Wednesday, November 11, 2009
Richard Tol on Climate Change and Policy
Richard S.J. Tol is among the very best economists working on the climate problem. He has developed his own integrated assessment model (AIM), called FUND, and very usefully aggregated and synthesized the climate cost and benefit projections from various models. In the presentation he gave yesterday at the IPI Workshop at NYU Law School, he provided several interesting findings. Among them, point estimates of the social cost of carbon range between $24/ton and $204/ton, with central estimates not far off the current price of carbon in the European Union's Emissions Trading Scheme. On mean estimates, global mean temperature increases of 1.0 or 1.5 degree (C) are consistent with improvements in global GDP, but just past 2.0 degrees (C) of warming, losses to global GDP begin - if global mean temps increase by 3 degrees (C), the loss to global GDP would amount to approximately 2.5%. Most of the damage would, of course, take place in developing countries whose economies tend to be more reliant on agriculture, tourism, and other climate-sensitive activities. Perhaps the most interesting graph he displayed showed that by 2050 the monetized impact of expected climate change is likely to be negative for the vast majority of countries in the world, with only a few exceptions.