[MCN] Many still believe that it's bad for the economy to halt climate change

[Lance Olsen]

The Economist Jan 18th 2014 

Finance and economics

Economists are getting to grips with the impact of climate change

http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather <http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather>
Excerpts

THE "polar vortex" that brought freezing weather to North America chipped roughly $3 billion off American output in a week. It was a reminder that extreme weather has economic consequences even in the richest countries and that climate change --which may usher in even wilder fluctuations --is likely to have a big economic impact.

A recent burst of studies look at how large it may be, adding useful detail to the initial efforts, such as the Stern review of 2010. The results suggest that climate change may be having an effect already; that the weather influences economies through a surprisingly wide range of channels; but that calculating the long-run effects of climate change is harder than estimating the short-run impact of weather.

It is often assumed that the economic effects of climate change will be confined mainly to poor countries. That may be wrong. A study of time-use surveys and temperatures in the United States found that when temperatures reach 100°F (38°C), the labour supply in farming, forestry, construction and utilities falls by an hour a day, compared with what happens at 76-80°F. These are outdoor activities, which may explain why workers fail to show up. But a study of call centres also showed that each 1°C rise between 22°C and 29°C cut labour productivity by 1.8%. And in car factories in America, a week of outside temperatures above 90°F reduced output by 8%.

Lastly, the weather influences basic conditions of life and hence factors of production. In America each additional day above 32°C raises the annual age-adjusted mortality rate by 0.1% relative to a temperate day (10-15°C). In India the rate increases by almost 0.8%. Heatwaves cause early deaths (especially of mothers and infants) and, by affecting the harvest, damage nutrition. This in turn has long-lasting effects on the economy.

But the new literature is a start….It shows the multiple channels that economists of the climate must heed. It suggests that climate change is not something that will affect only poor countries, or hit rich ones only in the distant future. And --who knows-- it may one day show how public policy, now so ineffective, might stem the emissions that are causing the mess in the first place.


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“...many scientists say deep emissions cuts are necessary … to prevent … 
dangerous consequences of global warming. 

"Getting from here to there would require a massive economic shift.”

Rachel Pannett and Jeffrey Ball. “Australia Approves Energy Bill.”  
The Wall Street Journal  p.A7, August 21, 2009
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“The gap between high- and low-income families has widened steadily 
since about 1980, hitting a new high every year since 1985. “

Business Week, November 21, 1994, p. 72.


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