Climate disruption: the 10 percent doctrine?

Laurie Johnson, Chief Economist, Climate Center, Washington, DC

What do the odds of a catastrophe have to be for insurance to be a wise investment? Apparently extremely low for a father or mother buying life insurance. For example, the probability of dying at age 35 is 0.1 percent. The odds of both parents dying are exponentially smaller. Yet, against these probabilities, parents routinely spend thousands of dollars on this insurance.

Why, then, haven't we made aggressive investments in climate protection, when the odds of a catastrophe and the number of lives at stake appear to be far larger? One prominent climate economics model (more below) estimates a 10 percent chance of catastrophe if global temperatures increase more than 2°C above preindustrial levels, yet the world's lack of serious mitigation efforts is putting the world on track for 3.6°C to 5.3°C (p. 9).

In a recent PBS column, reporter Paul Solman asked one very prominent economist to speculate on this dilemma. Martin Weitzman, economics professor at Harvard (and formerly Yale and MIT), presented the economics of uncertainty in no uncertain terms:

• [W]e are undertaking a colossal planet-wide experiment of injecting CO2 into the atmosphere that goes extraordinarily further and faster than anything within the range of natural CO2 fluctuations for tens of millions of years...[I]n this kind of situation, for an economist, abating CO2 emissions is like buying insurance against a catastrophe...The bottom line is that if we continue on a business-as-usual trajectory, then there is some non-trivial probability of a catastrophic climate outcome materializing at some future time.... If we don't start buying into this insurance policy soon, the human race could end up being very sorry should a future climate catastrophe rear its ugly head.

These are strong words for an economist: the famous joke about economists is that you will never find a one-handed one (on the one hand...).

The model I referred to above is one of the most popular ones used in the economics literature and by policy makers: PAGE (Policy Analysis of the Greenhouse Effect, developed by Chris Hope at the University of Cambridge and used by, among others, the UK and the US to estimate the benefits of emissions reduction policies).

PAGE's assumptions are based upon the overwhelming scientific consensus that an increase above 2°C puts the climate at risk of reaching a "tipping point," where irreversible catastrophic damages could unfold. Corresponding to the 2°C mark is an atmospheric CO2 concentration level of 450 ppm. PAGE assumes an increasingly higher chance of a catastrophic event the larger the temperature increase and, associated with these rises, increasingly higher economic damages.

Of course, passing 450 ppm doesn't mean there will be a catastrophe. We can only know that the risk increases the more CO2 exceeds that level. But the business-as-usual scenario is of no comfort. In 2001, the Intergovernmental Panel on Climate Change presented a range of approximately 550 to 1000 ppm by 2100; by 2010, CO2 emissions reached levels consistent with the higher end projections. To put this in context, consider the projections relative to historical fluctuations:

FIGURE DESCRIPTION: The horizontal axis goes back in time starting at 0 at the right end, which is the present, going back 600,000 years, from two different ice core records (EPICA and Vostok). The small red bar at the side on the right vertical axis indicates the increase in CO2 concentrations between 1958 and 2007. On this time scale, the 50 years of measurements span less than the thickness of the line, so it appears vertical, as do projections to 2100 (the six arrows above the 2007 mark).

Any rational person should find this graph alarming: pre-industrial levels were around 300 ppm or less, and the natural range between ice ages and warm periods like ours is about 100 ppm. This year, we blew past a milestone of 400 ppm and, if we do nothing, risk reaching 1,000 ppm. For Weitzman, the huge uncertainties associated with this experiment don't preclude a certain policy choice:

• Admittedly, almost all of the relevant probabilities in this kind of rough analysis are uncomfortably indeterminate. But that is the nature of the beast here and shouldn't be an excuse for inaction...Prudence would seem to dictate taking action to cut back greenhouse gas emissions significantly.

Weitzman's reasoning is not unlike the famous wager proposed by the 16th century Catholic French philosopher Blaise Pascal, which goes something like this: "Given the possibility that God actually does exist, and the infinite loss associated with non-belief (eternal damnation), a rational person should live as though God exists. If God does not actually exist, such a person will have only a finite loss (some pleasures, luxury, etc.). An infinite cost times even a tiny probability is still ... an infinite cost."[1]

Replace "God" with "catastrophic climate risk" in the previous paragraph.

Another analogy is the famous "One Percent Doctrine," coined from Dick Cheney's assessment of the risks of terrorism:

"If there's a 1% chance that Pakistani scientists are helping al-Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response. It's not about our analysis ... It's about our response."

One might dismiss Cheney's assessment on grounds that they disagree with his anti-terrorism policies, but his statement reflects the nation's longstanding approach to national security-we spend a huge amount of resources against unknown risks. Every year, the US military budget is well over $600 billion dollars.

One percent is a small number, but if that is the risk of a catastrophe it makes sense to invest a great deal to prevent it. A ten percent risk of catastrophe is unacceptable. Yet, by one estimate, the Federal government spent only $25 billion on low-emission technologies in 2010 (excluding short-term stimulus).

Instead, we should be taking aggressive actions, like those outlined by the International Energy Agency, to prevent CO2 from exceeding 450 ppm. Time is running out fast: anything built from now on that produces carbon will do so for decades, producing a "lock-in" effect that will be the single factor most likely to produce irreversible climate change. If we don't stop locking in high carbon emissions within the next five years the results are likely to be disastrous.

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[1] This paraphrase is adapted from Solman's piece and Wikipedia's description.

http://switchboard.nrdc.org/blogs/ljohnson/climate_disruption_the_10_p

Taxpayers Get Nearly $100 Billion Bill for 2012 Extreme Weather, Equivalent to One-Sixth of Non-Defense Discretionary Spending

Dan Lashof, Program Director, Climate & Clean Air, Washington, D.C.

With all the debate on the federal budget in Congress, climate change rarely gets mentioned as a deficit driver. Yet dealing with climate disruption was one of the largest non-defense discretionary budget items in 2012. Indeed, as NRDC shows in Who Pays for Climate Change?, when all federal spending on last year's droughts, storms, floods, and forest fires are added up, the U.S. Climate Disruption Budget was nearly $100 billion, equivalent to 16% of total non-defense discretionary spending in the federal budget-larger than any official spending category.

2012 U.S. Federal Non-Defense Discretionary Budget (in Billions)
Source CRS, BEA, OMB (Table 8.7), NRDC estimates
Education, training, employment and social services	$95
Transportation	$91
Housing assistance and other income security	$65
Health	$60
Veterans benefits and services	$57
Administration of Justice	$54
International Affairs	$50
Natural Resources and Environment	$40
Science, Space and Technology	$29
Energy	$13
Other Non-Defense Discretionary	$61
Total FY2012 Non-Defense Discretionary Spending	$616
Federal Climate Disruption Costs, CY2012 Impacts	$96

That means that federal spending to deal with extreme weather made worse by climate change far exceeded total spending aimed at solving the problem. In fact, it was eight times EPA's total budget and eight times total spending on energy.

Overall the insurance industry estimates that 2012 was the second costliest year in U.S. history for climate-related disasters, with over $139 billion in damages. But private insurers themselves only covered about 25% of these costs ($33 billion), leaving the federal government and its public insurance enterprises to pay for the majority of the remaining claims. As a result, the U.S. government paid more than three times as much as private insurers did for climate-related disasters in 2012.

That reflects a major shift in liabilities with respect to climate change away from private insurers to public alternatives that began in earnest following the $72 billion hit the industry took in 2005 from hurricane Katrina.

Federal spending related to climate disruption falls into two major categories: Storms and droughts.

Spending related to storms includes appropriated funds for the Federal Emergency Management Agency (FEMA) as well as emergency supplemental appropriations following major disasters, such as Superstorm Sandy. It also includes the National Flood Insurance Program, which is supposed to be self-supporting, but is increasingly under water.

Drought-related spending includes the federal crop insurance program as well as the government's share of higher food costs (see this post for more details).

The figure below shows how the federal climate disruption budget breaks down.

While some of these federal programs-such as forest fire prevention, crop insurance, flood coverage, and disaster preparedness-offer wider benefits to the country, it should be noted that these liabilities have largely been assumed by the public sector due to a lack of private sector alternatives. The true scorekeepers of climate risk-the insurance industry-realizes it can't win when the dice are increasingly loaded with carbon pollution, so it's walking away from the table, leaving taxpayers holding the bag. Last year that cost amounted to over $1100 per taxpayer, and we can expect to see even higher costs in future as CO2 concentrations continue to soar past 400 parts per million.

Even as the budget to clean up climate disruptions hit a record high in 2012 and is expected to continue to grow, the budget for programs to fight climate disruption-such as environmental enforcement, energy efficiency, clean energy vehicle research, and ARPA-E-suffered cuts of more than $100 million the "sequester" that went into effect in March and remain under continued pressure from the budget-cutting process.

Our climate plan is, in effect, to cut critical investments now for the sake of small short-term deficit reductions and send our children the tax bills to clean up the mess.

That's colossally short-sighted, even by Washington standards.

http://switchboard.nrdc.org/blogs/dlashof/post.htm

Hiding the Impacts of Climate Change in South Carolina

Ben Chou, Water Policy Analyst, Washington, D.C.

As a near native of the Palmetto State, I often find myself reminiscing about the many years I lived there. From my childhood in Mauldin (near Greenville), to high school in Hartsville (near Florence), undergrad in Columbia (Go Gamecocks!), and a few months post-college in Charleston, I have lived in many areas of the state. I even return a few times a year to visit my in-laws in Myrtle Beach.

• Sunset on Hilton Head Island (photo by Lee Edwin Coursey)

One of my favorite things about the state is a slogan that used to grace the license plate: Smiling Faces. Beautiful Places. I think it nicely sums up the warm and friendly disposition of the people and amazing natural beauty found in South Carolina. Unfortunately, the Department of Natural Resources (DNR) has kept under wraps a report that spells trouble for the state's beautiful places and could turn those smiles into frowns.

The DNR completed a climate change vulnerability assessment a few years ago but decided against releasing it for public review. The report was leaked to a major state newspaper and then published on their website. It seems like a waste of taxpayer money for a public agency to invest so much time and many resources into developing a study only to leave it collecting dust on a shelf somewhere, especially when it comes to an incredibly important topic that will impact all South Carolinians-climate change.

According to the report, there have been several observed changes in the state's climate and across the Southeast region:

• Since 1970, a general warming trend has been observed in the state's three major geographic divisions.
• Water temperatures in Charleston Harbor have shown a steady warming trend since 1985.
• Across the Southeast, there have been observed increases in heavy downpours in many areas even though moderate to severe drought conditions also were widespread.

Over the next 70 years, average temperatures are projected to rise 4.5°F to 9°F depending on future greenhouse gas emissions. And as if summers were not already hot enough (and extremely humid might I add), the greatest temperature increases are projected to occur during the summer months. By the 2080s, summers are projected to be about 11°F hotter. Just imagine summer highs well into the triple digits being the norm instead of the exception. Drought conditions also are expected to become longer, more frequent, and more intense as temperatures and rates of evapotranspiration rise.

The report only focuses on direct impacts to natural resources, which also will affect natural resource-dependent industries like tourism and recreational fishing and hunting-tourism alone contributes approximately $17 billion annually to the state economy. There are also untold impacts to people, homes, businesses, communities, and the economy that are not included in this assessment.

These are a few of the likely consequences of climate change for natural resources in the state from the report:

• Rising sea levels will impact beaches, wetlands, and other coastal habitat, threatening sea turtles, birds, and commercially-important fisheries like shrimp and blue crab.
• Increasing salinity in river systems due to sea level rise will force freshwater and diadromous fish (fish that spend portions of their life cycles in freshwater and saltwater) to move upstream, where possible, to find better habitat.
• Warmer water temperatures could cause a shift in the distribution of anadromous species (fish that live in saltwater but return to freshwater to spawn) like striped bass and sturgeon and cause coldwater fishes like brook trout and smallmouth bass to become locally extinct.

While this report is a critical first step towards planning for climate change impacts, the state still has much work to do. Given that the places and wildlife that people love so much are at great risk, the DNR should formally release this report for public review. The state also should take immediate steps to examine what the likely impacts of climate change are for other sector areas as part of the development of a statewide climate preparedness plan. Approximately 20 percent of states in the U.S. have developed such a plan. The state can and should join these ranks to preserve its beautiful places and keep the smiles on the faces of future generations of South Carolinians.

http://switchboard.nrdc.org/blogs/bchou/hiding_the_impacts_of_climate.

President Obama Vows Action on Climate; Latino Groups Support Swift Action

Adrianna Quintero, Senior Attorney, Director, La Onda Verde de NRDC, San Francisco

In his second inaugural speech yesterday, President Obama presented his vision for the future of our country, calling on us to seize the moment and highlighting the strength of our country's diversity. For Latinos across the nation there was much to cheer for, and much to hope for.

Answering the concerns of so many families, the President affirmed his commitment to ease the path to citizenship for immigrants, improve outdated education programs, and create greater equality in our workforce. And in a bold pledge to protect the health of our families and communities, President Obama declared that his administration would work to address climate change--a commitment strongly supported by Latinos nationwide.

With communities still recovering from the flooding and devastation left by Hurricane Sandy, the President's call for action to curb climate change could not come soon enough. 2012 saw thousands of records broken in the U.S. for heat, rain, and snow across the country, with American families suffering the consequences. From devastating droughts in the Midwest that ruined crops and the livelihoods of American farmers, to violent storms that left thousands without power or water along the East Coast, 2012 proved to be a shockingly dangerous--and deadly--year of extreme weather events.

Ready or not, our climate is changing, and we're witnessing the consequences in our backyard. The National Oceanic and Atmospheric Administration reported that 2012 was the hottest year ever recorded in the continental United States. A warmer climate fuels more heat waves, downpours, floods, fires, and other extreme weather events--just what we've seen across the country over the past few years.

The President got it right when he stated that we will all be affected by a changing climate. As the President stated, "Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms."

We can't afford to wait any longer. That's why leading Latino groups, along with small business owners and environmental organizations, are urging President Obama to act quickly to address the growing climate threat. In a new letter to the President, Voces Verdes, the National Hispanic Medical Association, the League of United Latin American Citizens (LULAC), and over a dozen other leading Latino organizations, called on President Obama to curb harmful carbon pollution from existing coal-fired power plants.

The President has already acted to reduce pollution from new power plants. But we can't stop there. Coal-fired power plants are the nation's largest source of global warming pollution. Implementing new standards for existing power plants will put us on a path toward climate stability, unleash investment in new clean energy technologies, and help stem the devastating storms, droughts, and floods worsened by climate change. And, even while Congress remains gridlocked, the President can act now to implement these new standards, using the authority already given to the Environmental Protection Agency (EPA) to clean up our air.

For Latino communities, action on climate change now means a healthier and more prosperous future for our children. Half of all U.S. Latinos live in places where air pollution often makes the air unsafe to breathe. Cutting pollution from existing power plants will not only clean up the air in communities near the plants, but will also help reduce the health impacts of climate change--like increased asthma attacks that come with warmer air. And with unemployment still hovering around 10% for Latinos, jobs in areas like construction, home weatherization, solar panel installation, and energy efficiency retrofits, will help get our workers back on their feet.

President Obama faces a long, difficult road in his second term, but his commitment to confront climate change could be a defining part of his legacy. The President has the opportunity now to drive global action on climate change, showing that we are committed to creating a healthier environment for all.

As President Obama outlined in his inaugural address, "America cannot resist this transition. We must lead it." Mr. President, the Latino community, and Americans across the nation, stand ready to support your actions to respond to the threat of climate change and protect our children and future generations.

http://switchboard.nrdc.org/blogs/aquintero/president_obama_vows_actio

Maryland is Taking Action to Prepare for Rising Seas

Ben Chou, Water Policy Analyst, Washington, D.C.

As Hurricane Sandy vividly demonstrated in late October, coastal communities across the U.S. are increasingly vulnerable to flooding and storm surge as sea levels rise. Storm surge from more extreme storms on top of higher sea levels increases coastal flooding by allowing floodwaters to move further inland, putting people, homes, and businesses in harm's way.

Given Maryland's thousands of miles of shoreline, coastal hazards are an ever-present threat. The state's coastal zone includes the 16 counties that border the Atlantic Ocean, Chesapeake Bay, and Potomac River-an area encompassing two-thirds of the state's total land, which contains nearly 70 percent of all residents. Since the early 1900s, relative sea levels along Maryland's coast have risen over one foot, placing 13 islands in Chesapeake Bay underwater. And approximately 580 acres of coastal land are lost to erosion every year.

• Abandoned home on Holland Island in 2009, which has since collapsed into the sea (photo credit: flickr user baldeaglebluff)

Rising seas due to warmer, expanding oceans and melting ice will only exacerbate existing coastal hazards, further jeopardizing communities in coastal areas. Relative sea levels are projected to rise by approximately one foot by mid-century and about three feet by the end of the century-though these projections were developed in 2008 and more recent data on rates of future sea level rise are now available. In fact, a 2012 study by the U.S. Geological Survey found that rates of sea level rise along the mid-Atlantic coast (from Cape Hatteras to Boston) are three to four times greater than the global average primarily due to the weakening of ocean currents. Warmer water temperatures and melting glaciers are decreasing the density of water in the northern Atlantic, which is subsequently affecting ocean circulation patterns.

According to our recent report, Maryland has been among the leading states in the country when it comes to preparing for climate change impacts. And the state is not idly standing by. Last week Governor Martin O'Malley signed the Climate Change and Coast Smart Construction Executive Order, which will help to reduce flooding risks to state buildings and public infrastructure in coastal areas. The order directs:

• State agencies to consider coastal flooding and sea level rise risks in the siting, design, and construction of new state buildings and the reconstruction of substantially damaged state buildings;
• The Department of General Services to update its engineering and design guidelines to require state agencies to elevate new and rebuilt state structures two or more feet above the 100-year flood level;
• The Department of Natural Resources to develop recommendations for siting and design requirements for coastal state infrastructure such as roads, bridges, and water systems and non-state infrastructure that receive public funds;
• The Scientific and Technical Working Group of the state's climate change commission to update statewide sea level rise projections based on the latest climate science.

These are critical first steps that every coastal state should be taking to prepare communities for more extreme storms and higher seas. By not factoring climate change into fundamental land use and structural design decisions, states are turning a blind eye to a problem that will only get worse. It's time for other governors across the country to stop ignoring the problem and, like Governor O'Malley, start implementing solutions.

http://switchboard.nrdc.org/blogs/bchou/maryland_is_taking_action_to_p