The Only Certainty is Uncertainty..

Uncertainties associated with climate change have polarized public debate. People use the uncertainty related to climate change and its impacts justify inaction while others take the opposite position and propose that the large risks should be mitigated regardless of the costs. Due to the high degree of uncertainty, the are limitations to using economic models to model climate change. By extension, modelling of abrupt climate change would be even more difficult.

I would like to propose that there are different sources of uncertainties involved in this debate. One source of uncertainty is an individual's aversion to risk (and adverse, abrupt climate change). Different people, from different places, would have different degrees of risk aversion. This would lead to uncertainties in predicting the impacts of climate change as well as the determining the thresholds or tipping points which calls for more action to prevent catastrophic consequences. 

Schneider and Mastrandrea (2005) put forward that stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference (DAI), as proposed by the United Nations Framework Convention on Climate Change, is largely a 'normative decision, influenced by value judgements, sociopolitical processes, and factors such as development, equity, sustainability, uncertainty and risk'. They propose the use of a probabilistic risk management framework to assess 'dangerous' climate change and use it as an effective method for informing the policy process (by determining the level of DAI and setting climatic (temperature) thresholds) and evaluating the implication of different policies. However, they recognise the limitations to this method as determining the level of DAI is ultimately still a value-laden process, which will lead to different levels for different stakeholders, in different regions of the world. David Archer (2012) proposes a similar idea. He proposes that contrary to climate change, the economy is 'much harder to forecast'. By extension, the uncertainties within economic models would be more significant than climate change models. He claims that eocnomics and other social sciences are not securely founded whereas physical sciences are based on a solid foundation of natural laws. Hence, economics is an awkward tool for the climate change decision (modelling uncertainty and risk aversion) because many aspects of the natural world are not economically fungible. However, he does concede that although it is not well suited to assess policy options, it can be used, at least in the short term.

This sets the tone for the debate on the role of economics within climate change as it is laden with uncertainties and value judgements from a diverse group of people. The decision for action/ inaction still lies with individual perceptions.

On the other hand, McKibbin and Wilcoxen (2002) discuss the role of economics within modelling climate change and put forward that the only certainty about climate change models is the prevalence of uncertainty at every juncture and the 'single most important attribute of climate change as a policy problem is uncertainty'. In contrast to the previous example, this case study delves into the uncertainties related to the science of climate change (projection of climate change).

They highlight three undisputed facts about climate change. Firstly, the presence of greenhouse gases and the greenhouse effect has been universally accepted. Secondly, most have also acknowledged that the concentration of many greenhouse gases has been increasing rapidly due to human activity and lastly, consequences of rising concentration of greenhouse gases are being clearer. These show that human activity affects climate change and there is a chance for man to prevent abrupt climate change.

Uncertainties and disputed facts about climate change comes in terms of the precision of how much warming will result from a given increase in greenhouse gas concentrations, or when such warming will occur, or how it will affect different regions and ecosystems. More importantly, the cost of reducing greenhouse gas emissions is also uncertain. For example, population growth and the rates of productivity growth in individual industries are key determinants of the cost of reducing greenhouse gas emissions, but neither can be projected with much confidence beyond a few years into the future. The table above is obtained from the article and it describes the uncertainties assigned to possible scenarios of the impact of global warming on the climate. The level of certainty uses terminology used by the Intergovernmental Panel on Climate Change where 'very likely' means a 90-99 percent chance, 'likely' means 66-90 percent chance. Being able to formulate accurate costs and benefits of climate change policy is crucial for justifying any proposed actions but uncertainties in climate change are pervasive. Regardless of how much models are built to incorporate uncertainties relating to climate change, it will be close to impossible for models to be able to accurately predict climatic changes.

This blog post has shown that what seems to be certain is that uncertainty is prevalent in both economics as well as climate change models. All these factors have to be taken into consideration when making decisions to mitigate climate change. 

References:

Archer, D (2012) Global warming: understanding the forecast. New Jersey: Wiley. 

McKibbin W. J. and Wilcoxen, P. J. (2002) 'The role of economics in climate change policy', Journal of Economics Perspectives, 16, 2, 107-129. 

Schneider, S. H. and Mastrandrea, M. D. (2005) 'Probabilistic assessment of ''dangerous'' climate change and emissions pathways', PNAS, 102, 44, 15728-15737.

Intergovernmental Panel on Climate Change (2001) Climate Change 2001: The Scientific Basis, Contribution of Working Group I to the Third Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge: Cambridge University Press.

Hurricane Sandy de-composed

The projected path of Hurricane Sandy provided by NOAA 4 days before the storm reached New York.

Following the previous entry about hurricane Sandy and its relevance to our discussion on abrupt climate change, I would like to share a video that is currently available on BBC. The documentary presents the period of time before and after Hurricane Sandy touched down on the US east coast. It shows the collaboration between the different institutions (i.e. fire department, transport, the electrical companies, expert opinions) in forecasting and preparing the city for the storm.

I woud like to highlight the last 5 mins of the video when the discussion turns towards relating adverse weather events to climate change. The narrator mentioned that 'expert opinion is divided on whether New York will face more frequent and destructive hurricanes in the future'. Coupled with rising sea levels as well as sea surface temperatures, this might cause storms that are significantly stronger and storm surges that are higher than what was experienced during Hurricane Sandy. An interesting point made in the documentary was that in the aftermath of the event, people wanted to put the event behind them and carry on with their lives (rebuilding their homes in the same areas with high risk of storm surges). I would like to point out that this is contrary to what is recommended by Bjørn Lomborg as mentioned in my previous post. 

Also, amidst the gloom of destruction, the documentary highlighted the accuracy of forecasts models which gave people the opportunity to evacuate before the storm hit. This is relevant to our discussion on managing the uncertainties and risks of abrupt climate change. With improvements in the accuracy of climate models, this would reduce the uncertainties in forecasting climate change. Lower uncertainties would better support the cost-benefit analysis of managing climate change and help us make better decisions in preparing for abrupt climate events. 

For more information on Hurricane Sandy, attached here is a news article which summarises the mechanisms of the hurricane presented in the BBC documentary.

Back to business

Hello again! after not being on the blog for quite some time, hope you're ready for quite a lengthy post!

First off the bat, I would like to highlight one of the key events that happened across the Atlantic Ocean last week. I am referring to the super storm that raged the US East coast, Hurricane Sandy. One of the possible impacts of abrupt climate change is more frequent and more adverse weather conditions (such as droughts, floods and hurricanes). In the aftermath of the destruction, insurers estimate that the cost of the hurricane could amount to $15-20 billion. This reminded me of what Bjørn Lomborg mentioned in his book- Cool It. 

Bjørn dedicates a section of his book to talk about extreme weather (page 94-107). He presents the arguments proposed by Al Gore in his famous documentary (An inconvenient Truth) and reasserts the claim that the costs of extreme weather conditions (future Sandys) in the future could amount to $1 trillion per year. However, he proposes that social changes are driving the higher costs rather than climate change. He posits that hurricanes have had similar strength and intensity over the past few decades and an increase in the economic costs of hurricanes over the years is caused by the rising concentrations of population and infra-structure in coastal regions. As such, resources should be put into mitigating such societal changes rather than mitigating climate change. Policies that he propose ranges from more stringent controls on coastal cities development, preventing people from staying in these hurricane prone areas, to redirecting the $180 billion a year spent on the kyoto protocol into building stronger buildings that can withstand more adverse conditions. Although there is still much uncertainty over the links between the frequency/intensity of hurricanes to anthropogenic processes, this is not the focus of todays post.

Let us first assume that the claims proposed by Bjørn are true and justified while we consider Hurricane Sandy and its impact on the residents of New York. It is quite possible for the city to build more 'hurricane-proof' buildings in the aftermath of Sandy but it is unlikely that people will relocate themselves away from this area given the importance that the city holds in light of the number of job opportunities and the significance of New York as a trading hub in the world. Hence, if the control of social changes are limited, under the model proposed by Bjørn, contrary to what is proposed, more effort will then need to be put in to mitigate climate change effects so that such extreme weather events do not become the norm. 

On this note, I would now like to highlight a paper written by Nicholas Stern in 2006, ahead of the publication of the Stern Review (which would be touched on in future posts). In his paper 'What is the Economics of Climate Change?', Stern identifies the severity of climate change and acknowledges the role of human activity in causing global warming. He highlights that climate change involves an externality (i.e. the emission of greenhouse gases damages others at no cost to the agent responsible for the emissions) and there is urgent need to find a remedy due to the risks of severe outcomes. With standard economic theory of externalities, several ways of ensuring that producers of the externality internalize the external costs have been proposed. However, these theories are based on strict assumptions that do not hold true in reality. Stern (2006) sums this up as 'a problem of intertemporal international collective action with major uncertainty and linked market failures'.

The economics of climate change, like the economics of most other social phenomenon, is focused on modelling the different aspects of society, ranging from implications of growth for emissions, calculating the 'social costs of carbon', to modelling the economics of technological options in mitigating climate change impacts. Key in this concept is the role of uncertainty. Stern reveals that uncertainty over the scientific, economic and social consequences of climate change makes it difficult for international collective action to mitigate the impacts of climate change. 

In light of these factors raised in the paper, focusing on mitigating the impacts of climate change is not simple and straight-forward. Even though economic models are useful in predicting social behavior, using such models to justify action (or inaction) towards mitigating climate change has its limitation due to a high degree of uncertainty. In the following posts, I will talk about the concepts of risks and uncertainties in the managing of climate change before moving on to the concept of tipping points.

For more information about the issues raised in this post, please refer to the following sources.

Lomborg, B. (2007) Cool It. London, Marshall cavendish limited and cyan communications limited.

Stern, N. (2006) 'What is the economics of climate change?', World Economics, 7, 2, 1-10.