sales?
A change of less than 1 percent is not the type of value on which people base life-altering decisions. Such low values are frequently ignored in our daily lives.
By law, the NCA4 is supposed to be a thorough examination of climate change impacts. Thus, if the authors have done their job and looked at the most consequential costs of climate change, the current NCA4 should provide a reasonable indication of the likely harm.
Accordingly, the findings of the report are clear: Under even the worst-case scenario, the harms from climate change in 2090, assuming 70 years of increasing carbon dioxide emissions, are fairly trivial. Even if the NCA4 predicted damages were too low by a factor of 10, the expected harm would be only mildly painful to the economy.
As a result, the United States should not undertake outsized efforts to fight climate change.
Stan Liebowitz, Ph.D. ([email protected]) is the Ashbel Smith Professor of Managerial Economics at the University of Texas at Dallas and a policy advisor to The Heartland Institute.