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Economic Impacts of Tipping Points in the Climate System
- 1. ECONOMIC IMPACTS OF TIPPING POINTS IN THE CLIMATE SYSTEM James Rising, University of Delaware Nov. 18, 2021
- 2. A short preview Climate risks and economic damages. The climate system is being pushed to the edge of multiple tipping points. Tipping points will cause big changes in the climate system, increase temperatures and sea-level rise, and making climate mitigation more difficult. Discussion of the economic consequences.
- 3. Some points on climate science The climate is changing rapidly, and impacts are occurring now. 2019
- 4. Some points on climate science The climate is changing rapidly, and impacts are occurring now. If GHG emissions continue, the world will look very different by 2100.
- 5. Some points on climate science The climate is changing rapidly, and impacts are occurring now. If GHG emissions continue, the world will look very different by 2100. Addressing climate change requires strong mitigation and adaptation action.
- 6. Uncertainty is a fact of climate Scientists use “Shared Socioeconomic Pathways” to study the risks of future warming. SSP5: Fossil-fueled development SSP1: Sustainable development
- 7. Uncertainty is a fact of climate Each emissions scenario results in a range of possible temperature changes. °C
- 8. Sources of uncertainty Moving far out of historical record Lots of processes that need more study Cloud formation Energy transport from eddies Rate of changes of slow-moving features Glacier and ice cap melt Land cover (forest to grassland) changes Strength of feedback loops in the climate CO2 warming more water vapor more warming
- 9. Sources of uncertainty Moving far out of historical record Lots of processes that need more study Cloud formation Energy transport from eddies Rate of changes of slow-moving features Glacier and ice cap melt Land cover (forest to grassland) changes Strength of feedback loops in the climate CO2 warming more water vapor more warming
- 10. Tipping points Tipping points are changes in the climate that are: Irreversible (in policy terms) Sudden (in climate terms) Self-reinforcing Small changes lead to fundamentally different behavior of the climate system. After a tipping point, every extra ton of CO2 causes more warming/SLR/damage than before.
- 11. Tipping points – some systems thinking Intuition: imagine leaning way back in a chair. State 1: if you stop leaning back, you’ll come back to rest in the upright position. State 2: You fall backwards and come to rest on the floor. The tipping point is: The point where you’ve leaned too far back. The instability of the chair to leaning backwards.
- 12. Tipping points – some systems thinking Intuition: imagine leaning way back in a chair. State 1: if you stop leaning back, you’ll come back to rest in the upright position. State 2: You fall backwards and come to rest on the floor. The tipping point is: The point where you’ve leaned too far back. The instability of the chair to leaning backwards. Systems thinking: The system has a mind of its own. Analogy of pushing a boulder up a hill.
- 13. Tipping points – some systems thinking Intuition: imagine leaning way back in a chair. State 1: if you stop leaning back, you’ll come back to rest in the upright position. State 2: You fall backwards and come to rest on the floor. The tipping point is: The point where you’ve leaned too far back. The instability of the chair to leaning backwards. Systems thinking: The system has a mind of its own. Analogy of pushing a boulder up a hill. Leaning back!
- 14. Tipping points – some systems thinking Intuition: imagine leaning way back in a chair. State 1: if you stop leaning back, you’ll come back to rest in the upright position. State 2: You fall backwards and come to rest on the floor. The tipping point is: The point where you’ve leaned too far back. The instability of the chair to leaning backwards. Systems thinking: The system has a mind of its own. Analogy of pushing a boulder up a hill. Tipping point!
- 15. Tipping points – some systems thinking Intuition: imagine leaning way back in a chair. State 1: if you stop leaning back, you’ll come back to rest in the upright position. State 2: You fall backwards and come to rest on the floor. The tipping point is: The point where you’ve leaned too far back. The instability of the chair to leaning backwards. Systems thinking: The system has a mind of its own. Analogy of pushing a boulder up a hill. Run-away change
- 16. Tipping points – Amazon dieback Example 1: Die-back of the Amazon rainforest. Forest creates it own weather, recycling water. Tree cove r Evapo- transpiratio n Rainfal l
- 17. Tipping points – Amazon dieback Example 1: Die-back of the Amazon rainforest. Forest creates it own weather, recycling water. Even without human- caused deforestation, warming harms trees, reducing recycling, causing more loss of trees. Grass -land More runoff More drying
- 18. Tipping points – Amazon dieback Example 1: Die-back of the Amazon rainforest. Forest creates it own weather, recycling water. Even without human- caused deforestation, warming harms trees, reducing recycling, causing more loss of trees. Tipping point! T ET R G R O D
- 19. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice).
- 20. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner.
- 21. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner. Ice caps cool the planet:
- 22. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner. Ice caps cool the planet: Another self-reinforcing feedback loop: Less Ice Warmer Water Melts Ice Local feedback
- 23. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner. Ice caps cool the planet: Another self-reinforcing feedback loop: Less Ice Warmer Water Melts Ice Local feedback Less snow buildup Local feedback
- 24. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner. Ice caps cool the planet: Another self-reinforcing feedback loop: Less Ice Warmer Water Melts Ice Warmer Atmosphe re Local feedback Global feedback Less snow buildup Local feedback
- 25. Tipping points – Arctic ice cover loss Example 2: Arctic ice cover North Pole ice cap shrinking since 1970 (looking at summer ice). Most summer ice now is 1- 2 years old & thinner. Ice caps cool the planet: Tipping point!
- 26. Tipping points – global feedbacks CO2 Warming Fossil Fuel Use Impacts
- 27. Tipping points – global feedbacks Amazon Dieback CO2 Loss of Arctic Ice Cover Warming Fossil Fuel Use
- 28. Tipping points – global feedbacks Amazon Dieback CO2 Loss of Arctic Ice Cover Warming Fossil Fuel Use
- 29. Tipping points Source: Lenton et al. (2008)
- 30. Likelihood of tipping points Big questions: Where are the trigger points? How likely are these triggers to happen in the near-term? How damaging would they be if they did?
- 31. Likelihood of tipping points Big questions: Where are the trigger points? How likely are these triggers to happen in the near-term? How damaging would they be if they did? IPCC has historically addressed big uncertainties like this with the “Burning 2001 2009 2014 2018 IPCC Reports by Year Global temperature change Risk of tipping point changes
- 32. Likelihood of tipping points Kriegler et al. (2009): Imprecise probability assessment of tipping points in the climate system Expert elicitation Ask 43 scientists: How likely are the following tipping points? Consider three different warming scenarios: low, El Niño-like mean state of ENSO Dieback of boreal forests Decline of the ocean carbon sink Atl. meridional overturning circulation Melt of the Greenland ice sheet Disintegration of W. Antarctic ice sheet 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 0.00 0.25 0.50 0.75 1.00 0.00 0.25 0.50 0.75 1.00 Global mean temperature change in 2200 Probability of tipping point El Niño-like mean state of ENSO Dieback of boreal forests Decline of the ocean carbon sink At least one tipping point Atl. meridional overturning circulation Melt of the Greenland ice sheet Disintegration of W. Antarctic ice sheet Dieback of the Amazon rainforest 0.00 0.25 0.50 0.75 1.00 0.50 0.75 1.00 Probability of tipping point
- 33. Likelihood of tipping points Kriegler et al. (2009): Imprecise probability assessment of tipping points in the climate system Expert elicitation Ask 43 scientists: How likely are the following tipping points? Consider three different warming scenarios: low, e of ENSO Dieback of boreal forests Decline of the ocean carbon sink At least one tipping point 4 - 8 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 Global mean temperature change in 2200 El Niño-like mean state of ENSO D 0.5 - 2 2 - 4 4 - 8 0.5 - 0.00 0.25 0.00 0.25 0.50 0.75 1.00 Probability of tipping point El Niño-like mean state of ENSO Di 0.00 0.25 0.50 0.75 0.25 0.50 0.75 1.00 Probability of tipping point El Niño-like mean state of ENSO Dieback of boreal forests Decline of the ocean carbon sink 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 0.5 - 2 2 - 4 4 - 8 0.00 0.25 0.50 0.75 0.00 0.25 0.50 0.75 1.00 Global mean temperature change in 2200 Probability of tipping point
- 34. Climate tipping points Tipping points are connected! If one tipping point is triggered, others usually become more likely.
- 36. Climate change to economics Why economics? Concerned about risks for lives and livelihoods. Social decision-making: Costs of mitigation must be paid by today’s generations. Benefits of mitigation for all future generations. “Economic welfare”: Want to combine losses to incomes, health, our appreciation of the natural environment and services it provides.
- 37. Climate change to economics Tough pathway from climate change to damages: Source: Hallegatte et al. (2017)
- 38. Economic losses: What we know Economic damages increase at higher temperatures. Inequality matters: poor most vulnerable and hit the hardest. Source: Burke et al. (2015) Source: Hsiang et al. (2017)
- 39. Economic losses: What we don’t know
- 40. Economic losses: What we don’t know
- 41. Economic losses: What we don’t know
- 42. Economic losses: What we don’t know
- 43. Combined impact Climate change estimated to reduce global welfare by 23% under business-as- usual. Worst damages in tropics.
- 44. Effect of tipping points On a “middle- of-the-road” scenario: Tipping points increase damages another 43%. Lots of uncertainty! 10% chance of doubling costs.
- 45. What does this mean for communities? Everyone is 33% poorer?
- 46. What does this mean for communities? Everyone is 33% poorer? More frequent disasters: More wildfires, floods, droughts. More crop failures, price spikes, supply shortages. Some regions fine, some will be devastated: How hot already? Where is the water? What does the economy rely on? Coastal risks? Some industries heavily impacted: Agriculture, construction, tourism
- 47. What does this mean for communities? Everyone is 33% poorer? More frequent disasters: More wildfires, floods, droughts. More crop failures, price spikes, supply shortages. Some regions fine, some will be devastated: How hot already? Where is the water? What does the economy rely on? Coastal risks? Some industries heavily impacted: Agriculture, construction, tourism Prepare for uncertainty. Future world will be: Less well-understood More chaotic and variable Require cooperation
- 48. How to avoid these losses Keep warming below 1.5C (2.7 F) Currently at 1.1C warming (2 F) Need to scale up mitigation fast!
- 49. COVID-19 Mitigation example Global CO2 emissions fell 6.4% due to COVID-19 restrictions. To keep under 1.5 C, need to drop by 45% by 2030. That’s a drop of 6% per year. To keep under 1.5 C with COVID-like restrictions, would need to keep current ones, and add new equally strong restrictions every
- 50. Outcomes from Glasgow Pledge for stronger reductions? “Phase down” coal? “At least double” adaptation finance by 2025 No funding for loss & damage. Carbon offset regulations Cut methane emissions by 30% (100 countries) Stop deforestation (130 countries)
- 51. Conclusions Pervasive uncertainty: Tipping points are a consequence of the climate system They will make mitigation harder and drive greater impacts Tipping points increase losses by 43% or more Economic losses are worst for the poor Also affect lives and livelihoods globally We need global cooperation and local action
- 52. The central challenge of our time Global, invisible externality driven by every aspect of our economy An exciting transformation underway: We must transform to a ~0% fossil-fuel, ~100% renewable energy system That can result in a more equitable, healthier society Climate will continue to evolve with consequent impacts Every aspect of our lives to change, through a 2- generation-long society-wide effort
- 54. The Social Cost of Carbon How much does each ton of CO2 cost society?
- 55. Uses of the social cost of carbon Cost-benefit analysis in the U.S. If U.S. government project could have climate change consequences, need to account for climate costs. Use a government-recommended value of the SCC. “Socially-optimal” level of mitigation What should the level of a carbon tax be? Set the tax equal to the SCC!
- 56. Battle lines Resource-extractive free market Societal inertia Climatic inertia Free-riding Shifting baselines Uncertainty Ease of geo-engineering Technological innovation Cheap renewables and batteries, electric cars Double/triple wins UNFCCC process (Paris agreement) Public support Green competitiveness Pro-climate change Pro-transition
- 57. The unknowns of business-as- usual Source: XKCD
- 58. The unknowns of business-as- usual Source: XKCD
Editor's Notes
- The vertical axis captures uncertainty in predicting climate change, with uncertainty increasing as we go down. There are three categories: Projection – we are highly confident on the direction of these changes and can place bounds around the magnitude of them (i.e. temperature change and sea-level rise); Bounded risks – we are more uncertain about the direction and magnitude of these changes, though we can place reasonable bounds around them (i.e. precipitation, extreme events); System change and surprises – we are highly uncertain about whether these changes will come about and when (e.g. slow-down of the thermohaline circulation, collapse of the West Antarctic Ice Sheet). The horizontal axis captures uncertainty in the economic measurement of impacts, with uncertainty increasing as we go from left to right. There are again three categories: Market impacts; Non-market impacts; Socially contingent responses; these are large-scale, second-round social responses, if you like, to the impacts of climate change, including migration and conflict, that are likely to exacerbate first-round impacts. Focus on long-run climate trends potentially ignores the additional effects of short-run volatility (e.g. poverty traps at the household to regional levels). Despite focussing on long-run climate trends, the impact analysis in each time period in large part assumes that climate impacts are instantaneous, i.e. they do not leave an imprint/shadow in the long run. However, if impacts today reduce our ability to invest in the future, then current climate change (i.e. in any time period) will impact future socio-economic outcomes. Migration and conflict are more extreme examples of this. The enumerative approach ignores potential interactions between sectors, which are likely to mean that, in the end, total climate impacts are larger than the sum of the parts.
- The vertical axis captures uncertainty in predicting climate change, with uncertainty increasing as we go down. There are three categories: Projection – we are highly confident on the direction of these changes and can place bounds around the magnitude of them (i.e. temperature change and sea-level rise); Bounded risks – we are more uncertain about the direction and magnitude of these changes, though we can place reasonable bounds around them (i.e. precipitation, extreme events); System change and surprises – we are highly uncertain about whether these changes will come about and when (e.g. slow-down of the thermohaline circulation, collapse of the West Antarctic Ice Sheet). The horizontal axis captures uncertainty in the economic measurement of impacts, with uncertainty increasing as we go from left to right. There are again three categories: Market impacts; Non-market impacts; Socially contingent responses; these are large-scale, second-round social responses, if you like, to the impacts of climate change, including migration and conflict, that are likely to exacerbate first-round impacts. Focus on long-run climate trends potentially ignores the additional effects of short-run volatility (e.g. poverty traps at the household to regional levels). Despite focussing on long-run climate trends, the impact analysis in each time period in large part assumes that climate impacts are instantaneous, i.e. they do not leave an imprint/shadow in the long run. However, if impacts today reduce our ability to invest in the future, then current climate change (i.e. in any time period) will impact future socio-economic outcomes. Migration and conflict are more extreme examples of this. The enumerative approach ignores potential interactions between sectors, which are likely to mean that, in the end, total climate impacts are larger than the sum of the parts.
- The vertical axis captures uncertainty in predicting climate change, with uncertainty increasing as we go down. There are three categories: Projection – we are highly confident on the direction of these changes and can place bounds around the magnitude of them (i.e. temperature change and sea-level rise); Bounded risks – we are more uncertain about the direction and magnitude of these changes, though we can place reasonable bounds around them (i.e. precipitation, extreme events); System change and surprises – we are highly uncertain about whether these changes will come about and when (e.g. slow-down of the thermohaline circulation, collapse of the West Antarctic Ice Sheet). The horizontal axis captures uncertainty in the economic measurement of impacts, with uncertainty increasing as we go from left to right. There are again three categories: Market impacts; Non-market impacts; Socially contingent responses; these are large-scale, second-round social responses, if you like, to the impacts of climate change, including migration and conflict, that are likely to exacerbate first-round impacts. Focus on long-run climate trends potentially ignores the additional effects of short-run volatility (e.g. poverty traps at the household to regional levels). Despite focussing on long-run climate trends, the impact analysis in each time period in large part assumes that climate impacts are instantaneous, i.e. they do not leave an imprint/shadow in the long run. However, if impacts today reduce our ability to invest in the future, then current climate change (i.e. in any time period) will impact future socio-economic outcomes. Migration and conflict are more extreme examples of this. The enumerative approach ignores potential interactions between sectors, which are likely to mean that, in the end, total climate impacts are larger than the sum of the parts.
- The vertical axis captures uncertainty in predicting climate change, with uncertainty increasing as we go down. There are three categories: Projection – we are highly confident on the direction of these changes and can place bounds around the magnitude of them (i.e. temperature change and sea-level rise); Bounded risks – we are more uncertain about the direction and magnitude of these changes, though we can place reasonable bounds around them (i.e. precipitation, extreme events); System change and surprises – we are highly uncertain about whether these changes will come about and when (e.g. slow-down of the thermohaline circulation, collapse of the West Antarctic Ice Sheet). The horizontal axis captures uncertainty in the economic measurement of impacts, with uncertainty increasing as we go from left to right. There are again three categories: Market impacts; Non-market impacts; Socially contingent responses; these are large-scale, second-round social responses, if you like, to the impacts of climate change, including migration and conflict, that are likely to exacerbate first-round impacts. Focus on long-run climate trends potentially ignores the additional effects of short-run volatility (e.g. poverty traps at the household to regional levels). Despite focussing on long-run climate trends, the impact analysis in each time period in large part assumes that climate impacts are instantaneous, i.e. they do not leave an imprint/shadow in the long run. However, if impacts today reduce our ability to invest in the future, then current climate change (i.e. in any time period) will impact future socio-economic outcomes. Migration and conflict are more extreme examples of this. The enumerative approach ignores potential interactions between sectors, which are likely to mean that, in the end, total climate impacts are larger than the sum of the parts.