As recent estimates of the rate of global warming have increased, so have the financial estimates of the damage costs.^[1]

The economics of global warming refers to the projected size and distribution of the economic costs and benefits of global warming, and to the economic impacts of actions aimed at the mitigation of global warming. Estimates come from a variety of sources, including integrated assessment models, which seek to combine socio-economic and biophysical assessments of climate change. Image File history File linksMetadata No higher resolution available. ... Image File history File linksMetadata No higher resolution available. ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... Cost-benefit analysis is an important technique for project appraisal: the process of weighing the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. ... Global mean surface temperatures 1850 to 2006 Mean surface temperature anomalies during the period 1995 to 2004 with respect to the average temperatures from 1940 to 1980 Global warming is the observed increase in the average temperature of the Earths atmosphere and oceans in recent decades and the projected... Mitigation of global warming involves taking actions aimed at reducing the extent of global warming. ... Socioeconomics or Socio-economics is the study of the relationship between economic activity and social life. ... Variations in CO2, temperature and dust from the Vostok ice core over the last 400,000 years For current global climate change, see Global warming. ...

At an Intergovernmental Panel on Climate Change (IPCC) conference in April 2007, delegates from 120 nations discussed the specific economic and societal costs of mitigating global warming, and eventually approved the IPCC Fourth Assessment Report,^[2] which indicates general consensus that benefits of mitigation are worth the mitigation costs.^[3][4][5] IPCC is the science authority for the UNFCCC The Intergovernmental Panel on Climate Change (IPCC) was established in 1988 by two United Nations organizations, the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP), to evaluate the risk of climate change brought on by humans, based mainly on... Climate Change 2007, the Fourth Assessment Report (AR4) of the United Nations Intergovernmental Panel on Climate Change (IPCC), is the fourth in a series of such reports. ...

Economic impacts of global warming

Main article: Effects of global warming

Many estimates of aggregate net economic costs of projected damages from climate change across the globe are now available. These are often expressed in terms of the social cost of carbon (SCC), the aggregate of future net benefits and costs, due to global warming from carbon dioxide emissions, that are discounted to the present. Peer-reviewed estimates of the SCC for 2005 have an average value of US$43 per tonne of carbon (tC) (i.e., US$12 per tonne of carbon dioxide) but the range around this mean is large. For example, in a survey of 100 estimates, the values ran from US$-10 per tonne of carbon (US$-3 per tonne of carbon dioxide) up to US$350/tC (US$95 per tonne of carbon dioxide.)^[6] The net impact of global warming so far has been modest, but near-future effects are likely to become significantly negative, with large-scale extreme impacts possible by the end of the century. ...

In a 2004 comment on the economic effect of global warming in Copenhagen Consensus, Professor Robert O. Mendelsohn of Yale School of Forestry and Environmental Studies, stated that Copenhagen Consensus is a project which seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics. ...

"A series of studies on the impacts of climate change have systematically shown that the older literature overestimated climate damages by failing to allow for adaptation and for climate benefits (see Fankhauser et al 1997; Mendelsohn and Newmann 1999; Tol 1999; Mendelsohn et al 2000; Mendelsohn 2001;Maddison 2001; Tol 2002; Sohngen et al 2002; Pearce 2003; Mendelsohn and Williams 2004). These new studies imply that impacts depend heavily upon initial temperatures (latitude). Countries in the polar region are likely to receive large benefits from warming, countries in the mid-latitudes will at first benefit and only begin to be harmed if temperatures rise above 2.5C (Mendelsohn et al 2000). Only countries in the tropical and subtropical regions are likely to be harmed immediately by warming and be subject to the magnitudes of impacts first thought likely (Mendelsohn et al 2000). Summing these regional impacts across the globe implies that warming benefits and damages will likely offset each other until warming passes 2.5C and even then it will be far smaller on net than originally thought (Mendelsohn and Williams 2004)."^[7]

McKibbin and Wilcoxen (2002) cite the United Nations IPCC as concluding with 33 to 67 percent confidence that the aggregate market sector effect of a small increase in global temperatures could be "plus or minus a few percent of world GDP". Developed countries are more likely to experience positive effects and developing countries are more likely to experience negative effects. Larger temperature rises would be more adverse across the board. McKibbin and Wilcoxen do not endorse GDP as a welfare measure. The foundation of the U.N. The United Nations (UN) is an international organization whose stated aims are to facilitate co-operation in international law, international security, economic development, social progress and human rights issues. ... IPCC is science authority for the UNFCCC The Intergovernmental Panel on Climate Change (IPCC) was established in 1988 by two United Nations organizations, the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP) to assess the risk of human-induced climate change. The Panel is open to all... The term Market Sector is used in economics and finance to describe a set of businesses that are buying and selling such similar goods and services that they are in direct competition with each other. ... World map indicating Human Development Index (as of 2004). ...

The Stern Review, a 2006 report ^[8] by the former Chief Economist and Senior Vice-President of the World Bank Nicholas Stern, predicts that climate change will have a serious impact on economic growth without mitigation. ^[9] The report suggests that an investment of one percent of global GDP is required to mitigate the effects of climate change, with failure to do so risking a recession worth up to twenty percent of global GDP.^[10] Sir Nicholas Stern, author of the report. ... For the Manfred Mann album, see 2006 (album). ... The position of World Bank Chief Economist is one of the most influential in economics. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means... Nicholas Stern Sir Nicholas Stern, FBA (born 22 April 1946) is a British economist and academic. ... This article needs additional references or sources to facilitate its verification. ... A recession is traditionally defined in macroeconomics as a decline in a countrys real Gross Domestic Product (GDP) for two or more successive quarters of a year (equivalently, two consecutive quarters of negative real economic growth). ...

The Stern Review has been criticized by some economists, saying that Stern did not consider costs past 2200, that he used an incorrect discount rate in his calculations, and that stopping or significantly slowing climate change will require deep emission cuts everywhere.^[11] Other economists have supported Stern's approach ^{[12] [13]}, or argued that Stern's estimates are reasonable, even if the method by which he reached them is open to criticism. ^[14]. Discount rate as used in finance and economics is distinct from the discount rate described below; please refer to discounting and discounts. ...

Effects on agriculture

Main article: Global warming and agriculture

For some time it was hoped that a positive effect of global warming would be increased agricultural yields, because of the role of carbon dioxide in photosynthesis, especially in preventing photorespiration, which is responsible for significant destruction of several crops. In Iceland, rising temperatures have made possible the widespread sowing of barley, which was untenable twenty years ago. Some of the warming is due to a local (possibly temporary) effect via ocean currents from the Caribbean, which has also affected fish stocks .^[15] As global warming causes climate change, the issue of effects of global warming on agriculture due to the change in weather conditions is often invoked in arguments on the course of action involving prediction of climate events. ... The leaf is the primary site of photosynthesis in plants. ... Photorespiration refers to the alternate pathway for production of Glyceraldehyde 3-phosphate by Rubisco, the main enzyme of the Dark reactions of photosynthesis (also known as the Calvin cycle or the Primary Carbon Reduction (PCR) cycle). ... Binomial name Hordeum vulgare L. Barley (Hordeum vulgare) is a cereal grain, which serves as a major animal feed crop, with smaller amounts used for malting and in health food. ...

While local benefits may be felt in some regions (such as Siberia), recent evidence is that global yields will be negatively affected. "Rising atmospheric temperatures, longer droughts and side-effects of both, such as higher levels of ground-level ozone gas, are likely to bring about a substantial reduction in crop yields in the coming decades, large-scale experiments have shown" (The Independent, April 27, 2005, "Climate change poses threat to food supply, scientists say" - report on this event). Siberian Federal District (darker red) and the broadest definition of Siberia (red) arctic northeast Siberia Udachnaya pipe Siberia (Russian: , Sibir; Tatar: ) is a vast region of Russia constituting almost all of Northern Asia and comprising a large part of the Euro-Asian Steppe. ... For other uses, see The Independent (disambiguation). ... April 27 is the 117th day of the year (118th in leap years) in the Gregorian calendar, with 248 days remaining. ...

The region likely to be worst affected is Africa, both because its geography makes it particularly vulnerable, and because seventy per cent of the population rely on rain-fed agriculture for their livelihoods. Tanzania's official report on climate change suggests that the areas that usually get two rainfalls in the year will probably get more, and those that get only one rainy season will get far less. The net result is expected to be that 33% less maize—the country's staple crop—will be grown .^[16] A world map showing the continent of Africa Africa is the worlds second-largest and second most-populous continent, after Asia. ...

The increasing cost of petroleum and other fossil fuel is related to global warming because greenhouse gases are produced from such fuel. The increasing cost of such fuel is expected to increase the cost of agricultural products. Pumpjack pumping an oil well near Lubbock, Texas Ignacy Łukasiewicz - inventor of the refining of kerosene from crude oil. ... // Fossil fuels are hydrocarbons, primarily coal and petroleum (fuel oil or natural gas), formed from the remains of dead plants and animals. ... Global mean surface temperatures 1850 to 2006 Mean surface temperature anomalies during the period 1995 to 2004 with respect to the average temperatures from 1940 to 1980 Global warming is the observed increase in the average temperature of the Earths atmosphere and oceans in recent decades and the projected... Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ...

Insurance

An industry very directly affected by the risks is the insurance industry; the number of major natural disasters has trebled since the 1960s, and insured losses increased fifteenfold in real terms (adjusted for inflation).^[17] According to one study, 35–40% of the worst catastrophes have been climate change related (ERM, 2002). Over the past three decades, the proportion of the global population affected by weather-related disasters has doubled in linear trend, rising from roughly 2% in 1975 to 4% in 2001 (ERM, 2002). Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ...

According to a 2005 report from the Association of British Insurers, limiting carbon emissions could avoid 80% of the projected additional annual cost of tropical cyclones by the 2080s.^[18] A June 2004 report by the Association of British Insurers declared "Climate change is not a remote issue for future generations to deal with. It is, in various forms, here already, impacting on insurers' businesses now."^[19] It noted that weather risks for households and property were already increasing by 2-4 % per year due to changing weather, and that claims for storm and flood damages in the UK had doubled to over £6 billion over the period 1998–2003, compared to the previous five years. The results are rising insurance premiums, and the risk that in some areas flood insurance will become unaffordable for some. National Flood Insurance Program In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. ...

Financial institutions, including the world's two largest insurance companies, Munich Re and Swiss Re, warned in a 2002 study that "the increasing frequency of severe climatic events, coupled with social trends" could cost almost US$150 billion each year in the next decade.^[20] These costs would, through increased costs related to insurance and disaster relief, burden customers, taxpayers, and industry alike. Headquarters in Munich Munich Re AG, in German Münchener Rück AG, is one of the worlds largest reinsurance companies with over 5000 customers in 160 countries and has its headquarters in Munich, Germany. ... 30 St Mary Axe - at 180 m, Swiss Res London headquarters is the 6th tallest building in London Swiss Re is the worlds second-largest reinsurance company (after Munich Re/ Münchener Rück), and the worlds largest life and health reinsurer. ... The United States dollar is the official currency of the United States. ...

In the United States, insurance losses have also greatly increased. According to Choi and Fisher (2003) each 1% increase in annual precipitation could enlarge catastrophe loss by as much as 2.8%.^[21] Gross increases are mostly attributed to increased population and property values in vulnerable coastal areas, though there was also an increase in frequency of weather-related events like heavy rainfalls since the 1950s (Science, 284, 1943-1947).

Infrastructure

Roads, airport runways, railway lines and pipelines, (including oil pipelines, sewers, water mains etc) may require increased maintenance and renewal as they become subject to greater temperature variation. Regions already adversely affected include areas of permafrost, which are subject to high levels of subsidence, resulting in buckling roads, sunken foundations, and severely cracked runways. ^[22] An elevated section of the Alaska Pipeline Pipeline transport is a transportation of goods through a tube. ... A sewer is an artificial conduit or system of conduits used to remove sewage (human liquid waste) and to provide drainage. ... A municipal water system is a large system of reservoirs and large-scale piping which supplies fresh water, suitable for human consumption, to houses and other residences. ... In geology, permafrost or permafrost soil is a thermal condition where ground material stays at or below 0°C for two or more years. ... A road destroyed by subsidence and shear. ...

Migration

Some Pacific Ocean island nations, such as Tuvalu, are concerned about the possibility of an eventual evacuation, as flood defense may become economically inviable for them. Tuvalu already has an ad hoc agreement with New Zealand to allow phased relocation.^[23]

In the 1990s a variety of estimates placed the number of environmental refugees at around 25 million. (Environmental refugees are not included in the official definition of refugees, which only includes migrants fleeing persecution.) The Intergovernmental Panel on Climate Change (IPCC), which advises the world’s governments under the auspices of the UN, estimated that 150 million environmental refugees will exist in the year 2050, due mainly to the effects of coastal flooding, shoreline erosion and agricultural disruption (150 million means 1.5% of 2050’s predicted 10 billion world population).^[24][25] Map of countries by population —showing the population of the Peoples Republic of China and India, the only two countries to have a population greater than a billion. ...

Northwest Passage

Ice thicknesses changes from 1950s to 2050s simulated in one of GFDL's R30 atmosphere-ocean general circulation model experiments

Melting Arctic ice may open the Northwest Passage in summer, which would cut 5,000 nautical miles (9,000 km) from shipping routes between Europe and Asia. This would be of particular relevance for supertankers which are too big to fit through the Panama Canal and currently have to go around the tip of South America. According to the Canadian Ice Service, the amount of ice in Canada's eastern Arctic Archipelago decreased by 15% between 1969 and 2004.^[26] Image File history File links Arctic_Ice_Thickness. ... Image File history File links Arctic_Ice_Thickness. ... The Geophysical Fluid Dynamics Laboratory (GFDL) is a laboratory in the National Oceanic and Atmospheric Administration (NOAA)/Office of Oceanic and Atmospheric Research (OAR). ... ... The red line indicates the 10°C isotherm in July, commonly used to define the Arctic region border Satellite image of the Arctic surface The Arctic is the region around the Earths North Pole, opposite the Antarctic region around the South Pole. ... Popular Northwest Passage routes through the Canadian Arctic Archipelago This article describes the route through the Canadian Arctic. ... A nautical mile or sea mile is a unit of length. ... A supertanker is an unofficial nickname that applies to a certain class of tanker ship built to transport very large quantities of liquids; in practice this typically refers to crude oil. ... Two Panamax running the Miraflores Locks The Panama Canal (Spanish: ) is a major ship canal that traverses the Isthmus of Panama in Central America, connecting the Atlantic and Pacific Oceans. ... Reference map of Canadian arctic islands. ...

While the reduction of summer ice in the Arctic may be a boon to shipping, this same phenomenon threatens the Arctic ecosystem, most notably polar bears which depend on ice floes. Subsistence hunters such as the Inuit peoples will find their livelihoods and cultures increasingly threatened as the ecosystem changes due to global warming. For other uses, see Inuit (disambiguation). ...

Development

The combined effects of global warming may impact particularly harshly on people and countries without the resources to mitigate those effects. This may slow economic development and poverty reduction, and make it harder to achieve the Millennium Development Goals.^[27][28] Mitigation of global warming involves taking actions aimed at reducing the extent of global warming. ... Economic development is a sustainable increase in living standards that implies increased per capita income, better education and health as well as environmental protection. ... Poverty reduction (or poverty alleviation) is any process which seeks to reduce the level of poverty in a community, or amongst a group of people or countries. ... The Millennium Development Goals are eight goals that 192 United Nations member states have agreed to try to achieve by the year 2015. ...

In October 2004 the Working Group on Climate Change and Development, a coalition of development and environment NGOs, issued a report Up in Smoke on the effects of climate change on development. This report, and the July 2005 report Africa - Up in Smoke? predicted increased hunger and disease due to decreased rainfall and severe weather events, particularly in Africa. These are likely to have severe impacts on development for those affected. The term non-governmental organization (NGO) is used in a variety of ways all over the world and, depending on the context in which it is used, can refer to many different types of organizations. ... A world map showing the continent of Africa Africa is the worlds second-largest and second most-populous continent, after Asia. ...

At the same time, in developing countries, the poorest often live on flood plains, because it is the only available space, or fertile agricultural land. These settlements often lack infrastructure such as dykes and early warning systems. Poorer communities also tend to lack the insurance, savings or access to credit needed to recover from disasters.^[29]

Environmental

Secondary evidence of global warming — reduced snow cover, rising sea levels, weather changes — provides examples of consequences of global warming that may influence not only human activities but also ecosystems. Increasing global temperature means that ecosystems may change; some species may be forced out of their habitats (possibly to extinction) because of changing conditions, while others may flourish. Few of the terrestrial ecoregions on Earth could expect to be unaffected. A coral reef near the Hawaiian islands is an example of a complex marine ecosystem. ... In biology, a species is one of the basic units of biodiversity. ... Ecoregions are defined by the World Wildlife Fund as relatively large units of land or water containing a distinct assemblage of natural communities and species, with boundaries that approximate the original extent of natural communities prior to major land-use change. Terrestrial ecoregions are land ecoregions, as distinct from freshwater...

Increasing carbon dioxide may increase ecosystems' productivity to a point. Ecosystems' unpredictable interactions with other aspects of climate change makes the possible environmental impact of this is unclear, though. An increase in the total amount of biomass produced may not be necessarily positive: biodiversity can still decrease even though a relatively small number of species are flourishing. Variations in CO2, temperature and dust from the Vostok ice core over the last 400,000 years For current global climate change, see Global warming. ... Switchgrass, a hardy plant used in the biofuel industry in the United States Rice chaff. ... Rainforests are among the most biodiverse ecosystems on earth Biodiversity is the variation of taxonomic life forms within a given ecosystem, biome or for the entire Earth. ...

Water scarcity

Positive eustasy (sea-level rise) may contaminate groundwater, affecting drinking water and agriculture in coastal zones. Increased evaporation will reduce the effectiveness of reservoirs. Increased extreme weather means more water falls on hardened ground unable to absorb it, leading to flash floods instead of a replenishment of soil moisture or groundwater levels. In some areas, shrinking glaciers threaten the water supply.^[30] The availability of freshwater runoff from mountains for natural systems and human uses may also be impacted.^[31] It has been suggested that this article or section be merged with sea level. ... Groundwater is water located beneath the ground surface in soil pore spaces and in the fractures of geologic formations. ... Runoff flowing into a stormwater drain Surface runoff is water, from rain, snowmelt, or other sources, that flows over the land surface, and is a major component of the water cycle[1][2]. Runoff that occurs on surfaces before reaching a channel is also called overland flow. ...

Higher temperatures will also increase the demand for water for the purposes of cooling and hydration.

In the Sahel, there has been on average a 25% decrease in annual rainfall over the past 30 years. This article or section is in need of attention from an expert on the subject. ...

Health

Direct effects of temperature rise

Rising temperatures have two opposing direct effects on mortality: higher temperatures in winter reduce deaths from cold; higher temperatures in summer increase heat-related deaths.

The distribution of these changes obviously differs. Palutikof et al calculate that in England and Wales for a 1 °C temperature rise the reduced deaths from cold outweigh the increased deaths from heat, resulting in a reduction in annual average mortality of 7000. However, in the United States, only 1000 people die from the cold each year, while twice that number die from the heat.^[32] The 2006 United States heat wave has killed 139 people in California as of 29 July 2006. [Deaths of livestock have not been well-documented.] Fresno, in the central California valley, had six consecutive days of 110 degree-plus Fahrenheit temperatures. ^[33] The 2006 North American heat wave spread throughout most of the United States and Canada beginning on July 15, 2006, killing at least 225 people. ... Nickname: Location in the state of California County Fresno Government  - Mayor Alan Autry Area  - City 104. ... Fahrenheit is a temperature scale named after the German physicist Daniel Gabriel Fahrenheit (1686–1736), who proposed it in 1724. ...

The European heat wave of 2003 killed 22,000–35,000 people, based on normal mortality rates (Schär and Jendritzky, 2004). It can be said with 90% confidence that past human influence on climate was responsible for at least half the risk of the 2003 European summer heat-wave (Stott et al 2004). The summer of 2003 was one of the hottest ever in Europe; this led to a health crisis in certain countries as well as considerable impact on crops. ...

Spread of disease

Global warming is expected to extend the favourable zones for vectors conveying infectious disease such as malaria.^[34] In poorer countries, this may simply lead to higher incidence of such diseases. In richer countries, where such diseases have been eliminated or kept in check by vaccination, draining swamps and using pesticides, the consequences may be felt more in economic than health terms, if greater spending on preventative measures is required.^[35] Traditionally in medicine, a vector is an organism that does not cause disease itself but which spreads infection by conveying pathogens from one host to another, a vector is where the infectious organism does not change its DNA/RNA, for the reason a mosquito will not serve as vectors for... This false-colored electron micrograph shows a malaria sporozoite migrating through the midgut epithelia. ... Malaria is a vector-borne infectious disease that is widespread in tropical and subtropical regions, including parts of the Americas, Asia, and Africa. ... Vaccination is the process of administering weakened or dead pathogens to a healthy person or animal, with the intent of conferring immunity against a targeted form of a related disease agent. ...

Cost of reducing fossil fuel use

Reducing greenhouse gas emissions depends on lowering consumption of fossil fuels. The key challenge is that nearly all forms of economic activity rely on fossil fuel energy sources, from transportation fuel, electricity from coal-fired plants, industrial furnaces to home and office heating. Reducing emissions can be achieved through gains in efficiency - producing the same benefits with smaller amounts of fossil energy, or by displacing fossil sources with non- or low-emitting sources. Low emission renewable energy sources such as wind, solar and biomass still represent only a small fraction of total energy consumption[2]. The scale of current fossil energy dependence poses a substantial challenge. Gaining energy efficiency typically requires up-front investment, such as adding insulation, replacing energy-inefficient devices and processes, or buying hybrid vehicles. Some such investments can pay for themselves in the savings on energy bills, and the economic case for choosing them depends on the payback period. If an upgrade's payback is better than the risk-free interest rate, economic theory predicts individuals will choose the higher return of making the efficiency investment[3]. If current pricing is not leading to this outcome, the cost of fossil energy is not yet high enough to drive adoption of available efficiency gains. World renewable energy in 2005 (except 2004 data for items marked* or **). Enlarge image to read exclusions. ... In physics and engineering, including mechanical and electrical engineering, energy efficiency is a dimensionless number, with a value between 0 and 1 or with times 100 given in percent. ... Payback period in business and economics refers to the period of time required for the return on an investment to repay the sum of the original investment. ...

Advocates of mitigating climate change hold that greenhouse gas emissions must carry a price, so the market can price in the impact of their emission. This could take the form of a carbon tax or of emission caps, with a market created for trading emission permits, much as was done for sulfate emissions blamed for acid rain. Thus the economic impact of avoiding greenhouse gas emissions depends on how much consumption will have to be avoided, and how quickly the economy can incorporate efficiency gains. A carbon tax is a tax on energy sources which emit carbon dioxide into the atmosphere. ... Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. ... The term acid rain also known as is commonly used to mean the deposition of acidic components in rain, snow, dew, or dry particles. ...

Some pundits have criticized such attempts at calculating the costs of mitigating climate change by avoiding fossil fuel consumption, pointing out that the opportunity costs of avoiding consumption are not (and cannot) be calculated and are likely to be more important than the expected benefits [4] [5]. In economics, opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits which could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i. ...

Many estimates of aggregate net economic costs of damages from climate change across the globe (i.e., the social cost of carbon (SCC), expressed in terms of future net benefits and costs that are discounted to the present) are now available. Peer-reviewed estimates of the SCC for 2005 have an average value of US$43 per tonne of carbon (tC) (i.e., US$12 per tonne of carbon dioxide) but the range around this mean is large, primarily due to the variation in discount rates used. For example, in a survey of 100 estimates, the values ran from US$-10 per tonne of carbon (US$-3 per tonne of carbon dioxide) up to US$350/tC (US$95 per tonne of carbon dioxide.)^[36]

Mitigation and adaptation

Main article: Mitigation of global warming

See also: Adaptation to global warming

The costs of mitigating (reducing) global warming depend on a number of factors. One fundamental factor is the target level of atmospheric carbon dioxide: the lower the level, the sooner action must be taken if increases beyond the target level are to be avoided. The sooner action must be taken, the shorter the period over which costs must be spread, and the higher the absolute costs, as cheaper technologies which might emerge later are not yet available. A common target level (assumed by the United Kingdom) is 550ppm (current levels are around 380ppm, and rising at 2-3ppm per year). Signatories of the Kyoto Protocol committed themselves to targets that require lowering their national greenhouse gas emissions to a specified level relative to their actual 1990 emissions. Many nations set targets to reach a small percentage below 1990 levels, during the target period for Kyoto of 2008-2012. Mitigation of global warming involves taking actions aimed at reducing the extent of global warming. ... Adaptation to global warming covers all actions aimed at reducing the negative effects of global warming. ... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ... Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ...

Another crucial factor in estimating the costs of climate change is the discount rate to apply. Normally a relatively high rate (e.g. 5%-10%) is applied, reflecting the cost of capital. However, where intergenerational issues involve potential irreversibilities such as climate change, a low discount rate (e.g. 1%-4%) may be applied. The difference is dramatic: at 4% (a typical rate for social issues), avoiding $1m worth of climate change damage in 100 years' time is valued at nearly $20,000 today (net present value), whereas at 8% it is valued at less than $500. Discount rate as used in finance and economics is distinct from the discount rate described below; please refer to discounting and discounts. ... Social issues are matters that can be explained only by factors outside an individual’s control and immediate social environment which affect many individuals in a society. ... Net present value (NPV) is a standard method for financial evaluation of long-term projects. ...

Another area for debate is the relationship between technological development and regulatory incentives: if regulation can induce substantial technological change, the costs of mitigation may be much lower. By the mid 20th century humans had achieved a mastery of technology sufficient to leave the surface of the Earth for the first time and explore space. ... A technological change is a term that is used in economics to describe a change in the set of feasible production possibilities. ...

Cost estimates

IPCC TAR (Synthesis Report) suggested values of $78bn to $1141bn annual mitigation costs, amounting to 0.2% to 3.5% of current world GDP (which is around $35 trillion), or 0.3% to 4.5% of GDP if borne by the richest nations alone. As economic growth is expected to continue, the percentage would fall. In terms of cost per tonne of carbon emission avoided, the range (for a target of 550ppm) is $18 to $80.^[37] This article needs additional references or sources to facilitate its verification. ...

These cost estimates refer to reductions achieved through tradable emissions permits when those permits are given away to polluters. If the reductions are achieved through emission taxes or auctioned permits, and the revenue is used to reduce distortionary taxes, the TAR III synthesis report concludes that "[depending] on the existing tax structure, type of tax cuts, labour market conditions and method of recycling... it is possible that the economic benefits may exceed the costs of mitigation." This is in contrast to McKibbin and Wilcoxen's (2002) report that Nordhaus and Boyer calculated that the present value cost of the Kyoto Protocol would be $800 billion to $1,500 billion if implemented as efficiently as possible. They also cite a study by Tol that estimated the net present value cost to be more than $2.5 trillion. A tax cut is a reduction in the rate of tax charged by a government, for example on personal or corporate income. ... Construction workers generally work long hours for their pay Labor economics seeks to understand the functioning of the market and dynamics for labor. ... Kyoto Protocol Opened for signature December 11, 1997 in Kyoto, Japan Entered into force February 16, 2005. ...

Azar and Schneider (2002) observe that global output in 1990 was around $20 trillion. If it grew steadily at 2.1 percent per annum it would be just short of $200 trillion by 2100. They thereby make the point that the calculated present value costs of mitigation would look smaller if scaled against 2100 output than if scaled against 1990 output. However, neither comparator is relevant to the question of whether the likely benefits from mitigation exceed the costs. The present value of a single or multiple future payments (known as cash flows) is the nominal amounts of money to change hands at some future date, discounted to account for the time value of money, and other factors such as investment risk. ...

Lord Peter Levene , chairman of Lloyd's of London, demanded, on 12 April 2007, that the threat of climate change must be an integral part of every company’s risk analysis.^[38] Peter Keith Levene, Baron Levene of Portsoken KBE KStJ (born December 8, 1941) is chairman of Lloyds of London and was Lord Mayor of London 1998 to 1999. ... It has been suggested that this article or section be merged with Council of Lloyds. ... April 12 is the 102nd day of the year in the Gregorian calendar (103rd in leap years). ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ...

Benefits

McKibbin and Wilcoxen also report that Nordhaus and Boyer calculated that the present value of benefits from mitigation under the Kyoto Protocol would be $120 billion, far below the likely costs. McKibbin and Wilcoxen report that "[o]ther studies reach similar conclusions". They cite Tol as concluding that "the emissions targets agreed in the Kyoto Protocol are irreconcilable with economic rationality."

However, the Stern Review produced much larger benefit estimates, of between 5 per cent and 20 per cent of GDP. The difference reflected a number of factors, the most important of which were the choice of discount rate, the use of welfare weighting for effects on people in poor countries, a greater weight on damage to the natural environment and the use of more up-to-date scientific estimates of likely damage. Sir Nicholas Stern, author of the report. ...

In addition to avoiding the costs of the business-as-usual scenario, mitigation actions can bring other benefits, depending on factors such as the technology used. These include, for example, the reduced economic impact from oil supply disruptions and/or price rises, if mitigation reduces oil dependence. This may be of particular benefit to non-oil-exporting developing countries, which suffer greater economic impact from oil price rises.[6] Co-benefits from ending deforestation include protection of biodiversity, benefits for indigenous people, research and development possibilities, tourism, and some protection from extreme weather events. (Stern Review, page 280) Peak Oil Depletion Scenarios Graph which depicts cumulative published depletion studies by ASPO and other depletion analysts. ... It has been suggested that Underdevelopment be merged into this article or section. ... Sir Nicholas Stern, author of the report. ...

Optimal strategies for mitigation

Financial and technological strategies can have a major impact on reaching a particular target atmospheric greenhouse gas concentration.

• Carbon tax
• Carbon emissions trading
• Hybrid systems of permits and user fees (e.g. the Brookings McKibbin-Wilcoxen Blueprint[7])
• Regulation
• Reducing the carbon intensity of energy via Nuclear power or Renewable Energy

"No regrets" policies - notably reducing fossil fuel subsidies, which is predicted to increase growth whilst reducing CO2 emissions. Article 2 of the Kyoto Protocol specifies a progressive removal of subsidies and reform of taxes as a means of achieving reduction commitments. [8] A carbon tax is a tax on energy sources which emit carbon dioxide into the atmosphere. ... Carbon emissions trading involves the trading of permits to emit carbon dioxide (and other greenhouse gases, calculated in tonnes of carbon dioxide equivalent, tCO2e). ... This article needs to be cleaned up to conform to a higher standard of quality. ... Carbon intensity is the ratio of carbon emissions to economic activity or some other activity. ... A nuclear power station. ... World renewable energy in 2005 (except 2004 data for items marked* or **). Enlarge image to read exclusions. ... // Fossil fuels are hydrocarbons, primarily coal and petroleum (fuel oil or natural gas), formed from the remains of dead plants and animals. ...

McKibbin and Wilcoxen (2002) argue that a combination of long term carbon price signals and short terms caps on economic cost is needed to address both economic efficiency, equity sharing and political feasibility. In economics, opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits which could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i. ... Economic efficiency is a general term for the value assigned to a situation by some measure designed to capture the amount of waste or friction or other undesirable economic features present. ...

The Stern Review recommends adopting a quantative global stabilisation target range for the stock of greenhouse gases as a foundation for policy. It suggests that this target range would be likely to be somewhere between 450-550 ppm CO₂-e. It also recommends a carbon price signal through the use of a carbon tax or emissions trading scheme. Sir Nicholas Stern, author of the report. ...

Brink et al (2005) showed that the costs of mitigation can be reduced by considering the inter-relationships of different greenhouse gas, and the differential impact that different technological decisions may have on their emissions. Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ...

Cost distribution

The costs and benefits of global warming are distributed quite unequally.

• low-lying countries' risk of floods
• many countries subject to increased drought are poor African countries
• ability of poor countries to mitigate / adapt (margin)
• GW increases variability of weather, which implies greater capital requirements for water storage systems, flood defenses, etc as well as individual requirements to cope with wider variation in weather patterns

The costs of mitigation may also be distributed unequally, both within and between countries. [9] Wier et al (2005) showed that carbon taxes, particularly direct taxes on households, are regressive (more so than VAT), suggesting that in order to maintain social acceptance the regressive effect needs to be compensated for either within the environmental tax structure, or in other parts of the tax system. Indirect taxes (on business) are less regressive, and petrol taxes are found to be progressive. A world map showing the continent of Africa Africa is the worlds second-largest and second most-populous continent, after Asia. ... A direct tax a tax that is collected directly by government from the persons (legal or natural) on which it is levied. ... vat can be a type of barrel used for storage. ... Ecotax, short for Ecological taxation, can refer to: A fiscal policy that introduces taxes intended to promote ecologically sustainable activities via economic incentives. ... The term indirect tax has more than one meaning. ...

Inter-relationships

Between countries

Bastianoni et al (2004) note the differences between methodologies for assigning responsibility for greenhouse gas emissions, which include the geographical approach, based on the IPCC guidelines for GHG inventory; the consumer responsibility approach, based on the Ecological Footprint methodology; and the Carbon Emission Added (CEA) approach, which resembles the accounting of a Value Added Tax. Different methodologies can produce quite different results in terms of responsibility for emissions, with consequent impact on policy. Value added tax (VAT) is tax on exchanges. ...

Gradual change vs climate surprises

Baranzini et al (2003) conclude that "(i) gradual, continuous uncertainty in the global warming process is likely to delay the adoption of abatement policies as found in previous studies, with respect to the standard CBA; however (ii) the possibility of climate catastrophes accelerates the implementation of these policies as their net discounted benefits increase significantly."

References

• Australian Greenhouse Office (2004), "Economic Issues Relevant to Costing Climate Change Impacts"
• Christian Azar and Stephen H. Schneider (2002) "Are the economic costs of stabilising the atmosphere prohibitive?", Ecological Economics 42 (1-2)
• Andrea Baranzini, Marc Chesney and Jacques Morisset (2003), "The impact of possible climate catastrophes on global warming policy", Energy Policy 31(8)
• Simone Bastianoni, Federico Maria Pulselli and Enzo Tiezzi (2004), "The problem of assigning responsibility for greenhouse gas emissions", Ecological Economics 49(3)
• P. Buonanno, C. Carraro and M. Galeotti (2003), "Endogenous induced technical change and the costs of Kyoto", Resour. Energy Econ. 25 (2003), pp. 11–34.
• Corjan Brink, Ekko van Ierland, Leen Hordijk and Carolien Kroeze (2005), "Cost-effective emission abatement in agriculture in the presence of interrelations: cases for the Netherlands and Europe", Ecological Economics 53(1)
• Congressional Budget Office (2005), "Uncertainty in Analyzing Climate Change: Policy Implications", January 2005 - emissions caps vs taxes
• Congressional Budget Office (2003), "The Economics of Climate Change: A Primer", April 2003
• DeCanio, Stephen J. (1997), The Economics of Climate Change, Redefining Progress (also Michael Toman)
• Friends of the Earth (1997), "Putting costs into perspective - economic benefits from fighting climate change", February 1997
• Mette Wier, Katja Birr-Pedersen, Henrik Klinge Jacobsen and Jacob Klok (2005), "Are CO2 taxes regressive? Evidence from the Danish experience", Ecological Economics 52(2)
• Warwick McKibbin and Peter Wilcoxen (2002) ‘The Role of Economics in Climate Change Policy”, Journal of Economic Perspectives, vol 16, no 2, pp107-130. re-printed in R. Stavins ed(2005) “Economics of the Environment: Selected Readings”, pp479-502. WW Norton and Co, New York
• Warwick McKibbin and Peter Wilcoxen (2002) Climate Change Policy after Kyoto: A Blueprint for a Realistic Approach, Brookings Institution, December, 133 pages (ISBN 0-8157-0608-1)

1. ^ Adapted from a portion of Figure 1 in Tol and Yohe (2006) "A Review of the Stern Review" World Economics 7(4): 233-50.
2. ^ Information page for Bangkok session (Working group III), IPCC Publications, Accessed 5/7/07.
3. ^ Coleman, Joseph. "Report: Climate change plan affordable", Associated Press, 2007-05-04. Retrieved on 2007-05-04. 
4. ^ Casey, Michael. "Climate plan arms world for key talks", Associated Press, 2007-05-04. Retrieved on 2007-05-04. 
5. ^ Malakunas, Karl. "Experts say nations have means to tackle global warming", Agence France-Presse, 2007-05-04. Retrieved on 2007-05-04. 
6. ^ 2007 IPCC Summary for Policymakers
7. ^ http://www.copenhagenconsensus.com/Default.aspx?ID=165
8. ^ Nicholas Stern (30 October 2006). "Stern Review executive summary". New Economics Foundation.
9. ^ http://news.bbc.co.uk/1/hi/business/6096594.stm (Report's stark warning on climate)
10. ^ BBC News (30 October 2006) "At-a-glance: The Stern Review"
11. ^ Tol and Yohe (2006) "A Review of the Stern Review" World Economics 7(4): 233-50. See also other critiques in World Economics 7(4).
12. ^ Brad DeLong. Do unto others....
13. ^ John Quiggin. Stern and the critics on discounting.
14. ^ Martin Weitzman. The Stern Review of the Economics of Climate Change.
15. ^ http://www.guardian.co.uk/climatechange/story/0,12374,1517939,00.html
16. ^ http://www.guardian.co.uk/climatechange/story/0,12374,1517935,00.html
17. ^ http://www.aaisonline.com/communications/Climate%20Change.pdf
18. ^ Association of British Insurers (2005) "Financial Risks of Climate Change" summary report
19. ^ Association of British Insurers (June 2005) "A Changing Climate for Insurance: A Summary Report for Chief Executives and Policymakers"
20. ^ UNEP (2002) "Key findings of UNEP’s Finance Initiatives study" CEObriefing
21. ^ Choi, O. and Fisher, A. (2003) "The Impacts of Socioeconomic Development and Climate Change on Severe Weather Catastrophe Losses: Mid-Atlantic Region (MAR) and the U.S." Climatic Change 58(1-2): 149-170
22. ^ http://www.airportbusiness.com/article/article.jsp?id=2258&siteSection=4
23. ^ http://www.guardian.co.uk/climatechange/story/0,12374,1063181,00.html
24. ^ http://www.risingtide.nl/greenpepper/envracism/refugees.html
25. ^ http://web.archive.org/web/20050223042051/http://www.risingtide.nl/greenpepper/envracism/refugees.html
26. ^ http://www.washingtontimes.com/specialreport/20050612-123835-3711r.htm
27. ^ http://www.odi.org.uk/iedg/publications/climate_change_web.pdf
28. ^ http://news.independent.co.uk/world/africa/story.jsp?story=648282
29. ^ http://lnweb18.worldbank.org/ESSD/envext.nsf/46ParentDoc/ClimateChange?Opendocument
30. ^ http://www.opendemocracy.net/globalization-climate_change_debate/kazakhstan_2551.jsp
31. ^ http://www.un.org/News/Press/docs/2002/UNEP114.doc.html
32. ^ http://www.epa.gov/climatechange/effects/health.html
33. ^ http://www.suntimes.com/output/news/cst-nws-heat29.html
34. ^ http://www.guardian.co.uk/climatechange/story/0,12374,1517940,00.html
35. ^ http://www.cdc.gov/ncidod/eid/vol6no1/reiter.htm
36. ^ 2007 IPCC Summary for Policymakers
37. ^ House of Lords, 6 July 2005, The Economics of Climate Change, House of Lords, Select Committee on Economic Affairs, 2nd Report of Session 2005-06
38. ^ Business Insurance, 12 April 2007, [1]

Stephen H. Schneider (born ca. ... A technical change is a term used in economics to describe a change in the amount of output produced from the same inputs. ... The Congressional Budget Office is a federal agency within the legislative branch of the United States government. ... 2005 : January - February - March - April - May - June - July - August - September - October - November - December- → Deaths in January • 29 Ephraim Kishon • 25 Philip Johnson • 23 Johnny Carson • 22 Parveen Babi • 20 Jan Nowak-Jeziorański • 17 Virginia Mayo • 17 Zhao Ziyang • 15... Friends of the Earth is an international network of environmental organizations in 70 countries. ... 1997 (MCMXCVII) was a common year starting on Wednesday of the Gregorian calendar. ... Warwick McKibbin (born 21 April 1957 in Sydney) is an Australian Professor of economics at the Australian National University who works across a wide range of areas in applied policy. ... The Journal of Economic Perspectives (JEP) is a economic journal published by the American Economic Association. ... W. W. Norton & Company is an American book publishing company that has remained independent since its founding. ... Warwick McKibbin (born 21 April 1957 in Sydney) is an Australian Professor of economics at the Australian National University who works across a wide range of areas in applied policy. ... The Brookings Institution is one of the oldest and best known think tanks in the United States. ... The Associated Press, or AP, is an American news agency, the worlds largest such organization. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... The Associated Press, or AP, is an American news agency, the worlds largest such organization. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... AFP logo Paris headquarters of AFP Charles Havas Agence France-Presse (AFP) is the oldest news agency in the world, and one of the three largest with Associated Press and Reuters. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ... May 4 is the 124th day of the year (125th in leap years) in the Gregorian calendar. ... October 30 is the 303rd day of the year (304th in leap years) in the Gregorian calendar, with 62 days remaining. ... For the Manfred Mann album, see 2006 (album). ... The New Economics Foundation is a British think-tank, or, in their own description, a think-and-do tank. The groups goal is to promote their progressive view of welfare economics and environmentalism. ... J. Bradford DeLong (b. ... John Quiggin (b. ... The House of Lords is the upper house of the Parliament of the United Kingdom and is also commonly referred to as the Lords. The Sovereign, the House of Commons (which is the lower house of Parliament and referred to as the Commons), and the Lords together comprise the Parliament. ... July 6 is the 187th day of the year (188th in leap years) in the Gregorian calendar, with 178 days remaining. ... A Select Committee is a committee made up of a small number of parliamentary members appointed to deal with particular areas or issues originating in the Westminster System of parliamentary democracy. ... April 12 is the 102nd day of the year in the Gregorian calendar (103rd in leap years). ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the CE era. ...

See also

• Avoiding Dangerous Climate Change
• Steady state (macroeconomics)
• Stern Review
• Tragedy of the commons
• Low-carbon economy

Global carbon dioxide emissions 1800–2000 Global average surface temperature 1850 to 2006 Avoiding Dangerous Climate Change: A Scientific Symposium on Stabilisation of Greenhouse Gases was a 2005 international conference that redefined the link between atmospheric greenhouse gas concentration, and the 2°C (3. ... The steady-state is a condition of the economy in which output per worker and capital per worker do not change over time. ... Sir Nicholas Stern, author of the report. ... It has been suggested that Tyranny of the Commons be merged into this article or section. ... A low-carbon economy is a future economy in which the use of carbon based fuels and carbon dioxide emissions from burning fuels are significantly reduced. ...

External links

• Cooler Heads Coalition, Economics of global warming
• Pew Center on Global Climate Change, Economics of global warming
• EIA: Emissions Cuts Much Cheaper Than Previously Thought
• The Brookings Institution global climate change project
• The Lavoisier Group - Australian Site looking at Issues in Global Warming Debate from sceptical viewpoint - concentrates on economic failings of IPCC analysis and projections
• The Stern Review UK Government's Chief Economic Advisor on Climate Change