On March 31 the Intergovernmental Panel on Climate Change (IPCC) released the tentative draft of its Fifth Assessment Report (AR5) for Working Group II, which studies the impacts of climate change under various possible scenarios, including actions by governments. (In contrast, the report from Working Group I—which was released in the fall of 2013—studied the physical science underlying projections of climate change.) Although the top brass at the IPCC and their accomplices in the media will do their best to hide it, the fact is that the new report shows just how optimistic we should be about the future.

The lengthy IPCC reports themselves are behemoths that only masochists and true nerds would attempt to parse (as the reader will see below). Consequently we will trickle out the major “news you can use” in a series of digestible posts over the next few weeks. In this first post, we will concentrate on the takeaway numbers on the impact of climate change, according to the IPCC. These should be a cause of relief, not alarm. We will also explain why a leading climate expert, Richard Tol, asked that his name be removed from the final “Summary for Policymakers.” The case for alarm over climate change is collapsing, and even the IPCC’s own reports—if not their dialog with the public—are reflecting it.

Summary for Policymakers—Written By Orwell?

We can quickly summarize the big-picture economic takeaway from the latest report by walking through a key paragraph, which is taken from page 19 of the Summary for Policymakers accompanying the recent release:

Global economic impacts from climate change are difficult to estimate. Economic impact estimates completed over the past 20 years vary in their coverage of subsets of economic sectors and depend on a large number of assumptions, many of which are disputable, and many estimates do not account for catastrophic changes, tipping points, and many other factors. With these recognized limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (±1 standard deviation around the mean) (medium evidence, medium agreement). Losses are more likely than not to be greater, rather than smaller, than this range (limited evidence, high agreement). Additionally, there are large differences between and within countries. Losses accelerate with greater warming (limited evidence, high agreement), but few quantitative estimates have been completed for additional warming around 3°C or above. Estimates of the incremental economic impact of emitting carbon dioxide lie between a few dollars and several hundreds of dollars per tonne of carbon (robust evidence, medium agreement). Estimates vary strongly with the assumed damage function and discount rate. [Bold and italics in original, footnotes removed.]

Before delving into the technical details, it is a useful exercise to try simply reading the above block quotation a few times, slowly. The Orwellian nature of the IPCC reports—especially the Summaries for Policymakers—should eventually make the reader shudder. For example, notice that in the four places above where the writers document the nature of the evidence and the degree of confidence in a particular statement, the two cases of “high agreement” are the ones with “limited evidence,” whereas the statement with “medium evidence” and even the statement enjoying “robust evidence” only receive “medium agreement.” That by itself is odd, but look more closely and see that the statements receiving “high agreement” bolster the alarmist side, whereas the two only garnering “medium agreement” contain reasons for optimism. This is yet another beautiful example of what the critics of the IPCC have been alleging all along: They go into this procedure with a preconceived agenda of what they want the political output to be, and then interpret the evidence however they need to, in order to suggest that result.

We should also highlight a sentence from the third paragraph above that should tell you just how “unsettled” this policy debate truly is: “Estimates of the incremental economic impact of emitting carbon dioxide lie between a few dollars and several hundreds of dollars per tonne of carbon.” Here they are referring to the “social cost of carbon,” and are admitting that the official, peer-reviewed estimates are all over the map, differing by a factor of hundreds. As we have repeatedly stressed, such quicksand is hardly the foundation upon which to build federal efforts to regulate and tax carbon dioxide.

What Type of Danger Should We Expect from Climate Change?

As we have seen in this latest report, the AR5 Working Group II Summary for Policymakers says that “estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income.” So how long does the IPCC in this latest report think it will take for the earth to warm by an additional ~2°C (from this point forward) if policymakers don’t engage in any further actions that would impede greenhouse gas emissions?

With the old IPCC reports, this question would be easy to answer, because they specified various “emissions scenarios” (called SRES) and reported the associated ranges of temperature increases for each scenario. (For example, see Table SPM.3 here for the projections as of the Fourth Assessment Report issued back in 2007.) These SRES scenarios contained different assumptions about the rate of economic growth in the developing world, the improvements in solar power and car batteries that would allow humans to naturally move away from fossil fuels more rapidly during the 21st century, etc. Crucially, the SRES scenarios didn’t assume major new government interventions in the name of mitigating climate change, so it was easy to calculate what the latest IPCC projections were for “business as usual” or what critics would want to label “doing nothing about climate change.”

Unfortunately, the IPCC did not make their new report so easy to parse. They now don’t focus on emission scenarios, but instead they classify Representative Concentration Pathways, or RCPs. These do not itemize specific emission scenarios but instead talk about the “pathways” by which a particular concentration of atmospheric greenhouse gases could arise. For our purposes, this switch poses analytical problems because each RCP could include scenarios involving government mitigation policies. Therefore, it’s not as clearcut to say, “This is what the IPCC now says will happen, if governments don’t embark on any major new anti-carbon initiatives.”

Notwithstanding these difficulties, let’s go ahead and report what the latest IPCC numbers show, for the particular scenarios they chose to highlight. We turn to the Working Group I’s AR5 report, released last September. Table SPM.2 (page 23) shows the projected temperature increases under various Representative Concentration Pathways (RCPs):

To understand the impact of these temperature projections, remember that the Working Group II report (which was just released) has told us that for an additional 2°C of warming, the impacts of climate change will range between 0.2% and 2.0% of global income. The table above shows us that under three of the four scenarios that the IPCC chose to highlight, that amount of warming won’t likely happen until near the end of the century (i.e. the year 2100). In the most pessimistic scenario (presumably involving the fastest growth of emissions), that amount of warming still won’t occur until mid-century.

So to sum up: If we take the IPCC’s middle-of-the-road estimates, and rounding to ballpark figures, the AR5 reports tell us that in three of their four representative scenarios, the damages of climate change would be about 1% of income by 2090, while in the most pessimistic of the scenarios it would be about 1% of income by the year 2055. It’s true, we can’t cleanly say exactly what the outcome would be if governments followed “business as usual,” but nonetheless the middle-of-the-road projections are not alarming at all no matter which scenario we choose.

Costs Versus Benefits

But wait, there’s more. In the previous section we just looked at the ballpark damages from climate change, according to the latest IPCC report. These conceivably could be mitigated by government policies to stem greenhouse gas emissions. But these government measures—such as a carbon tax or cap-and-trade program—would themselves entail substantial costs. For these programs to make economic sense, their benefits (in the form of avoided climate change damage) would have to exceed their costs (in the form of slower conventional economic growth).

We will come back to this issue in future blog posts, but for right now, here’s one reference point: Back in 2009, Paul Krugman was stumping for aggressive government action to slow climate change. He reported with glee that an MIT study had estimated that stringent limits on US emissions would “only” reduce national income by 2% by the year 2050.

Now the reader should understand the hole into which the climate alarmists have dug themselves. They can’t have the IPCC running around telling people that the best projection of climate change damage will be “0.2% to 2.0%” of global income, either by mid-century (at worst) or possibly not until 2090, when they’ve spent a few years reassuring Americans that their preferred anti-carbon policies will cost 2% of income by 2050. Even using their own numbers, these policies clearly fail a standard cost/benefit test. (It obviously doesn’t make sense to spend $2,000 in the year 2050 to prevent a bad outcome that will probably cost you $1,000 in the year 2090, and the same logic applies to percentages of income.) The cost/benefit comparisons get much worse when you consider that even in their own computer simulations, the various carbon tax and cap-and-trade proposals will only reduce (not eliminate) the total damages from climate change; thus the economic costs of these policies must be compared to the potential benefits of avoiding only some fraction of the projected damages of climate change.

Richard Tol Takes His Name Off the Report

Thus far we have shown that the latest IPCC report undercuts the rationale for aggressive government policies to slow climate change; they don’t pass a standard cost/benefit test. This fact explains why the latest AR5 is shifting ground onto a discussion of the various “risks” involved in climate change; focusing on big-picture averages and “likely” outcomes isn’t going to cut it. For example, look how a co-chair on the Working Group II report, Chris Field, frames this new “boldness” in the IPCC approach:

The [IPCC Fifth Assessment Working Group II] report itself is scientifically bold. It frames managing climate change as a challenge in managing risks, using this characterization as a starting point for two of the report’s core themes. The first is the importance of considering the full range of possible outcomes, including not only high-probability outcomes. It also considers outcomes with much lower probabilities but much, much larger consequences. Second, characterizing climate change as a challenge in managing risks opens doors to a wide range of options for solutions.

Again, I ask the reader to go back and re-read the second paragraph above. Without perhaps realizing it, Field is openly admitting that the new and “bold” approach of the IPCC AR5 will shift emphasis away from “high-probability outcomes” and instead consider outcomes with “much lower probabilities,” and that this shift “opens doors to a wide range” of government interventions. How convenient. Needless to say, if the case for government “options for solutions” can be made on the basis of theoretically possible risks, then no critic will ever be able to refute the proposal.

This shift in rhetoric also sheds light on what happened with Richard Tol, who is a global expert on climate change economics and a lead author on IPCC reports. Tol made a splash recently when he took his name off of the Summary for Policymakers associated with the AR5 Working Group II report. As this Daily Mail story reports:

Professor Tol, the lead co-ordinating author of the report’s chapter on economics [i.e. the Working Group II report that just came out—RPM], was involved in drafting the summary for policymakers – the key document that goes to governments and scientists. But he has now asked for his name to be removed from the document. He said: ‘The message in the first draft was that through adaptation and clever development these were manageable risks, but it did require we get our act together. ‘This has completely disappeared from the draft now, which is all about the impacts of climate change and the four horsemen of the apocalypse. This is a missed opportunity.’

Conclusion

The latest IPCC report on the impacts of climate change—and various possible government policies to address it—is a huge issue that we will cover in several future posts. But for now, the big-picture takeaway is that the case for alarmism is collapsing. According to the IPCC’s own numbers, the likely damages from climate change through the end of the century are entirely manageable, and moreover are lower than reputable estimates of the costs of mitigation strategies. Regardless of how the media try to spin things, the case for “wait for now, and re-evaluate in a few years” keeps getting stronger. The teams in charge of writing the Summary for Policymakers have to bend over backwards to undercut these quite optimistic results that, in a sane world, would be the headline grabbers.

The case for taking drastic government actions, and thereby imposing very real and immediate costs on the economy, gets weaker and weaker, as even the “official” reports can’t help but admit to those who know how to read them. In order to offset this inconvenient truth, the latest IPCC Working Group II report discusses patterns in extreme weather events that might happen, even though the IPCC Working Group I report from last fall itself says they haven’t happened yet and we have no reason to expect them. But don’t expect the major media to pick up on such nuances.