From Benny Pieser’s CCNet:
Abstract
The Stern Review on the Economics of Climate Change has focused debate on the costs and benefits of alternative courses of action on climate change. This refocusing has helped to move debate away from science of the climate system and on to issues of policy. However, a careful examination of the Stern Review’s treatment of the economics of extreme events in developed countries, such as floods and tropical cyclones, shows that the report is selective in its presentation of relevant impact studies and repeats a common error in impacts studies by confusing sensitivity analyses with projections of future impacts. The Stern Review’s treatment of extreme events is misleading because it overestimates the future costs of extreme weather events in developed countries by an order of magnitude. Because the Stern Report extends these findings globally, the overestimate propagates through the report’s estimate of future global losses. When extreme events are viewed more comprehensively the resulting perspective can be used to expand the scope of choice available to decision makers seeking to grapple with future disasters in the context of climate change. In particular, a more comprehensive analysis underscores the importance of adaptation in any comprehensive portfolio of responses to climate change.
Roger Pielke Jr
Center for Science and Technology Policy Research, University of Colorado, 1333 Grandview Ave, Campus Box 488 boulder, Co 80309-0488, USA
Received 5 March 2007; revised 21 May 2007; accepted 22 May 2007. Available online 15 August 2007.
Global Environmental Change
“In its Chapter 5 the Stern Review concludes, “The costs of climate change for developed countries could reach several percent of GDP as higher temperatures lead to a sharp increase in extreme weather events and large-scale changes.” (Stern, 2007, p. 137). This conclusion cannot be supported by the Review’s own analysis and references to literature. One error is a serious misrepresentation of the scientific literature, and the second is more subtle, but no less significant. The serious misrepresentation takes the form of inaccurately presenting the conclusions of an unpublished paper on trends in disaster losses. The second error is more complex and involves conflating an analysis of the sensitivity of society to future changes in extreme events, assuming that society does not change, with a projection of how extreme event impacts will increase in the future under the integrated conditions of climatic and societal change. The result of the errors in the Stern Review is a significant overstatement of the future costs of extreme climate events not simply in the developed world, but globally-by an order of magnitude.
In light of these errors if the Stern Review is to be viewed as a means of supporting a particular political agenda, then it undercuts its own credibility and this risks its effectiveness. If instead the Stern Review is to be viewed as a policy analysis of the costs and benefits of alternative courses of actions on climate change, then at least in the case of extreme events it has missed an opportunity to clarify the scope of such actions and their possible consequences, and arguably misdirects attention away from those actions most likely to be effective with respect to future catastrophe losses. In either case, on the issue of extreme events and climate change, the Stern Review must be judged a failure. This short paper documents these errors and suggests how an alternative approach might have been structured.”
Jennifer Marohasy BSc PhD is a critical thinker with expertise in the scientific method.
I would have liked to read this paper, but it is copyright protected, and costs #30.00 (US) to download the PDF. So as a discussion topic,it is limited, as some, if not most would be commenting in information they had not read and considered. Pity. Interesting topic.
Reminder – Stern is an economist who said that 12 months before he wrote the report he knew nothing about climate change. Stern had previously used suspect methods of determining future values and in this report he repeated them. The Stern Report was rejected long before this from Pielke but some people (and some politicians especially) continued to cling to the jetsam.
Stern may call himself an economist but he has spent most of his working life in the organisation that loans obscene amounts of money to unelected dictators and then sits by as the funds are returned to private accounts in Switzerland. And when the dictator has completely stuffed his country and barely escaped with his life, Stern and his cronies came in with the jack boots to force the long suffering citizens to pay off the loans that none of them ever saw any benefit from.
And the Gombean Greens would now have us regard the clown as a credible expert.
As I have stated here before, the use of completely different discount rates in calculating future costs and benefits would, if done in a prospectus or loan application, be more than enough to earn Stern a long stretch in stir for criminal, fraudulent misrepresentation, in every OECD nation.
Trust him? He’s a born again green from the world bank?
I’d be more interested in seeing Pielke take on Amory Lovins who claims that the solutions to reducing fossil fuel dependency and greenhouse gas emissions are profitable – i.e. a net economic win.
http://www.theglobeandmail.com/servlet/story/RTGAM.20070224.wlovins23/BNStory/ClimateChange
Lovins is doing the usual partial analysis, on a replicated microeconomic scale that is no substitute for comprehensive analysis. What he has not considered is the loss of value if vast coal reserves are rendered valueless. This current value of all these reserves are owned by the ordinary citizenry through their pension funds and superannuation accounts. And any reduction in that value will eventually feed through to ordinary people.
This is the same sort of error of omission committed by many costings of alternate energy sources. They neglect to include the loss in operating efficiency to base load generating systems when shorter term suppliers like solar and wind energy dump their capacity in the middle of the base load generators operating schedule.
It may make them look competitive but the consumer will, inevitably, pay the full price. When Lovins has fed the lot through a decent circulation model that determines the reverse multiplier of capital diminution then he might get taken seriously. At the moment he is doing nothing more than spruiking his company’s services.
That’s sounds reasonable enough – I would certainly expect a deliberate attempt to phase out fossil-fuel energy before it became otherwise uneconomic (ignoring externalities) could only entail a net economic cost, at least in the medium term (~50 years). But arguably there will be far more winners than losers. The idea of the world’s potential total GDP being reduced by a few percentage points wouldn’t bother me in the least if we could be certain it didn’t affect those that could least afford it.
A corrected proof of Pielke’s new paper is available free for download — Roger put the PDF on the UC Boulder site
http://sciencepolicy.colorado.edu/admin/publication_files/resource-2543-2007.21.pdf
More resources are on my blog at
http://seekerblog.com/archives/20070820/stern-review-economics-of-extreme-events/
The mad monk from the global warming religion- Professor Johnny Quiggin- is lnking to a paper suggesting Stern’s report has understated AGW related damage.
This is the same person who supposedly stress tested the Australian Greens economic policies and found them to be sensible.
You can’t make this up.
“Stern had previously used suspect methods of determining future values and in this report he repeated them.”
That’s not even the 1/2 of it. He used a discount rate 1/75 of that used in normal studies.
What makes it is hilarious is that suggests we do nothing about AGW even if we use Stern’s methodology.
Stern suggested we will lose 20% of our GDP in about 100 years time.
20/75 = .26666%
He also suggested the cost would be 1% per year if we take mitigating action now
1-.26666 = .73
It means we are better off not doing nothing over this period.
If we had used a higher discount rate the difference would have been even more dramatic.
People who support Stern are the deniers of logic and reasoning.
They are a pathetic joke