Wednesday, October 17, 2007

 

Global Warming Co$t$$$$

I haven’t had time to read the whole study itself but the Executive Summary does not encourage me.

Warming's Costs to Top Its Benefits, Study Says

The study is out of the University of Maryland’s Center for Integrative Environmental Research which, I’m sorry, makes it initially kind of suspect….I just can’t conceive of anyone in most of academia – and serious about staying in said academia - publishing anything that throws cold water on the current global warming hysteria. Further heightening my suspicions is this tidbit:

“…funded in part by the advocacy group Environmental Defense…”

Note the Post writer doesn’t indicate exactly which way that advocacy goes but you can be pretty sure that if it was a conservative or libertarian-leaning group, that detail would have been disclosed…and, in fact, later in the article, a reaction was noted from someone from the Property and Environment Research Center, which was duly noted as libertarian. Now funding by ED doesn’t automatically negate a study but just imagine a study, even tangentially funded by an oil company and with an opposing result…

Anyway, not sure exactly what we’re supposed to get out of the study beyond an increase in our general alarm:

“But the study's authors declined to put an overall price tag on climate change's future impact, saying it is impossible to predict how it would affect the U.S. economy on a broad scale.”

But they are willing to put the price tag on specific additional costs in specific regions:

“Not all regions of the country or sectors of the economy will be equally affected by climate impacts because of differences in climatic, economic and social conditions whose interplay influences coping capacities. For example, in the Northeast, the maple sugar industry—a $31 million industry—is expected to suffer losses of between 15 and 40% ($5-12 million) in annual revenue due to decreased sap flow. The region can also expect a decrease of 10-20% in skiing days, resulting in a loss of $405-810 million per year.”

Much of the summary is like this – outlining specifics on where the authors think warming is going to cost us. Yet surely there are some avoided costs in any potential warming but the summary doesn’t provide even one quantified example of such:

“For example, electricity demand in Massachusetts may increase by 40% in 2030 because of climate change alone, most of which will occur in summer months and require significant investment in peak load capacity and energy efficiency measures.”

That surely is worst-case scenario and one seemingly designed to plausibly ignore the positive effect of a warmer winter - because that would probably have a greater impact on the demand for heating oil (vice electricity) but no estimates of such savings are provided. (And how inartful is the wording "...increase by 40% in 2030..." - do they mean in 2030 the demand for electricity suddenly goes up 40% or are they telling us that such demand may have increased 40% by 2030.) But, to their credit, they do expound on the potential value of nuclear power to meet our future energy needs.

Ha! Of course they didn’t (I did mention this study came out of a public university with funding from ED, didn’t I?).

But here’s my favorite instance of global warming alarm found within:

“However, additional warming and the movement of agricultural areas mean not only economic losses for farms that lose production. They also add costs to farms that benefit from improved growing conditions because cultivation of new crops and changing farming practices may make prior investments in technology obsolete.”

Obviously, the authors of this study have no familiarity with the concept of a “sunk cost” but... prior investments are not a future cost. For example: Living in Maryland, you buy a $500 snow blower to make your life easier (and maybe even a bit more fun) on snow days. A week later, you start thinking about moving to Tampa. Now whether you move or not, that snow blower still cost you $500 and it certainly is not a cost of the move to Tampa just because it will have no relevance down there.

(Further, such observations highlight an obvious need for the authors to read some Joseph Schumpeter and his brilliant insights into Capitalism and what he termed “creative destruction”.)

Most problematic with the study is a lack of specific matching of costs of mitigation to the supposed costs of the warming. As such, the study seems most designed to just add to the cacophony of voices screaming for action, preferably government action…because it seems that most benefits economically those doing the screaming.

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