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- 1. Scanned by CamScanner Free exchange Economics The long run Weighing the future May 19th 2014, 21:39 by R.A. | LONDON OVER the past two weeks the world has received sobering news concerning the melting of polar ice. Unexpectedly deep canyons (http://www.scientificamerican.com/article/deep-valleys-under- greenland-mean-higher-sea- level-rise/) in Greenland's bedrock mean that its retreating glaciers will be in contact with warm ocean water for longer, and will therefore melt faster. And in West Antarctica a wall of glaciers (http://www.popsci.com/article/10-foot-sea-level-rise-now- unstoppable-due-glacier-collapse) separating a vast basin of ice from the sea is coming apart far faster than anticipated, suggesting that quite a lot of sea level rise is now unavoidable and will occur faster and more dramatically http://www.economist.com/ http://www.economist.com/blogs/freeexchange
- 2. http://www.scientificamerican.com/article/deep-valleys-under- greenland-mean-higher-sea-level-rise/ http://www.popsci.com/article/10-foot-sea-level-rise-now- unstoppable-due-glacier-collapse than anticipated. So, time to sell that oceanfront property? Perhaps not. Many of the reports covering the news read like this: A large part of the West Antarctic Ice Sheet, a massive expanse of frozen water that flows into the Amundsen Sea, is likely already in the process of collapsing, probably irreversibly. A pair of studies show that part of the sheet is melting more quickly than previously thought, and that several of its large glaciers will probably melt into the ocean, raising global sea levels at least 10 feet in the coming centuries. And it cannot be stopped. For many readers the sense of anxiety no doubt melted away like a chunk of polar ice at the qualification "in coming centuries". Sea level rise is just one of many ways in which global climate change will affect humanity, and serious repercussions from other phenomena—like longer, more frequent, and more intense severe weather patterns—will become meaningful problems long before rising seas begin disrupting the economy (unfortunately for those living in places like the Maldives). But all of these changes will be felt most severely decades or centuries
- 3. down the road: after our children, and our children's children, are gone. That is a nasty complication for economists trying to figure out the most appropriate way to respond to climate change. Some economists, like Martin Weitzman, reckon that significant investment may be justified now as a form of insurance. There is a risk that climate change will happen faster or be more costly than we anticipate, possibly threatening humanity's very existence. Whether or not it makes sense to pay to cut emissions in order to enjoy the benefits of slower warming, it is worth taking action now in order to reduce the odds of a civilisation-ending outcome. Though that argument makes quite a lot of sense, it does leave some economists unsatisfied. Surely the costs of warming are high enough that it's worth cutting emissions to stop it, whether or not it threatens our very existence, right? It seems like that ought to be the case. But to suss that out, we have to make an assumption about discount rates—that is, how much we, today, should value benefits received well down the line—in order to compare costs today to benefits tomorrow. If one believes that humanity should take drastic action now even though it might slow economic growth, one has to assume that future costs will be very, very big or that people living today place significant value on benefits realised 50 or 100 or 500 years down the line. And that strikes many dismal scientists as implausible. It is easy enough to
- 4. imagine that people living today care about benefits that might accrue to them in their old age, or that of their children or grandchildren. But look much beyond a century and the beneficiaries become too distant to count much in our mental calculus. Discount rates, in other words, are high. In a lot of climate modelling, researchers use discount rates of around 4% to 6% (common estimates of the average rate of return to capital) to calculate the present value of future benefits from reduced emissions today. That sort of rate implies that humans should do a bit to save the planet, but only just a bit. Lower discount rates, like the 1.4% effective rate used by Sir Nicholas Stern in his review (http://webarchive.nationalarchives.gov.uk/+/http:/www.hm- treasury.gov.uk/sternreview_index.htm) of the economic risks from climate change, imply that humanity should be willing to be substantial costs in the present to protect generations in the distant future from harm. Unfortunately, peeling apart how people actually discount benefits centuries or more in the future is very hard. But a fascinating new NBER working paper (http://papers.nber.org/tmp/31463-w20133.pdf) uses a clever approach to take a crack at it. The authors exploit an oddity in British real estate: Britons buying a home may either purchase what is known as a freehold (which means they own the land outright) or a leasehold (which
- 5. means they "own" it for the duration of the leasehold). But leaseholds aren't like your standard rental contract; they often grant ownership for periods between 80 and 999 years. The authors reckon that by finding the premium paid for freeholds relative to super-long-dated leaseholds on otherwise identical properties, they can come up with an estimate of how distant benefits are actually valued in the market. Remarkably, they find that people pay a premium of 10%-15% less for 100-year leaseholds and 5%-8% less for leaseholds of between 125-150 years. Only for leaseholds of 700 years or more do they detect no difference in price. On the whole, they reckon, a discount rate of about 2.6% appears to apply out well beyond a century. Oddly enough, people are willing to part with real money now in exchange for benefit flows accruing well beyond any reasonable expected lifespan. That won't make it any easier to generate the political support for meaningful action to slow climate change. But it does make it harder to justify delay based on the fact that people simply don't care much about the distant future. http://webarchive.nationalarchives.gov.uk/+/http:/www.hm- treasury.gov.uk/sternreview_index.htm http://papers.nber.org/tmp/31463-w20133.pdf Science & Environment What is in the Paris climate agreement?
- 6. By Helen Briggs BBC News 31 May 2017 Science & Environment What was agreed as part of the Paris climate deal? Overview The deal unites all the world's nations in a single agreement on tackling climate change for the first time in history. Coming to a consensus among nearly 200 countries on the need to cut greenhouse gas emissions is regarded by many observers as an achievement in itself and has been hailed as "historic". The Kyoto Protocol of 1997 set emission cutting targets for a handful of developed countries, but the US pulled out and others failed to comply. AFP Home News Sport Weather Shop Earth Travel http://www.bbc.com/news/science_and_environment http://www.bbc.com/news/science_and_environment http://www.bbc.com/news http://www.bbc.com/ http://www.bbc.com/ http://www.bbc.com/news/ http://www.bbc.com/sport/ http://www.bbc.com/weather/
- 7. http://shop.bbc.com/ http://www.bbc.com/earth/ http://www.bbc.com/travel/ http://search.bbc.co.uk/search https://session.bbc.com/session?ptrt=http%3A%2F%2Fwww.bbc .com%2Fnews%2Fscience-environment- 35073297&userOrigin=news&context=news However, scientists point out that the Paris accord must be stepped up if it is to have any chance of curbing dangerous climate change. Pledges thus far could see global temperatures rise by as much as 2.7C, but the agreement lays out a roadmap for speeding up progress. What are the key elements? To keep global temperatures "well below" 2.0C (3.6F) above pre-industrial times and "endeavour to limit" them even more, to 1.5C To limit the amount of greenhouse gases emitted by human activity to the same levels that trees, soil and oceans can absorb naturally, beginning at some point between 2050 and 2100 To review each country's contribution to cutting emissions every five years so they scale up to the challenge For rich countries to help poorer nations by providing "climate finance" to adapt to climate change and switch to renewable energy.
- 8. What's in and what has been left out? The goal of preventing what scientists regard as dangerous and irreversible levels of climate change - judged to be reached at around 2C of warming above pre-industrial times - is central to the agreement. The world is already nearly halfway there at almost 1C and many countries argued for a tougher target of 1.5C - including leaders of low-lying countries that face unsustainable sea levels rises in a warming world. REUTERS The desire for a more ambitious goal has been kept in the agreement - with the promise to "endeavour to limit" global temperatures even more, to 1.5C. Dr Bill Hare, CEO of Climate Analytics, says the objective is "remarkable". "It is a victory for the most vulnerable countries, the small islands, the least developed countries and all those with the most to lose, who came to Paris and said they didn't want sympathy, they wanted action." Meanwhile, for the first time, the accord lays out a longer-term plan for reaching a peak in
- 9. greenhouse emissions "as soon as possible" and achieving a balance between output of man-made greenhouse gases and absorption - by forests or the oceans - "by the second half of this century". "If agreed and implemented, this means bringing down greenhouse-gas emissions to net zero within a few decades. It is in line with the scientific evidence we presented," says John Schellnhuber, Director of the Potsdam Institute for Climate Impact Research. Some have described the deal as "woolly" because some of the targets were scaled down during the negotiations. "The Paris Agreement is only one step on a long road, and there are parts of it that frustrate and disappoint me, but it is progress," says Greenpeace International executive director Kumi Naidoo. "This deal alone won't dig us out the hole we're in, but it makes the sides less steep." What about money? Money has been a sticking point throughout the negotiations. Developing countries say they need financial and technological help to leapfrog fossil fuels and move straight to renewables. Currently they have been promised US $100bn (£67bn) a year by 2020 - not as much as
- 10. many countries would like. The agreement requires rich nations to maintain a $100bn a year funding pledge beyond 2020, and to use that figure as a "floor" for further support agreed by 2025. The deal says wealthy countries should continue to provide financial support for poor nations to cope with climate change and encourages other countries to join in on a voluntary basis. Dr Ilan Kelman of UCL, London, says the lack of time scales is "worrying". "The starting point of $100bn per year is helpful, but remains under 8% of worldwide declared military spending each year." What happens next? Only elements of the Paris pact will be legally binding. The national pledges by countries to cut emissions are voluntary, and arguments over when to revisit the pledges - with the aim of taking tougher action - have been a stumbling block in the talks. The pact promises to make an assessment of progress in 2018, with further reviews every five years.
- 11. As analysts point out, Paris is only the beginning of a shift towards a low-carbon world, and there is much more to do. "Paris is just the starting gun for the race towards a low-carbon future," says WWF-UK Chief Executive David Nussbaum. Prof John Shepherd of the National Oceanography Centre, University of Southampton, says the agreement includes some welcome aspirations but few people realise how difficult it will be to achieve the goals. "Since the only mechanism remains voluntary national caps on emissions, without even any guidance on how stringent those caps would need to be, it is hard to be optimistic that these goals are likely to be achieved." Share this story About sharing More on this story COP21 climate change summit reaches deal in Paris 13 December 2015 Science & Environment mailto:?subject=Shared%20from%20BBC%20News&body=http %3A%2F%2Fwww.bbc.com%2Fnews%2Fscience-environment- 35073297 http://www.facebook.com/dialog/feed?app_id=58567469885&re