as the erosion of shoreline occurring in Alaska now as a result of sea ice receding. These impacts were not foreseen but ought to be accounted for.

Bill Nordhaus commented that the IPCC report did not make an effort to synthesize what is known about impacts, which would have been helpful to modelers trying to represent impacts. What has not changed since early reports from the 1980s, he said, is that for high-income countries in the north, it appears that impacts could be relatively minor as far out as the end of the century. Nordhaus also remarked that impacts of migration within and between countries as a result of climate change need more study and interdisciplinary research—this is overlooked in most models but could have significant consequences in developing countries especially.

Calculating benefits, or damages averted, is alternately referred to as calculating the social cost of carbon. There is not wide agreement on the social cost of carbon, and Francisco de la Chesnaye remarked that getting some sort of agreement will be quite difficult. It is often present as a range of values. Bill Nordhaus noted that the global equivalent of a carbon price currently is around $2 per ton. Even with some suggesting $30 per ton and others more than $100 per ton, the price needs to come up significantly. As we begin implementing carbon trading and can demonstrate that it is not detrimental to the economy, then it will be easier to ramp up the price. Joel Smith pointed out that analysts must give thought to what drives perceptions—it is not purely economics. Dallas Burtraw supported this observation and said that a limitation of current benefit analysis is that it does not account for the sovereign value consumers might place on non-use values on resources—issues such as species extinction hint at this. In focus groups, the thought of species extinction sent consumers’ willingness to pay skyrocketing, but environmental economics cannot frame this response well. Leon Clarke also remarked that the Department of Defense is paying more and more attention to climate change. He said that citizens certainly pay a lot more for the military than would be economically attractive using any type of discount rate, and thus there seem to be non-economic assumptions when dealing with something that is viewed as an existential threat.

On the topic of valuing impacts across different regions and timeframes, Adele Morris questioned what could be drawn from the literature about revealed preferences concerning contemporaneous wealth redistribution. Richard Newell replied that Partha Dasgupta of Cambridge University has drawn a distinction between these sorts of transfers within time, across geographies, for things for which people do not feel a responsibility, such as a hurricane. People might, however, feel responsible for the fate of future generations where climate change is concerned (Dasgupta, 2007). Bill Cline’s recent analysis of potential agricultural impacts suggests that damage will be greatest near the equator, i.e., in developing countries. Damage in Africa and Latin America could range from a 15 to a 30 percent reduction in agricultural potential, and losses in India could be even higher (Cline, 2007). Marilyn Brown mentioned a report by the National Conference of State Legislators that provided some estimates of more localized climate impacts and costs. Impacts at a state level could translate, for example, to displacement of public investments in other areas, a possibility that makes the issue more compelling. Brown commented that more research on such impacts would be valuable.

Catastrophic Damage

In the economic modeling community, catastrophic damage is often discussed in terms of a fat-tail distribution (as opposed to a normal distribution). Martin Weitzman at Harvard University has written extensively on the importance of this approach, and Bill Nordhaus borrowed a quote from Weitzman to summarize the point, “The catastrophic insurance aspect of a fat tail unlimited exposure situation could dominate basically everything: the discounting, the risk, and the consumption smoothing” (Weitzman, 2009). Nordhaus indicated that the challenge for the modeling community is to think about how and where this issue and situation apply, and the ramifications for analysis. Dimitri Zenghelis remarked that we do not know with precision what the world will look like in the future or which regions or groups of people will be most adversely affected, but we do know that there are possibilities for high-impact/low-probability events, and the potential for catastrophic risks is bound to be an essential part of assessing



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