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October 30, 2006

Stern Report: Chapter 5

Here. Costs of climate change on rich countries. Well, they blame Katrina on climate change...well, no not quite. They say that more such extreme events will happen.

The rest of it seems fair enough.

Chapter 6.

Very strong words here:

Putting these three additional factors together would increase the total cost of BAU climate change to the equivalent of around a 20% reduction in current per-capita consumption, now and forever.
Distributional judgements, a concern with living standards beyond those elements reflected in GDP,
and modern approaches to uncertainty all suggest that the appropriate estimate of damages may well lie in the upper part of the range 5 – 20%. Much, but not all, of that loss could be avoided through a strong mitigation policy. We argue in Part III that this can be achieved at a far lower cost.

They most certainly do not mean what they say, either. They do not mean current per-capita consumption. As we've already seen the assumptions about future wealth (in the SRES) are that the world in a century will be 5 to 10 times richer than it was 6 years ago. What they mean (or at least I hope to God what they mean, I'd hate to think they got things this wrong) is that GDP per capita will be in 100 years time 5-20% below where it could be.

This is driven by their earlier insistence that economic growth will be higher with mitigation than without it: it may be slower to begin with, but as the costs of climate change kick in then the mitigating path will provide higher growth than the non-mitigating one.

I have to admit that as yet they haven't convinced me of that.

Hey, wait a minute!

They run their own models: great. They take their information from IPCC 3, OK, great. But they only run the A2 and then one with greater, extra, climate feedbacks included!

Baseline Climate: This is designed to give outputs consistent with the range of assumptions
presented in the IPCC Third Assessment Report (TAR). The scenario produces a mean warming of
3.9°C relative to pre-industrial in 2100 and a 90% confidence interval of 2.4 – 5.8°C (see figure below) for the A2 emissions scenario used in this exercise. This is in line with the mean projection of 4.1°C given by the IPCC TAR. The IPCC does not give a probability range of temperatures. It does quote a range across several models of 3.0 – 5.3°C. The wider range of temperatures produced by
PAGE2002 mainly reflects the wider combinations of parameters explored by the model.
High Climate: This is designed to explore the impacts that may be seen if the level of temperature
change is pushed to higher levels through the action of amplifying feedbacks in the climate system.
Scientists are only just beginning to quantify these effects, but these preliminary studies suggest that they will form an important part of the climate system’s response to GHG emissions. No studies have yet combined ranges of climate sensitivity and feedbacks in this way, so these results should be treated as only indicative of the possible potential scale of response. The scenario includes recent estimates of two types of amplifying feedback: a weakening of natural carbon absorption and increased natural methane releases from, for example, thawing permafrost.

Way to go guys, how to skew your results. Only run your model on a medium high and high emissions scenario! A2 assumes National Enterprise (ie, not much more globalization), high population (15 billion), a low degree of convergence....and the only other model you run is an even higher emissions scenario?

How do things change when you run it on B1? Or A1 F1? Now, in that latter, emissions are higher (it's a high emissions scenario, not a medium high one) but global income is twice in that scenario what it is in A2. It's important to note that all of the SRES scenarios are without mitigation of any kind.

So, what Stern is saying is that if we mitigate, we save (or do not do the damage) of 20% of A2: or around $50 trillion a year. This is then said to be a reason to do the mitigation. But if we look at scenario A1 F1, global output will be $ 250 trillion higher than A2!

How does this prove that mitigation is a good idea? As far as I've found one so far this seems like a very serious flaw.

Sorry folks, I was going to go through this thing all the way to the end but I'm not going to bother now. I'm sure they say some very good things about all sorts of matters but that one point there does it for me.

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 failure 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?

Surely not?

October 30, 2006 in Climate Change | Permalink


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Tracked on Oct 30, 2006 10:10:08 PM


On a (broadly) different subject..


Quick, you're missing it!

Posted by: Dave Hill | Oct 30, 2006 2:11:14 PM

Oh look, they've gone for the scenario that backs Miliband's proposed massive tax hikes: who woulda thunk it, eh?


Posted by: Devil's Kitchen | Oct 30, 2006 2:12:29 PM

Timmy, Timmy, Timmy. Poor old, Timmy, Timmy, Timmy. You surely cannot be saying that a government sponsored report was biased towards supporting government policy? I mean, where is the precedent for such a thing?

I, of course, approved of the July energy review (reservedly), but it still seemed like a government spin doctoring operation rather than a true and proper justification for the going nuclear that we all know exists.

Posted by: Josh | Oct 30, 2006 7:37:45 PM

Do you feel like improving the Wikipedia page on TSR?

Posted by: William Connolley | Nov 7, 2006 5:29:44 PM