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Friday, October 17, 2014

Bob Ward: IPCC corrects Richard Tol's erroneous suggestion that climate change would be good for the economy

by Bob Ward, The Guardian, October 17, 2014

In this Oct. 30, 2012 file photo, Brian Hajeski, 41, of Brick, N.J., reacts as he looks at debris of a home that washed up on to the Mantoloking Bridge the morning after superstorm Sandy rolled through in Mantoloking, N.J. S
Debris of a home that washed up on to the Mantoloking Bridge, New Jersey, US, after Superstorm Sandy hit the area. The incorrect claim in the IPCC report said small amounts of global warming could have positive economic effects. Photograph: Julio Cortez/AP
The Intergovernmental Panel on Climate Change (IPCC) has corrected a controversial claim that small amounts of global warming could have overall positive economic impacts, after I pointed out that it was based on inaccurate information.
The final version of the IPCC’s report on Impacts, Adaptation and Vulnerability was published without fanfare on the web this week, including a chapter on Key Economic Sectors and Services.
The final draft of the chapter, which was published in April, featured a section on the aggregate economic impacts of climate change, containing the statement: “Climate change may be beneficial for moderate climate change but turn negative for greater warming.”
But the version published this week omits the statement because it was based on faulty data.
The statement had been inserted into the draft report at a late stage in the preparation process, and after it had been sent to independent reviewers, including me, for comment.
It was based on a paper by Richard Tol, a professor of economics at the University of Sussex, who was also a coordinating lead author on the economics chapter of the IPCC report.
The paper was one in a series by Prof Tol which had reviewed studies by a number of researchers on the potential economic impacts of climate change.
However, the first paper in the series, published in the Journal of Economic Perspectives in 2009, had contained a number of errors, including a claim that some other studies had found net positive impacts for warming of less than 3C.
Unfortunately, Tol had not used the correct figures from these studies.
I discovered the errors after a draft of the IPCC chapter was leaked online in January, and I alerted Tol and the other authors of the report.
The IPCC acknowledged the mistakes in the draft and agreed that the final version should not include them.
In May, the Journal of Economic Perspectives published an update and correction to Tol’s paper, in which he admitted the errors.
However, Tol’s 2009 paper had already been heavily promoted by climate change sceptics.
In October 2013, The Spectator magazine published a front–page article under the headline ‘Why climate change is good for the world.’
It was written by Viscount Ridley who, likeTol, is a member of theAcademic Advisory Council of the Global Warming Policy Foundation, which was set up by Lord Lawson to campaign against the UK Government’s climate change policies.
Viscount Ridley’s article stated: “Prof Tol calculated that climate change would be beneficial up to 2.2C of warming from 2009 (when he wrote his paper).”
Tol caused controversy in April when he announced that he had withdrawn from the team preparing a summary of the IPCC report on the grounds that he did not agree with the other authors.
The summary points out: “Economic impact estimates completed over the past 20 years vary in their coverage of subsets of economic sectors and depend on a large number of assumptions, many of which are disputable, and many estimates do not account for catastrophic changes, tipping points, and many other factors.”
It concludes: “With these recognised limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2C are between 0.2 and 2.0% of income.”
A number of economists have criticised the models used to estimate future losses due to climate change, and an official journal of the American Economic Association published a collection of papers last year which examined their usefulness.
Robert Pindyck, professor of economics and finance at the Massachusetts Institute of Technology (MIT), declared: “These models have crucial flaws that make them close to useless as tools for policy analysis.”
Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science and president of the British Academy, pointed out: “Scientific models, because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks.”
He added: “Many economic models add further gross underassessment of risk because the assumptions built into the economic modelling on growth, damages and risks, come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes.”
In a new paper due to appear in the The Economic Journal, published by the Royal Economic Society, Stern and Dr Simon Dietz show that if models are amended so that climate change impacts can affect the drivers of economic growth, they find that rising global temperatures could lead to a collapse in living standards.

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