The Week That Was
March 1-7, 1999

Despite what the public hears from many of the news outlets, not everyone thinks a warmer climate -- if it occurs -- would be a bad thing. Heresy is even creeping into the ivied halls at Yale...

Here is a book review written by Fred Singer that suggests: Global Warming is Good for You! (The book is mentioned in the current issue of Science, with approval but without the enthusiam it deserves.)

Ref: R. Mendelsohn and J. E. Neumann [editors] The Impact of Climate Change on the United States Economy, Cambridge University Press, Cambridge 1999.

The impact of this book on climate policy may well be more important than the impact of climate change itself on human affairs.  Yet, until one reaches the final chapter, which sums up the conclusion, there is little indication that this book produces a bombshell result about global warming.  The dust jacket and preface give no hint whatsoever that the economic impact is positive and beneficial rather than negative and damaging.  The dust jacket and preface merely claim that the book "improves our understanding of key issues raised in the influential Intergovernmental Panel on Climate Change [IPCC] reports." What an understatement!

The original IPCC report "Economic and Social Dimensions of Climate Change," assembled in 1995, relied on the earlier published judgments of five different authors, which were based on a small set of comprehensive sectoral studies. Their estimates concluded that doubling the levels of atmospheric greenhouse gases would result in global damages equal to from 1.5 to 2 percent of GDP. (Damages in the United States were estimated to be between 1 and 2 percent of US GDP.)  These early studies, by Nordhaus [1991], Cline [1992], Fankhauser [1995], Tol [1995], and Titus [1992], gave total US losses ranging from 55 to 140 billion [in 1990 $], including both market and non-market impacts.  But this apparent agreement, within a factor of three, is largely fortuitous.  When comparing the details of the five studies, one finds the impact on agriculture ranging from -1.1 to as high as -17.5 [billion dollars]; the impact on energy from -1.1 to -10; sea level damage from -5.7 to -12.2; losses of timber from -0.7 to as much as -43.6; and the impact on  water resources from -7.0 to -15.6.  The IPCC authors did not consider a number of sectors; all their non-market impacts are uniformly negative and, in many cases, greater than the market impacts.

By contrast, the new reevaluation comes to an opposite conclusion.  It reassesses the effect on the economy, assuming that a doubling of greenhouse gases would occur and assuming that it would lead to a warming of 2.5°C.  The major change is in improved methodology, which considers among other items the possibility of adaptation.  The new studies also rely on natural climate experiments, by observing energy expenditures, leisure activities, etc. in towns that experience different temperature changes.  Sectors that involve large capital stocks, such as coastal structures and timber, are treated with dynamic models.  The new studies are also more comprehensive, and include commercial fishing impacts for the first time.  The individual sectoral studies were designed also to be more consistent and to respond to a broader range of climate projections.

When all is said and done, the new studies detailed in the book arrive at large positive impacts for agriculture and smaller positive impacts for timber and recreation.  The remaining sectors show small negative impacts, considerably smaller than the previous IPCC estimates.  Summing up, the effect of warming is found to increase the US GDP by approximately 0.2 percent.

This reversal in economic impact of a warming is startling, but not entirely unexpected to those who have been following the economic literature of last few years.  Individual research papers have indeed shown a large positive impact on agriculture from warming.  It arises from the longer growing seasons, warmer nights, increased precipitation, and the higher level of carbon dioxide that speeds up plant growth.  The editors of the book are not yet aware that a modest warming will slow down sea level rise rather than accelerate it.  It further enhances their conclusion, never explicitly stated in the book, that global warming is good for us, improving our economic wellbeing as well as our health.  Similar conclusions apply not only to other industrialized nations, but also to the rest of the world, including to the island nations that fear sea level rise.

Will these new results lead to a change in policy or even reverse the present drive to limit carbon dioxide emissions and curtail energy use?  Politicians are unlikely to pay attention to the economic facts, nor to the new scientific facts that should reverse our thinking about the basis of global warming.  It does lead to some embarrassments for economists who have been engaged in cost-benefit analyses of global warming.  How can one do such a study when the costs of mitigation are between 1 and 2 percent of GDP and the benefits of warming turn out to be positive?

The research project involved 26 well-known economists, mostly academics. Robert Mendelsohn is at the Yale School of Forestry and Environmental Studies; James E. Neumann is associated with Industrialized Economics, Inc. in Cambridge, Mass.  In addition to reviewers of individual chapters, several distinguished economists reviewed the overall project and provided comments that improved the analysis.  The project was funded principally by the Electric Power Research Institute of  Palo Alto, Cal., as part of their academic support program for climate modeling.

S. Fred Singer  is professor emeritus of environmental sciences at the University of Virginia and the president of the Fairfax-based Science & Environmental Policy Project, a non-profit policy institute.  He has held several academic and governmental positions, including as the first director of the US Weather Satellite Service.  He is the author of Hot Talk, Cold Science: Global Warming's Unfinished Debate, and serves on the editorial advisory board of Regulation.

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