Economics, Cost of Affecting Climate Change

Modeling Difficulties

Even if the climate change model of the United Nations Environment Programme (UNEP)/World Meteorological Organization (WMO) Intergovernmental Panel on Climate Change (IPCC) is the accepted model, the IPCC model itself is evolving at such a rapid rate that any economic projections based on it are outdated in no more than five years. The 2001 IPCC data used to create most current climate change models and to extrapolate economic projections was already out of date before the spring 2008 IPCC report updated the data and created a model synthesized from the competing models. As the data and modeling of climate change evolves, the economic projections based on them evolve, making the economic projections less reliable because their assumptions and infinite variables are built on the changing assumptions and variables of climate change models that are themselves evolving.

Variables include policy and regulatory shifts, population growth and densities, the pace and type of climate changes, agricultural and forestry losses, changes in governments, changes in regional alliances, wars, damage from catastrophic storms, the impact of climate change on human health, technological change, utility costs, changes in energy use and generation, savings from efficiency improvements, and water shortages. Modeling these variables is made even more daunting by the need to project the range of potential changes in these quantifications and then amalgamate them into a coherent economic model that itself rests on the range of projected quantifications of the evolving climate change models. Additionally, any projection becomes outdated if massive policy changes are introduced. If, for example the four major greenhouse gas (GHG) emitters, the United States, China, Russia, and India, adopted the Kyoto Protocol, the costs of adoption, estimated at $350 billion (2001–10) if Kyoto was universally accepted, would have to be integrated into future economic projections. These future economic projections would then have be readjusted once the climate [Page 345]change models were remodeled integrating the universal acceptance of Kyoto or another policy shift

Another challenge in projecting the economic impact of climate change or in affecting climate change is that there is no standard format for making these projections. Some of the studies use annual projections, some five-year projections, some decade projections, some 100-year projections, and some 200-year projections. The longer the projections, the more assumptions must be made to create the projections, making the projections more subject to variances in the original projection and, thus, less reliable. This difficulty is seen in the competing projections of impact and mitigation based on the 2001 IPCC data and correlative climate change models.

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