Economists have in recent years painted a misleadingly rosy picture of climate change impacts, that more recent research, and harsh experience are showing, is glaringly deficient.
Record temperatures, droughts, floods and wildfires this year have caused billions of dollars of damage, even before emissions take warming beyond the 2015 Paris Agreement cap of 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial levels.
Still, some economist models conclude – implausibly, say the critics – that by the turn of the century, warming will cause less harm to the world economy than COVID-19 has, or hit global shares by less than in the 2007-2009 financial crisis.
Nobel-winning U.S. economist William Nordhaus sparked controversy in 2018 with a model that found the climate policies that best balanced the costs and benefits from an economic point of view would result in warming of more than 3C by 2100.
A year earlier, the Trump administration cited similar models to justify replacing the Obama-era Clean Power Plan with one allowing higher emissions from coal-burning plants.
Many policymakers acknowledge the modelling’s limitations: European Central Bank executive board member Isabel Schnabel said in September it could understate the impact. Others go further, saying the whole approach is flawed.
At issue are the “integrated assessment models” (IAMs) economists use to draw conclusions on anything from output losses to financial risk or the pricing of carbon markets.
They rely on a theory of how demand, supply and prices interact throughout an economy to find a new balance after an outside shock – the so-called “general equilibrium” model developed by 19th century French economist Leon Walras.
“But climate change is fundamentally different to other shocks because once it has hit, it doesn’t go away,” said Thierry Philipponnat, author of a report by Finance Watch, a Brussels-based public interest NGO on financial issues.
“And if the fundamental assumption is flawed, all the rest makes little sense – if any,” he told Reuters.
Another issue is that IAMs have for years used a “quadratic function” to calculate GDP losses that involves squaring the temperature change – while ignoring other methods such as the exponential function better suited for rapid change.
Critics say this choice is doomed to underplay the likely impact – particularly if the planet hits environmental tipping points in which damage is not only irreversible but happens at an ever-accelerating rate
“Nordhaus sparked controversy in 2018 with a model that found the climate policies that best balanced the costs and benefits from an economic point of view would result in warming of more than 3C by 2100.”
The natural world would be dead at 3 C, since it’s happening so fast. Observing that the factories would still be chugging away amidst all this carnage seems reminiscent of claiming that the best way to run an agrarian economy is to bring back slavery.
The whole point of climate action was to prevent us from having to rely on ‘the dismal science’ for an estimation of just how impacted we are by it. It’s a profound admission of failure to even have to bring it to them for such an estimate. Maybe while they are churning the numbers they can help us predict nine of the last five recessions.
Save us from theorists who make pronouncements based on how they feel the world should work. Nordhaus, when taking comfort in manufacturing being safe because “indoors”, failed badly in considering that the separation of indoors and outdoors is in flux during many weather events that are increasing as the climate system becomes more dynamic.
For example, when water, normally “outdoors” stays indoors with your manufacturing equipment, it can have impacts in today’s tightly-integrated global supply chain that an economist should somehow be aware of, but that didn’t figure much in Nordhaus’ work.
October 28, 2011 in Reuters: “Thai floods batter global electronics, auto supply chains”
“Manufacturers of car parts to computer hard drives are worst hit in Thailand and face a bleak key holiday selling season due to massive floods, which have shut down production.
Japanese car makers that had just started to recover from the March earthquake and tsunami that disrupted their supply chains are now facing shortages of key parts made in Thailand, a key manufacturing base in Southeast Asia.”
Much more here: https://www.reuters.com/article/world/thai-floods-batter-global-electronics-auto-supply-chains-idUSTRE79R0QR/
I remembered this specific example instead of many others because I was trying to get a number of disk drives for a project and we were delayed because of a weather event on the other side of the planet.
You don’t need to point out anything but the assumption that components of the economy that are indoors will not be affected by climate change.
Even if by some magical shield indoor work won’t require insane amounts of cooling and will be unaffected by extreme weather, there’s that pesky matter of food supply, transport, dock work, power lines and subways flooding.
Anybody paying the slightest bit of attention to anything right wing a-hole Nordquisling is saying should seriously reconsider. His name is forever linked with Shellenberger’s & the other breakthrough boys—shills for fossil fuels, nukes, & radical right anti-environmentalist hippie bashing.
I almost hate to offer the following because the author doesn’t seem to know the difference between “being negative” & telling the truth when the truth is terrifying & enraging & grief-striking*… & she’s also ridiculously naive or kind or “diplomatic” (aka afraid of the powerful) or something I don’t understand, in ascribing anything but malevolent, far right, near-fascist ideology to Nordhaus, despite his long-standing magnanimous position of recognizing reality when it’s pointed out by a few hundred thousand scientists & their peer-reviewed scientific papers. But here the following is anyway, because at least it mentions that he has assumptions, though it doesn’t point out or seem to understand what they are (for that, see the work of George Lakoff):
“How to Blunt the ‘New Climate Denial’ with Better Language:
A Q&A with Dr. Genevieve Guenther, author of a new book called The Language of Climate Politics.”
Jul 29, 2024 https://www.desmog.com/2024/07/29/how-to-blunt-the-new-climate-denial-with-better-language/
* I have said, over & over & over, that the way & place to communicate that potentially-paralyzing truth is in a community, however ad hoc & temporary, led by people knowledgeable & experienced
1. in climate science,
2. climate politics, &
3. psychotherapeutic care,
so they can bring the group quickly through the shock & denial that plagues even the left, to acceptance-but-determination-to-activisticize.
I suggest instead Richard Wolff’s economic views on climate.
[Very short post seems to have disappeared]
Instead, I recommend Richard Wolff’s views. Here’s some on Nordhaus which is unfortunately short & shallow, despite Wolff being anything but:
https://www.youtube.com/watch?v=PgzqNuLLnn0
I disagree with a lot of Marxist theory, but think it’s largely beside the point what political-economic system is chosen. Wolff often seems worth listening to because like Chinese communists, or “communists”, with historically essentially Confucian foundations, his pragmatic approach is informed by but not ruled by his ideology.
But what happens in a society is mostly determined by the ‘worst common denominator’ because in a mentally ill society the most mentally ill who are still able to function, or appear to function, will always “rise” to the rulership of a society as a mirror of the ruled. (Note that all civilizations are by definition mentally ill, because civilization IS a mental illness, (while at the same time they’re attempts to overcome the prevailing mental illness).) Healing the psychological affliction the rulers & ruled share is far more important than the system they run, because however great the system is, it will be warped & twisted to bend to the demands of the disease infecting the society.
Societies are healthy & adaptive to the extent that they’re functionally progressive. A society can be right or left politically, even far right or left, but it’s actually conservative to the extent that it actually & practically holds conservative views, ie behaves conservatively in a Lakoffian sense. It assumes there must be hierarchy, (especially but not only patriarchy) & punishment, which comes from a personal psychological experience or feeling of aloneness & isolation in what is thus seen as a harsh & unforgiving universe.
Note that racism, genderism, religious discrimination, & so many otherisms are (falsely-believing, since race does not exist, eg) attempts to impose self-justifying, self-aggrandizing order on real or imagined difference, in the context of the belief that there must be hierarchy. The cruelty of such systems is a result of the feeling of & belief in punishment & coercion handed out by a strict father. Soviet communism, eg. was a very conservative system despite its superficial, spotty, & ultimately temporary progressive aspects. In the end, all such conservative systems are headed, a we are, for iron fascism. Nordhaus, Shellenberger, climate denying delayalists, et al, are the used car salesmen (yes, men) of that strict-father conservatism.