Natural Selection
Reassessing the Human Health Benefits from Cleaner Air
Tony Cox
Risk Analysis, forthcoming
Abstract:
Recent proposals to further reduce permitted levels of air pollution emissions are supported by high projected values of resulting public health benefits. For example, the Environmental Protection Agency recently estimated that the 1990 Clean Air Act Amendment (CAAA) will produce human health benefits in 2020, from reduced mortality rates, valued at nearly $2 trillion per year, compared to compliance costs of $65 billion ($0.065 trillion). However, while compliance costs can be measured, health benefits are unproved: they depend on a series of uncertain assumptions. Among these are that additional life expectancy gained by a beneficiary (with median age of about 80 years) should be valued at about $80,000 per month; that there is a 100% probability that a positive, linear, no-threshold, causal relation exists between PM2.5 concentration and mortality risk; and that progress in medicine and disease prevention will not greatly diminish this relationship. We present an alternative uncertainty analysis that assigns a positive probability of error to each assumption. This discrete uncertainty analysis suggests (with probability >90% under plausible alternative assumptions) that the costs of CAAA exceed its benefits. Thus, instead of suggesting to policymakers that CAAA benefits are almost certainly far larger than its costs, we believe that accuracy requires acknowledging that the costs purchase a relatively uncertain, possibly much smaller, benefit. The difference between these contrasting conclusions is driven by different approaches to uncertainty analysis, that is, excluding or including discrete uncertainties about the main assumptions required for nonzero health benefits to exist at all.
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Climate on Cable: The Nature and Impact of Global Warming Coverage on Fox News, CNN, and MSNBC
Lauren Feldman et al.
International Journal of Press/Politics, forthcoming
Abstract:
This study examines climate change coverage on the three major cable news channels and assesses the relationship between viewership of these channels and beliefs about global warming. Evidence from a content analysis of climate change coverage on Fox News, CNN, and MSNBC during 2007 and 2008 demonstrates that Fox takes a more dismissive tone toward climate change than CNN and MSNBC. Fox also interviews a greater ratio of climate change doubters to believers. An analysis of 2008 survey data from a nationally representative sample of U.S. adults finds a negative association between Fox News viewership and acceptance of global warming, even after controlling for numerous potential confounding factors. Conversely, viewing CNN and MSNBC is associated with greater acceptance of global warming. Further analyses reveal that the relationship between cable news viewership (both Fox and CNN/MSNBC) and global warming acceptance is stronger among Republicans than among Democrats. That is, the views of Republicans are strongly linked with the news outlet they watch, regardless of how well that outlet aligns with their political predispositions. In contrast, Democrats don't vary much in their beliefs as a function of cable news use. This asymmetry suggests that some Republicans, who as a group tend to be predisposed toward global warming skepticism, are less skeptical when exposed to information on the reality and urgency of climate change.
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Welfare Costs of Long-Run Temperature Shifts
Ravi Bansal & Marcelo Ochoa
NBER Working Paper, November 2011
Abstract:
This article makes a contribution towards understanding the impact of temperature fluctuations on the economy and financial markets. We present a long-run risks model with temperature related natural disasters. The model simultaneously matches observed temperature and consumption growth dynamics, and key features of financial markets data. We use this model to evaluate the role of temperature in determining asset prices, and to compute utility-based welfare costs as well as dollar costs of insuring against temperature fluctuations. We find that the temperature related utility-costs are about 0.78% of consumption, and the total dollar costs of completely insuring against temperature variation are 2.46% of world GDP. If we allow for temperature-triggered natural disasters to impact growth, insuring against temperature variation raise to 5.47% of world GDP. We show that the same features, long-run risks and recursive-preferences, that account for the risk-free rate and the equity premium puzzles also imply that temperature-related economic costs are important. Our model implies that a rise in global temperature lowers equity valuations and raises risk premiums.
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Immo Fritsche et al.
Journal of Environmental Psychology, forthcoming
Abstract:
Climate change can increase societies' propensity to conflict by changes in socio-structural conditions (e.g., resource scarcity, migration). We propose an additional, subtle, and general effect of climate change threat via increases in authoritarian attitudes. Three studies in Germany and the UK support this suggestion. Reminding participants of the adverse consequences climate change may have for their country increased the derogation of societal groups that may threaten the collective (e.g., criminals) as well as general authoritarian attitudes. Salient climate change threats also led to system justification and approval of system supporting groups (e.g., judges) in those people who were highly identified with their nation. We discuss the implications of these findings for the explanation of authoritarian attitudes and the question of how societies may cope with the subtle social psychological effects of climate change.
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Behind the veil of ignorance: Self-serving bias in climate change negotiations
Peter Kriss et al.
Judgment and Decision Making, October 2011, Pages 602-615
Abstract:
Slowing climate change will almost certainly require a reduction in greenhouse gas emissions, but agreement on who should reduce emissions by how much is difficult, in part because of the self-serving bias - the tendency to believe that what is beneficial to oneself is also fair. Conducting surveys among college students in the United States and China, we show that each of these groups displays a nationalistic self-serving bias in judgments of a fair distribution of economic burdens resulting from mitigation. Yet, we also show, by disguising the problem and the identity of the parties, that it is possible to elicit perceptions of fairness that are not influenced by national interests. Our research reveals that the self-serving bias plays a major role in the difficulty of obtaining agreement on how to implement emissions reductions. That is, the disagreement over what constitutes fair climate policy does not appear to be due to cross-national differences in what constitutes a fair distribution of burdens. Interventions to mitigate the self-serving bias may facilitate agreement.
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Estimates of the Social Cost of Carbon: Background and Results from the RICE-2011 Model
William Nordhaus
NBER Working Paper, October 2011
Abstract:
A new and important concept in global warming economics and policy is the social cost of carbon or SCC. This concept represents the economic cost caused by an additional ton of carbon-dioxide emissions or its equivalent. The present study describes the development of the concept as well as its analytical background. We estimate the SCC using an updated version of the RICE-2011 model. Additional concerns are uncertainty about different aspects of global warming as well as the treatment of different countries or generations. The most important results are: First, the estimated social cost of carbon for the current time (2015) including uncertainty, equity weighting, and risk aversion is $44 per ton of carbon (or $12 per ton CO2) in 2005 US$ and international prices). Second, including uncertainty increases the expected value of the SCC by approximately 8 percent. Third, equity weighting generally tends to reduce the SCC. Finally, the major open issue concerning the SCC continues to be the appropriate discount rate.
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Increase of extreme events in a warming world
Stefan Rahmstorf & Dim Coumou
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
We develop a theoretical approach to quantify the effect of long-term trends on the expected number of extremes in generic time series, using analytical solutions and Monte Carlo simulations. We apply our method to study the effect of warming trends on heat records. We find that the number of record-breaking events increases approximately in proportion to the ratio of warming trend to short-term standard deviation. Short-term variability thus decreases the number of heat extremes, whereas a climatic warming increases it. For extremes exceeding a predefined threshold, the dependence on the warming trend is highly nonlinear. We further find that the sum of warm plus cold extremes increases with any climate change, whether warming or cooling. We estimate that climatic warming has increased the number of new global-mean temperature records expected in the last decade from 0.1 to 2.8. For July temperature in Moscow, we estimate that the local warming trend has increased the number of records expected in the past decade fivefold, which implies an approximate 80% probability that the 2010 July heat record would not have occurred without climate warming.
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Haitao Yin, Howard Kunreuther & Matthew White
Journal of Law and Economics, May 2011, Pages 325-363
Abstract:
This paper examines whether risk-based pricing promotes risk-reducing effort. Risk-based pricing is common in private insurance markets but rare in government assurance programs. We analyze accidental underground fuel tank leaks - a source of environmental damage to water supplies - over a 14-year period, using disaggregated (facility-level) data and policy variation in financing the cleanup of tank leaks over time. The data indicate that eliminating a state-level government assurance program and switching to private insurance markets to finance cleanups reduce the frequency of underground fuel tank leaks by more than 20 percent. This corresponds to more than 3,000 fuel tank release accidents forgone over 8 years in one state alone, a benefit in avoided cleanup costs exceeding $400 million. These benefits arise because private insurers mitigate moral hazard by providing financial incentives for tank owners to close or replace leak-prone tanks prior to costly accidents.
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Prediction and Impact of Sea Level Rise on Properties and Infrastructure of Washington, DC
Bilal Ayyub, Haralamb Braileanu & Naeem Qureshi
Risk Analysis, forthcoming
Abstract:
The city of Washington, District of Columbia (DC) will face flooding, and eventual geographic changes, in both the short- and long-term future because of sea level rise (SLR) brought on by climate change, including global warming. To fully assess the potential damage, a linear model was developed to predict SLR in Washington, DC, and its results compared to other nonlinear model results. Using geographic information systems (GIS) and graphical visualization, analytical models were created for the city and its underlying infrastructure. Values of SLR used in the assessments were 0.1 m for the year 2043 and 0.4 m for the year 2150 to model short-term SLR; 1.0 m, 2.5 m, and 5.0 m were used for long-term SLR. All necessary data layers were obtained from free data banks from the U.S. Geological Survey and Washington, DC government websites. Using GIS software, inventories of the possibly affected infrastructure were made at different SLR. Results of the analysis show that low SLR would lead to a minimal loss of city area. Damages to the local properties, however, are estimated at an assessment value of at least US$2 billion based on only the direct losses of properties listed in real estate databases, without accounting for infrastructure damages that include military installations, residential areas, governmental property, and cultural institutions. The projected value of lost property is in excess of US$24.6 billion at 5.0 m SLR.
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Current global warming appears anomalous in relation to the climate of the last 20000 years
Svante Björck
Climate Research, July 2011, Pages 5-11
Abstract:
To distinguish between natural and anthropogenic forcing, the supposedly ongoing global warming needs to be put in a longer, geological perspective. When the last ca. 20000 yr of climate development is reviewed, including the climatically dramatic period when the Last Ice Age ended, the Last Termination, it appears that the last centuries of globally rising temperatures should be regarded as an anomaly. Other, often synchronous climate events are not expressed in a globally consistent way, but rather are the expression of the complexities of the climate system. Due to the often poor precision in the dating of older proxy records, such a statement will obviously be met with some opposition. However, as long as no globally consistent climate event prior to today's global warming has been clearly documented, and considering that climate trends during the last millennia in different parts of the world have, in the last century or so, changed direction into a globally warming trend, we ought to regard the ongoing changes as anomalies, triggered by anthropogenically forced alterations of the carbon cycle in the general global environment.
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Nivedita Dutta & K. Narayanan
Science, Technology and Society, November 2011, Pages 333-350
Abstract:
There is a large concentration of chemical firms around Mumbai, and the Maharashtra Pollution Control Board has been actively monitoring them. Such monitoring is likely to have an impact on the productive efficiency of these firms. The firms argue that additional costs to minimise environmental damage have reduced their efficiency. We try to find out whether these water-polluting firms in the chemical industry around Mumbai are actually unable to cope with the additional cost of pollution abatement, or whether by using cleaner practices, are able to improve their efficiency, and support the ‘win-win' opportunities as claimed by the Porter Hypothesis. The study is carried out by estimating an Output Distance Function using a stochastic production function. The panel data of fifty water-polluting small-to medium-scale firms for three-year period of 2004-06 was collected in a primary survey of chemical industries around Mumbai. We find that the polluting firms are technically more efficient than those firms which adhere to pollution norms. Thus, the Porter Hypothesis does not hold for the sample.
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Consumer willingness to pay for appliances produced by Green Power Partners
David Ward et al.
Energy Economics, November 2011, Pages 1095-1102
Abstract:
The U.S. Environmental Protection Agency's Green Power Partnership (GPP), has over 1200 members purchasing nearly 18 billion kilowatt hours of green power annually. One possible motivation for firms to join the GPP is to raise their reputation for environmental quality among consumers. This research investigates the extent to which consumer preferences for a residential appliance are affected by information on whether or not the appliance manufacturer was a member of the GPP. Data for the study were obtained from a contingent choice exercise in an online survey of a national sample of adults. The results suggest that consumers are, on average, willing to pay an extra $48.52 to $70.95 for a refrigerator manufactured by a company that is a member of the GPP. These amounts appear to generally exceed the additional costs associated with using green power to manufacture a refrigerator and suggest that GPP could effectively be used to market consumer products.
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Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States
Matthew Kotchen, Kevin Boyle & Anthony Leiserowitz
NBER Working Paper, October 2011
Abstract:
This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.
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Can Global De-Carbonization Inhibit Developing Country Industrialization?
Aaditya Mattoo et al.
World Bank Economic Review, forthcoming
Abstract:
Most economic analyses of climate change have focused on the aggregate impact on countries of mitigation actions. We depart first in disaggregating the impact by sector, focusing particularly on manufacturing output and exports. Second, we decompose the impact of a modest agreement on emissions reductions - 17 percent relative to 2005 levels by 2020 for industrial countries and 17 percent relative to business-as-usual for developing countries - into three components: the change in the price of carbon due to each country's emission cuts per se; the further change in this price due to emissions tradability; and the changes due to any international transfers (private and public). Manufacturing output and exports in low carbon intensity countries such as Brazil are less affected. In contrast, in high carbon intensity countries, such as China and India, even a modest agreement depresses manufacturing output by 3-3.5 percent and manufacturing exports by 5.5-7 percent. The increase in the carbon price induced by emissions tradability hurts manufacturing output most while the real exchange rate effects of transfers hurt exports most.
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Temperature, Aggregate Risk, and Expected Returns
Ravi Bansal & Marcelo Ochoa
NBER Working Paper, November 2011
Abstract:
In this paper we show that temperature is an aggregate risk factor that adversely affects economic growth. Our argument is based on evidence from global capital markets which shows that the covariance between country equity returns and temperature (i.e., temperature betas) contains sharp information about the cross-country risk premium; countries closer to the Equator carry a positive temperature risk premium which decreases as one moves farther away from the Equator. The differences in temperature betas mirror exposures to aggregate growth rate risk, which we show is negatively impacted by temperature shocks. That is, portfolios with larger exposure to risk from aggregate growth also have larger temperature betas; hence, a larger risk premium. We further show that increases in global temperature have a negative impact on economic growth in countries closer to the Equator, while its impact is negligible in countries at high latitudes. Consistent with this evidence, we show that there is a parallel between a country's distance to the Equator and the economy's dependence on climate sensitive sectors; in countries closer to the Equator industries with a high exposure to temperature are more prevalent. We provide a Long-Run Risks based model that quantitatively accounts for cross-sectional differences in temperature betas, its link to expected returns, and the connection between aggregate growth and temperature risks.
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Species-specific responses of Late Quaternary megafauna to climate and humans
Eline Lorenzen et al.
Nature, 17 November 2011, Pages 359-364
Abstract:
Despite decades of research, the roles of climate and humans in driving the dramatic extinctions of large-bodied mammals during the Late Quaternary period remain contentious. Here we use ancient DNA, species distribution models and the human fossil record to elucidate how climate and humans shaped the demographic history of woolly rhinoceros, woolly mammoth, wild horse, reindeer, bison and musk ox. We show that climate has been a major driver of population change over the past 50,000 years. However, each species responds differently to the effects of climatic shifts, habitat redistribution and human encroachment. Although climate change alone can explain the extinction of some species, such as Eurasian musk ox and woolly rhinoceros, a combination of climatic and anthropogenic effects appears to be responsible for the extinction of others, including Eurasian steppe bison and wild horse. We find no genetic signature or any distinctive range dynamics distinguishing extinct from surviving species, emphasizing the challenges associated with predicting future responses of extant mammals to climate and human-mediated habitat change.
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Labor Market Effects of the Exxon Valdez Oil Spill
John Hore & William Carrington
B.E. Journal of Economic Analysis & Policy, October 2011
Abstract:
We study the labor market effects of the 1989 Exxon Valdez Oil Spill in Prince William Sound, Alaska, which was the largest U.S. oceanic oil spill prior to the 2010 Gulf Oil Spill. We find that employment and average earnings increased in 1989 when the cleanup effort was largest and there appears to have been little, if any, adverse effect on average labor market opportunities in later years. Increased wages elicited increased labor supply in the form of both in-migration of workers and increased weekly hours. While the labor market effects of the spill were largely beneficial, there is some evidence that the effects upon self-employed fishing boat owners in the region may have been more heterogeneous, with some owners signing lucrative cleanup contracts with Exxon and its agents while others did not. The existence of these positive labor effects does not address the significant environmental, psychological and social costs imposed on the region and on the communities whose livelihood and organization were affected by the spill.