In This Issue
Fall Bridge: A Panoply of Perspectives
September 22, 2014 Volume 44 Issue 3

Why Climate Action is Urgent

Thursday, September 11, 2014

Author: Yannis A. Phillis, Asad M. Madni, Evangelos Grigoroudis, Fotis Kanellos, Vassilis S. Kouikoglou, and Spiros Papaefthimiou

Present climate change is a manmade problem of global scale and consequences. Climate knows no borders and distinguishes no countries: all nations are susceptible to the impacts of climate change.

Overview

Carbon dioxide (CO2) is the main greenhouse gas (GHG) in the atmosphere responsible for long-term global warming, and scientific evidence indicates that the current CO2 concentration is probably the highest in the last 15 million years (World Bank 2012)—more than 391 parts per million (ppm), compared to the preindustrial level of 278 ppm. CO2 emissions grew 1.1 percent per year from 1990 to 1999 but since 2000 they have been growing by more than 3 percent per year (Gowdy 2010). The National Oceanic and Atmospheric Administration (NOAA) reported a reading of CO2 at Mauna Loa of 400.03 ppm on May 9, 2013, crossing for the first time the 400 ppm mark.1

Global warming due to past anthropogenic CO2 emissions is irreversible for at least 1,000 years, and current and future CO2 emissions will result in additional warming (Matthews and Solomon 2013). The international community has set the goal of stabilizing global warming at no more than 2°C above preindustrial levels by 2100, while the Small Island Developing States (SIDS; www.sidsnet.org) have set it at 1.5°C. But given current emission levels and minimal international action to mitigate climate change, “there is roughly a 20 percent likelihood of exceeding 4°C by 2100” (World Bank 2012, p. 1).

It is still possible, however, to keep global warming within tolerable limits through the use of appropriate technologies to replace fossil fuel consumption with other energy sources and the application of international political will to change course and control climate change. Any delay of such action will commit the planet to higher and higher temperatures that will become irreversible in the foreseeable future. The likely consequences will be dire.

Some Consequences

If current CO2 emissions are not abated and a 4°C warming above preindustrial levels is reached by 2100, the likely stresses on society will be severe. Warming at higher latitudes will be greater than in the tropics, but the impacts will be greater in the latter, thus disproportionately affecting the poorer regions of the planet (World Bank 2012). Agriculture and ecosystems in the tropics will be stressed not only by higher temperatures but also by more intense cyclones, and sea level rise may be up to 20 percent greater than average. In the United States a recent study predicts that, if emissions continue unabated, increased flooding is likely and snowfall on the mountains of southern California may be reduced by 30–40 percent compared to snowfall at the end of the 20th century (Sun et al. 2013).

Past climate records could provide an idea of what might happen with a 4°C warming. The sea level was 120m lower during the last ice age when average temperatures were 4–7°C lower than they are now, and 25–35m higher when temperatures were 2–3°C higher, 3 million years ago during the Pliocene Epoch (Allison et al. 2009).

National security will also be at risk from climate change as food scarcity and famine, epidemics and pandemics pose international security threats. A recent report of the National Academy of Sciences (Steinbruner et al. 2012) links climate change to possible societal breakdowns and conflicts due to health problems and food and water scarcity in certain regions. Migration within and between countries may increase dramatically—especially associated with megacities in the delta regions of Asia and Africa under the stress of sea level rise—with possible violent consequences. Water resources will be stressed severely as some dry areas, such as the Middle East and the Sahel Region, become drier. There is no substitute for clean water and its scarcity can be a source of conflict.

Economic Aspects

It has been suggested that the reluctance of the United States and China to sign the Kyoto Protocol in support of controlling GHG emissions (although they signed the Montreal Protocol, which phased out the use of ozone-depleting substances) stems partly from economic considerations (Sunstein 2006). Both countries were projected to incur higher costs than benefits by signing the Kyoto Protocol, whereas the opposite was perceived to be true for the Montreal Protocol. European countries, on the other hand, signed the Kyoto Protocol for different reasons. Germany, for example, experienced lower GHG emissions after reunification, thanks to East Germany’s bad economy, whereas the United Kingdom reduced its emissions by subsidizing natural gas.2

Uncertainty and Variability in Economic Assumptions

Economic valuations of future climate gains and losses present many difficulties partly because of tremendous uncertainties. Modelers often resort to simplistic assumptions to handle the complexities of the problem, with the result that valuations exhibit considerable variability and sometimes questionable conclusions. One such valuation found that a 2.5°C warming would benefit Russia to the tune of 0.65 percent of its GDP (Baird and Morrison 2005), but the country’s 2010 heat wave cost 55,000 lives, 25 percent of crop production, and 1 million hectares of land burned by wildfires—in economic terms, a loss of about $15 billion or 1 percent of GDP (World Bank 2012). Such extreme events would be very rare in the absence of climate change but are likely to happen more frequently as climate warms.

Two commonly cited economic models of the costs of climate change mitigation were developed by Nordhaus (1994) and Stern (2007). The former uses a discount rate of about 3 percent and suggests moderate mitigation action while the latter uses 1.5 percent and suggests more aggressive measures. A higher discount rate values the climate impact on future generations less. More importantly, the choice of discount rates reflects values rather than objective scientific method.

One estimate of damages associated with a 2.5°C warming predicts losses of $113 billion per year in the United States alone (in 1990 US dollars; Hanemann 2010). In contrast, another estimate by Nordhaus (1994) is $28 billion. And according to Stern, if no mitigation action is taken, at least 5 percent of global GDP annually will be lost in costs and risks associated with climate change. Such a number should have shocked nations into action, but it hasn’t.

In addition to differing discount rates and projected economic losses, most economic models use average temperatures with no regard for variability. But a temperature rise of 2°C globally implies a 2.3°C winter rise and a 4.6°C summer rise in California (World Bank 2012), and in the state’s agricultural Central Valley the rise will be 5°C, which would almost certainly have negative effects on farming and food production.

The point is that climate change valuations vary according to assumptions. However, reality suggests that less conservative economic estimates might represent the future more reliably. According to Munich Re, a leading global reinsurer, natural catastrophes in 2011 caused $400 billion in overall losses worldwide and $160 billion in 2012.3 In January 2013 Australia suffered a prolonged heat wave that forced the country’s Bureau of Meteorology to add two new colors, deep purple and pink, to its weather forecasting chart to cover record temperatures of 47.8°C. The heat wave caused a number of fires to spread across the country. These conditions in Queensland and northern New South Wales were ended in the last week of January by severe flooding caused by tropical cyclone Oswald. The economic cost of the heat waves and wildfires (as well as floods) has yet to be estimated.

Finally, economic studies examine only a limited spectrum of climate change consequences. There are no comprehensive assessments of the economic and ecological consequences of a possible collapse of coral reefs, loss of marine life, or loss of human settlements to rising seas due to climate change (World Bank 2012).

Neoclassical Economic Models and Human Behavior

Most economic discussions in the context of climate change rely on the basic tenets of the neoclassical model, which have been criticized on various grounds. For example, Gowdy (2010) offers the following criticism of Nordhaus’s dynamic integrated climate-economy (DICE) model (Nordhaus 1994):

  • The only value assigned to climate is economic.
  • There is no regard for humans as social and biological creatures.
  • Human well-being is measured by income and mitigation policies are justified only on the grounds of income increase.
  • Future income is discounted subjectively.
  • The model is static, unlike economic reality, which is highly dynamic.
  • Consumers and producers are assumed to be autonomous and thus unaffected by other producers and consumers.
  • There is always a substitute for goods. This proposition violates common sense that dictates that there are no substitutes, for example, for drinking water, lost species, or a stable climate.

Neoclassical economic models assume that humans are rational actors making purely rational decisions, but evidence from the social sciences points in the opposite direction (Gowdy 2008; Kahneman and Tversky 1979). A number of experiments have demonstrated that people have a sense of fairness and social responsibility that goes beyond maximization of their own monetary gain; for example, blood donations decline when payment to blood donors is introduced (Buyx 2009).

It is also a well known fact of behavioral economics that people usually exhibit an aversion to loss (Kahneman and Tversky 1979) and that their willingness to pay for a gain is greater than their willingness to accept a loss. So it is reasonable to suppose that, when properly informed about climate change, people would be willing to pay to avert an imminent loss rather than continue the present course that leads with high probability to greater loss.

Climate change is already affecting humans and the environment, and the scale of phenomena experienced today will likely worsen in the near future. In this context human needs extend well beyond economics, and models that view climate through a narrow economic lens miss most of the picture of humanity and life. Monetary values cannot be assigned to the inability to be active outdoors because of excessive heat, or to the suffering associated with disease, lack of water, hunger, or the loss of a homeland sunk in rising seas.

Social Aspects: Importance of Public Understanding

Report of a Survey

We recently conducted a survey in Greece about climate change. We devised two questionnaires accompanied by a brief introduction on the effects of climate change; the second survey also presented information showing that renewables can satisfy global human energy demand of 125 kWh per day per capita, which is the average British and European consumption level (McKay 2009, p. 104) and guarantees a comfortable lifestyle. In our sample of 930 respondents, 84 percent were students of higher education.

The first question was “Do you agree with the investments of foreign governments in new fossil fuel sources?” The extra information about renewables had no statistical effect on the responses of the second survey: 56 percent of all the respondents believed that it is important for foreign governments to invest in fossil fuels. The number jumped to 75 percent in the second question when this investment concerns Greece, presumably because of claims that oil sales will pull the country out of its present economic crisis. About 64 percent believed that Greece will benefit from such investment, but when asked if the country’s children would benefit, the positive responses dropped to 53 percent. When respondents were asked in the third question whether they would make a one-time donation of €500 to a “good effort” to mitigate climate change, 43 percent said yes.

The fourth and last question was “Would you agree to pay a 3 percent annual income tax to mitigate climate change if the probability of failure (you lose your money) were 20 percent, 50 percent, 80 percent, or would you say no?” This question was also phrased slightly differently by referring to the probability of success at 20 percent, 50 percent, or 80 percent. Interestingly, when loss was mentioned 66 percent agreed to the tax, whereas when success was mentioned the positive responses went up to 82 percent, although the meaning of the two questions was identical. Loss aversion may be responsible for this discrepancy. Also, to most people a one-time contribution of €500 appears to be greater than an annual tax of 3 percent, although the opposite is true in the majority of cases over the long run.

Findings

The importance of public opinion cannot be overemphasized. Our survey exposed a few major points. First, the public is generally not well informed about climate change. Second, people often make decisions based on emotion without going into deeper details, as in the case of the monetary contributions. Third, immediate dangers and concerns (e.g., Greece’s economic crisis) eclipse future possibilities of enormous disasters. Although loss aversion is a strong force in decision making, the future is perceived as something too remote to matter much. From an evolutionary point of view, it seems that humans are not well equipped to grasp future dangers. Finally, people’s decisions and opinions depend heavily on the way information is presented to them.

The success of a campaign to prevent catastrophic climate change depends to a large degree on how well the public is informed. New and fairly complex information takes many years to trickle down. An energetic campaign would have to take into account that people’s perception of loss or gain depends on how information is framed and not merely on the facts of a message.

What to Do

All scientific evidence indicates that climate change is already occurring, with detrimental effects for humanity and the global ecosystem. Political action by all nations is therefore urgent. Further delay will render the 2°C goal technically impossible. Carbon trapped in Earth’s crust must stop being released into the atmosphere. The burning of fossil fuel is unsustainable from the point of view of not just availability but, more importantly, environmental damage.

Energy Technology

Is there an alternative? MacKay (2009) makes a compelling case that there is. A combination of renewable energy production, adoption of new transportation technologies such as electric cars, energy-saving practices, new home designs, proper energy regulation and pricing, and installation of large-scale solar systems in deserts, among others, have the potential to guarantee a high standard of living while mitigating climate change and preserving the planet. Given present technological capabilities, all of these measures can safely provide for every citizen on earth a daily energy amount of 125 kWh, which is the current average daily per capita energy consumption in Britain and the European Union. In other words, phasing out fossil fuel burning without compromising standard of living is technically feasible.

International Leadership

The missing ingredient is political will and action. It seems difficult to achieve the 2°C goal given the current state of emissions and the reluctance of major emitters to take immediate action. If the United States and China, the two major GHG emitters, engage in serious international climate discussions, most other nations will follow suit. Realistic economic assessments show that climate mitigation will pay off not only by reducing damages but also by opening new investment opportunities in alternative energy conservation and generation technologies. US leadership and participation in international discussions and agreements will add influence that the Kyoto Protocol lacked.

Furthermore, in times of economic stagnation nations place climate change mitigation at the bottom of their priorities. However, a recent study showed that when economic growth is lower, the social cost of CO2 increases because climate impacts have more severe effects on weaker economies (Hope and Hope 2013). Thus, contrary to intuition, it “pays more” to mitigate climate change when the economy grows less. So economic hardship is a poor excuse for climate mitigation avoidance.

A first step in the direction of climate change mitigation would be the abandonment of long-term planning in fossil fuel technologies. Unfortunately, many nations—most notably the United States, Canada, Australia, Israel, Greece, and Cyprus—are frantically searching for new oil and natural gas, and in some cases disputes over fossil fuel rights awaken old animosities (e.g., between Turkey, Cyprus, and Greece). Energy investments in fossil fuels carry with them the baggage of irreversible further warming. Building new coal-fired power plants, for example, commits nations to the emission of enormous quantities of CO2 for at least 50 years. Yet in March 2013 a €1.4 billion project was signed to build a new 660 MW lignite-fired power plant in northern Greece—ironically, with funds from Germany, a country that aspires to supply 40 percent of its energy needs with renewable sources in the coming decade.

Policy Scenarios

To gauge the urgency of climate change mitigation, we simulated the impacts of a number of policies over time (as explained in our appendix and illustrated in Figure 1) using a dynamic emissions model proposed by Socolow and Lam (2007). We examined three scenarios of climate action, starting in 2015, 2020, and 2030, using the latest emissions data in conjunction with parabolic policies, which permit smooth growth of emissions at the time of action and then parabolic reduction until a given level of carbon in the atmosphere is reached.

Figure 1

The most optimistic scenario starts in 2015, reaching in 2046 the goal of stabilization at 1,000 gigatons of carbon (GtC), which corresponds to a 2°C warming, and steady-state emissions of 2 GtC/year, while 1,200 GtC were reached in 2074 with steady-state emissions of 3 GtC/year thereafter (current annual emissions are about 9.5 GtC; World Bank 2012). A more realistic scenario of action starting in 2020 stabilized the climate at the two levels in 2043 and 2070 correspondingly. Finally, action in 2030 resulted in the 2°C warming in just 7 years.

Clearly, any further delay of concerted political action will bring 2°C warming closer and likely create conditions for higher irreversible warming.

Conclusion

Time is of the essence. Further postponement of significant action to mitigate climate change and its impacts reduces the possibility of achieving the goal of 2oC. This is a multifaceted problem of global dimensions that requires multilateral action.

Adequate information is available about climate change and how to control it technologically. We show here that mitigation efforts should begin as early as 2015. Climate change is already a significant threat, but response has to be collective. We hope leaders will see it as such—or that the public will nudge them in this direction.

References

Allison I, Bindoff NL, Bindschandler RA, Cox PM, England MH, Francis JE, Gruber N, Haywood AM, Karoly DJ, Kaser G, Le Quéré C, Lenton TM, Mann ME, McNeil BI, Pitman AJ, Rahmstorf S, Rignot E, Schellnhuber HJ, Schneider SH, Sherwood SC, Somerville RCJ, Steffen K, Steig EJ, Visbeck M, Weaver AJ. 2009. The Copenhagen Diagnosis: Updating the World on the Latest Climate Science. Sydney: University of New South Wales Climate Change Research Center.

Baird DG, Morrison ER. 2005. Serial entrepreneurs and small business bankruptcies. University of Chicago Law & Economics, Olin Working Paper No. 236. Available at http://dx.doi.org/10.2139/ssrn.660301.

Buyx AM. 2009. Blood donation, payment, and non-cash incentives: Classical questions drawing renewed interest. Transfusion Medicine and Hemotherapy 36:329–339.

Gowdy JM. 2008. Behavioral economics and climate policy. Journal of Economic Behavior and Organization 68:632–644.

Gowdy J. 2010. Behavioral economics, neuroeconomics, and climate policy. Baseline review for the Garrison Institute Initiative on Climate Change Leadership, draft, February 20.

Hanemann M. 2010. What is the economic cost of climate change? In: Climate Change Science and Policy. Schneider SH, Rosencranz A, Mastrandea MD, Duriseti KK, eds. Washington: Island Press. pp. 185–193.

Hope C, Hope M. 2013. The social cost of CO2 in a low-growth world. Nature Climate Change 3:722–724.

Kahneman D, Tversky A. 1979. Prospect theory: An analysis under risk. Econometrica 47:263–291.

MacKay DJC. 2009. Sustainable Energy without the Hot Air. Cambridge, UK: UIT.

Matthews HD, Solomon S. 2013. Irreversible does not mean unavoidable. Science 340:438–439.

Nordhaus WD. 1994. Managing the Global Commons: The Economics of Climate Change. Cambridge, MA: MIT Press.

Socolow RH, Lam SH. 2007. Good enough tools for global warming policy making. Philosophical Transactions of the Royal Society A 365:897–394.

Steinbruner JD, Stern PC, Husbands JL, eds. 2012. Climate and Social Stress: Implications for Security Analysis. Washington: National Academies Press.

Stern N. 2007. The Economics of Climate Change: The Stern Review. Cambridge, UK: Cambridge University Press.

Sun F, Hall A, Walton D, Capps S, Reich KD. 2013. Mid- and end-of-century snowfall in the Los Angeles region: Part II of the “Climate Change in the Los Angeles Region” project. University of California, Los Angeles. Available at www.c-change.la/snowfall.

Sunstein CR. 2006. Montreal vs Kyoto: A tale of two protocols. University of Chicago Law & Economics, Olin Working Paper No. 302. Available at www.law.uchicago.edu/files/files/302.pdf.

World Bank. 2012. Turn Down the Heat: Why a 4°C Warmer World Must Be Avoided. Washington, November.

Appendix

The total carbon content (in GtC) in the atmosphere in year t is denoted C(t) and the carbon emissions (in GtC yr–1) in that year E(t). Computer simulations of detailed carbon cycle dynamics have demonstrated that, once the carbon content reaches any designated value Cstab, a constant emissions level E(t) = Estab thereafter stabilizes C(t) to this value. From this observation Socolow and Lam (2007) proposed the following approximation of atmospheric carbon dynamics:

  description for Phillis forumla 1                                                                       (1)

Good parameter approximations of the above model are

description for Phillis formula 2 


for any initial year t0 for which C(t0) < Cstab and E(t0) > Estab.

The aim here is to examine how fast the atmospheric carbon accumulation reaches a critical value Cstab under various emissions policies and to determine the corresponding paths, {E(t), t ³ t0}. Out of all possible stabilizing policies, the following subclass is examined. There is an initial period of inactivity, [t0, t1), during which annual carbon emissions increase at rate R0 (GtC yr–1) following a business-as-usual (BAU) policy. At time t1 an emissions mitigation policy is implemented and reduces the rate of emissions. Finally, at some time t2 the total carbon accumulation reaches the Cstab level and is stabilized by keeping emissions fixed at Estab, according to Eq. (1).

A simple family of emissions paths that exhibit such a behavior is the class of parabolic policies:

 
description for Phillis formula 3

The initial year is t0 = 2013.4 Initially, total carbon accumulation and emissions to the atmosphere are respectively C(t0) = 840 GtC and E(t0) = 9.5 GtC yr–1. Emissions increase at a constant rate R0 = 0.24 GtC yr–2 during the BAU period [t0, t1). Parameters t2, a, b, and c are chosen so that the concentration target is achieved and maintained by an emissions trajectory E(t), which is continuous for all t and smooth at t1. The corresponding constraints are:

integration of Eq. (1) to t2 equals C(t2) = Cstab

continuity of emissions at t1: E(t0) + (t1t0)R0 = at12 + bt1 + c

continuity of emissions at t2: at22 + bt2 + c = Estab

continuity of emissions growth rate at t1: R0 = 2at1 + b

Three scenarios are examined for the start of the mitigation period (t1 = 2015, 2020, 2030) and two target concentrations (Cstab = 1,000 or 1,200 GtC). Figure 1 shows that the later the mitigation policy starts, the larger the corresponding cutbacks and the sooner the carbon concentration reaches the critical level. Thus if mitigation efforts are delayed until 2030 the 2°C stabilization temperature is reached in just 7 years.

FOOTNOTES

1 “Carbon Dioxide at NOAA’s Mauna Loa Observatory reaches new milestone: Tops 400 ppm,” May 10, 2013. Available at http://research.noaa.gov/News/NewsArchive/LatestNews/TabId/ 684/ArtMID/1768/ArticleID/10061/Carbon-Dioxide-at-NOAA ’s-Mauna-Loa-Observatory-reaches-new- milestone-Tops-400-ppm.aspx.

2 Other factors, not discussed in this article, play an important role in the decision to join an international climate agreement: pressure by powerful private agents such as oil companies, public opinion (which hinges on properly informing citizens), and perceived national interests.

3 ABC News, “Reinsurer estimates 2012’s disasters cost $160b,” January 4, 2013. Available at www.abc.net.au/news/2013-01-04/reinsurer-estimates-2012s- disasters-cost-160b/4452288.

4 To avoid loss of significance in the floating-point calculations due to the use of large arguments in the quadratic function, our computer model offsets all times by 2013 setting t0 = 0.

About the Author:Yannis A. Phillis is a professor in the School of Production Engineering and Management, Technical University of Crete. Asad M. Madni (NAE) is retired president, chief operating officer, and CTO of BEI Technologies Inc. and distinguished adjunct professor/distinguished scientist in the Electrical Engineering Department of the Henry Samueli School of Engineering and Applied Science at the University of California, Los Angeles. Evangelos Grigoroudis is an associate professor, Fotis Kanellos a lecturer, Vassilis S. Kouikoglou a professor, and Spiros Papaefthimiou an assistant professor, all in the School of Production Engineering and Management, Technical University of Crete.