env econ chapter 5

the impact of global climate change

energy balance model

• At its absolute simplest, global temperature is determined by an energy ledger

  • energy in: shortwave solar radiation from the sun

  • energy out: longwave infrared radiation emitted back into space by the earth

  • greenhouse effect mechanism

greenhouse effect mechanism

• GHG trap outgoing infrared radiation

• this reduces energy out, creating temporary imbalance where energy in > energy out

• energy stores increase, driving global temp up

• warmer bodies emit more radiation → temp continues to rise until energy in = energy out again, hitting a new hotter steady state

climate sensitivity

• defines exactly to what extent a given increase in carbon concentrations shifts global temps

• calculation:

  • ΔT/Δt = (ΔT/ΔCO2) x (ΔCO2/Δt)

positive feedback loop

• amplifying

• high temp increases water vapour in atmosphere

• because water vapour is a potent GHG, it reduces energy out → accelerates warming

negative feedback loop

• stabilising

• high temp increases cloud cover, which reflects incoming solar radiation back into space

• energy in reduces & dampens warming

the faltering carbon sink risk

• annually, natural carbon sinks (oceans & land ecosystems) absorb 50% of human emissions

• does not mean we only need to cut emissions by 50% to stop warming

• sinks are under immense ecological strain

• between 2018 and 2023, German forests shifted from being a net carbon sink to a carbon source due to droughts, bark beetle infestations, and forest fires

• if global sinks collapse, warming will accelerate far faster than basic IPCC baseline scenarios predict

The Asymmetric Distribution of Wealth and Harm

• climate change damages are highly regressive

• low- & middle-income countries emit the least cumulative carbon but suffer the worst proportional damages

• they are geographically exposed to extreme heat & lack financial capital required for infrastructure adaptation

climate damage curve

• In integrated assessment modeling, damage is plotted as a function of temperature change

net losers vs temporary winners

• Under moderate warming scenarios, selected localized regions might see minor benefits (eg expanded Arctic shipping trade routes, decreased winter heating energy needs, or short-term higher agricultural productivity in Northern Europe)

• but, once warming crosses into high scenarios, the localized benefits are completely overwhelmed, and global aggregate costs vastly exceed benefits

non-linear destruction factor

• economic damages do not rise linearly

• they follow an accelerating quadratic or exponential path, because crossing regional climate thresholds triggers compounding multi-sector failures

  • eg infrastructure collapses, civil/military conflicts, systemic agricultural yield failures

transition realities → econ of net-0 transition

1. possibility vs price tag

2. the mckinsey net-0 estimate

3. the DNV best estimate forecast

possibility vs price tag

• data scientists say that a full transition to a net-0 emission economy is possible with current tech, but needs massive upfront capital reconfiguration

the mckinsey net-0 estimate

• to reach net-0 by 2050, global capital spending on physical assets for energy & land use systems would need to average $9.2 trillion per year

• represents an annual increase of $3.5 trillion over what is spent today

• mckinsey models what should happen to meet climate safety targets

DNV best estimate forecast

• model what is most likely to happen based on political and commercial momentum

• DNV forecasts show that while the transition is underway, current global efforts are structurally off-target to cap warming at 1.5°C, meaning society will concurrently face high transition costs & accelerating climate damage costs