The right climate for US change?

The Impact of Climate Change on the United States Economy
October 29, 1999

Climate change is inevitable over the next century and we need to make some harsh choices. In The Impact of Climate Change on the United States Economy , Robert Mendelsohn and James Neumann urge us to make these choices on an economic basis following the comprehensive approach set out by them and their co-contributors.

We need to weigh the economic and environmental costs of the impacts of climate change against the costs of slowing climate change, primarily through reducing the use of carbon-based fuels that are changing the composition of the atmosphere.

Two factors are usually overlooked in this equation. First is the fact that no single country, not even the United States, which contributes one quarter of all emissions, can make this cost-benefit calculation without the cooperation of its global neighbours. Second, in theory, economies should be able to adapt to climate change, as they have done throughout history.

The strength of the book is the novel manner in which Mendelsohn, Neumann and contributors incorporate adaptation of the impacts of climate change on the various sectors of the US economy in their analysis. The Intergovernmental Panel on Climate Change (IPCC) - a body of scientists sponsored by their governments and the United Nations to assess and synthesise the latest science of climate change - is now urging social and natural scientists to give priority to this critical issue. This book is a major contribution to defining economic aspects of adaptation.

It uses a range of techniques and models. The authors seek analogies with how individuals act in different climates. Hence farmers in Minnesota are likely to face the climate of Missouri in 50 years' time and, all things being equal (crop mix and distances to market for instance), we can estimate the cost of climate change to US agriculture by comparing farmland prices.

The book takes this spatial analogue and other modelling approaches to the issues of timber markets, water resources, and, for the first time, to the commercial fishing sector and to outdoor recreation. John Loomis and John Crespi argue that although the winter sports season will be negatively affected by shorter seasons (global warming will be experienced over continental land masses more in winter than summer), this will be more than offset by longer summer seasons for hunting, fishing and boating.I look forward to extending my biennial vacation in northern Maine well past the Labor Day weekend in September.

The book paints a picture of moderate climate change easily adapted to by a robust, technologically advanced US economy. The natural-resource sectors that are weather dependent and climate sensitive, such as agriculture, forestry and fishing, form only a small part of the economy. Even the spectre of returning to the dust bowls of the 1930s in the prairies is dismissed, as climate-change projections generally point to increased precipitation. Even in the areas where

climate change could affect all aspects of the economy, for example the availability of water to households and industry and coastal cities facing sea-level rise, the assessment suggests that costs will be minimised through rational and effective adaptation.

The book has one major omission: it ignores the costs of and responses to extreme events. These are crucial to how the public and politicians perceive climate change because they entail a direct cost. Politicians reacted with swift rhetoric and some action when the US was hit by major drought in the late 1980s. In 1992, Hurricane Andrew cost billions of dollars in damage in Florida and, without much direct damage, Hurricane Floyd in September 1999 still extorted a large economic toll as a result of the need to evacuate half the population of the southeastern seaboard. If these events were to alter their frequency and become less predictable, as many analysts fear, this would represent an accounted-for cost to the economy. So, ironically, such events may be a spur to action.

The book's limitations are therefore threefold. First, much of the analysis assumes effective adaptation by state and federal governments where it is required, say in water allocation and coastal planning. However, as a chapter by Gary Yohe and colleagues points out, local governments are loathe to lose land and property. They usually protect houses crumbling into the sea at any cost, thereby spending more than necessary and often shifting the problem down the coast by altering the dynamic balance of coastal processes. Politicians only rarely, and then only coincidentally, spend public money in the same way an economic analyst would. In these cases, the costs of climate change would be significantly higher than they need be.

Second, there is insufficient treatment of where the costs of climate change may fall. The analysis excludes issues associated with what Mendelsohn and Neumann call "quality of life" issues of health, loss of biodiversity and ecosystem change, and the immediate impacts of these on the US's neighbours. What of the poor moose, for example, trapped in a declining range as forests die back and the fall hunting seasons are extended?

A third limitation is a lack of consideration of the geo-politics of climate change. What happens if the US takes the message of this book seriously, and decides that the expected impacts of climate change on quality of life are an acceptable risk? The US government would be unlikely to take the drastic action required to stabilise the global atmosphere. Given its key role in global climate negotiations, the rest of the world might have no option but to follow the US lead and adapt to the inevitable.

Despite these reservations (and the lack of an index), Mendelsohn and Neumann clearly set out the parameters and complexities of the climate-change challenge for the US. Policy-makers there will form the major readership. Perhaps we should all hope that their economic analyses do not proceed in isolation, and that the wider global and irreversible aspects of the climate-change issue are presented to these decision-makers as early as possible in the coming greenhouse century.

Neil Adger is lecturer in environmental economics, University of East Anglia. He is lead author of the IPCC report on the impacts of climate change on Asia.

The Impact of Climate Change on the United States Economy

Editor - Robert Mendelsohn and James E. Neumann
ISBN - 0 521 62198 4
Publisher - Cambridge University Press
Price - £35.00
Pages - 331

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