The Climate Change Dystopia and National Accounts

I joke a lot about the robot apocalypse. I follow the news on the latest things we’ve taught robots and AI to do (e.g. consume organic matter, lie, shoot guns, recognize cats, etc.) and laugh at how when you add their capabilities together, you get the robot apocalypse that fiction (and Charli Carpenter) have warned us about for years. I like to think about the robot apocalypse because, while plausible in a science fiction way, it doesn’t seem imminent. Unlike the Climate Change Dystopia (CCD, let’s call it).*

This morning I read a piece from the next issue of Rolling Stone, Global Warming’s Terrifying New Math. There’s not that much that’s truly new about the piece, but it does an excellent job of summarizing how bad things have gotten and how much worse they’re going to get absent immediate, radical changes. The piece is framed around three numbers: 2 degrees Celsius (the amount of warming scientists used to think would be allowable without triggering CCD, though new estimates are a bit lower), 565 gigatons of carbon (how much more we can dump into the atmosphere and keep global warming to 2 degrees Celsisus), and 2,795 gigatons of carbon – the amount of fossil fuels that large companies already have in their reserves. That’s perhaps the most novel contribution of the article: to think through the political and economic consequences of the fact that fossil fuel producers have already discovered five times more fossil fuels than we can safely burn without triggering a catastrophe. These reserves are built into the value of large oil and gas companies around the world. These companies will fight tooth and nail for the right to burn all of what they’ve found, and even to search for more. In fact, they are already fighting hard, and have successfully produced doubt in the public about the extent and severity of the problem, as well as the scientific consensus (see Oreskes and Conway for details). And that’s going to destroy the world as we know it.

Here’s just one choice quote from the article on the absurd politics of energy and climate change:

Sometimes the irony is almost Borat-scale obvious: In early June, Secretary of State Hillary Clinton traveled on a Norwegian research trawler to see firsthand the growing damage from climate change. “Many of the predictions about warming in the Arctic are being surpassed by the actual data,” she said, describing the sight as “sobering.” But the discussions she traveled to Scandinavia to have with other foreign ministers were mostly about how to make sure Western nations get their share of the estimated $9 trillion in oil (that’s more than 90 billion barrels, or 37 gigatons of carbon) that will become accessible as the Arctic ice melts. Last month, the Obama administration indicated that it would give Shell permission to start drilling in sections of the Arctic.

For one clear demonstration of how things are going to get worse: this year’s record heats have made it harder to grow corn. When it’s too hot for too long, corn kernels don’t develop right, and they won’t produce corn. The US exports a tremendous amount of corn, and that keeps global food prices low (lower than they would be). This year, food prices are going to go up. Here’s a graph and caption from Paul Krugman:

I’ve been searching for something useful to say about the epic heat wave and drought afflicting U.S. agriculture, other than that this is the shape of things to come. Of course it’s about climate change: a rising number of temperature records is exactly what you’d expect given an underlying upward trend in global temperatures. And the economic consequences will be large: maybe 1 percent on U.S. consumer prices, but suffering and food riots in poorer nations that spend more of their income on food.

I don’t have too much insight into climate change beyond the apocalyptic things I read from the actual experts. The one point that arises from my research is that if we took climate change – or really, the environment at all – into account in our estimates of economic growth, the picture we have of “the economy” would look dramatically different. For example, Muller, Mendelsohn and Nordhaus (2011) produce a modified set of national accounts that take into account just one kind of environmental damage: air pollution (including estimates of the cost of CO2 emissions, where possible). Muller et al find that including this one form of pollution radically alters our assessment of how valuable certain industries are to the overall economy (understood here as “what GDP measures”).

For some industries (sewage treatment plants, solid waste combustion, stone quarrying, marinas, and petroleum fired and coal-fired power generation), [Gross Environmental Damage, GED] actually exceeds conventionally measured [Value Added, VA]. Crop and livestock production also have high GED/VA ratios, which is surprising given that these activities generally occur in rural (low marginal damage) areas. Other industries with high GED/VA ratios include water transportation, carbon black manufacturing, steam heat and air conditioning supply, and sugarcane mills. It is likely that many of these sources are underregulated.

Muller et al are cautious because of the many kinds of uncertainties in their estimates, and because GDP is already a wacky enough measure to begin with that it’s hard to take too seriously as a measure of economic welfare (despite the fact that we do just that all the time), but the point is clear: we are much less well off than we think if we think hard about pollution, and some industries may be downright destructive (at least at the margin), with their marginal product being less valuable than their marginal environmental damage.

Muller et al end with a call for the production official national accounts that take into account environmental damage. While they don’t make this link, I would argue that such accounts would be a helpful tool for climate change debates: every time someone asks, “But what will this do to the economy?” we would be able to provide a very different answer, one that recognized the previously undercounted costs (including increasing global warming). But, like most of the incremental political tools mentioned in the Rolling Stone article, these sorts of changes would likely take years, and only have small effects on our national debates. And we simply may not have the time for incremental measures anymore.

* For an excellent fictional account of the CCD, see Paolo Bacigalupi’s work, especially The Windup Girl.

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