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In a classic move, I'm going to side step the point and rant about Economists and their obsession with observational statistics.
Economists have an annoying tendency of making selective use of math. I empathize. Hard Sciences have the luxury of operating in closed systems. Economics relies on a representative model of the real world, and LLMs are proof that such a model takes a minimum of trillions of data points. Economists get 1 data-point every quarter, at best.
This claim can be extended to most economic studies, many of which parroted as fact.
It is annoying on 2 levels. First, the same lack of data points doesn't deter Economists from making wide claims about all sorts of other topics. If you fashion yourself a statistician, then be consistent in the weakness of your posteriors. Second, if they fashion themselves as mathematicians, then they should consider studying a sub-field outside of Bayesian statistics for once.
I get what the authors are saying, but there are other methods for causally linking the economic impacts of climate change. Climate change when defined as 'increase in average worldwide temperatures, and increase in local temperature swings', is real. There is statistical consensus on that claim.
Higher temperatures increase world wide energy demand. For the first time, northern temperate areas need to purchase air-conditioners, ie. increased spending without productivity gains. The increased heat in tropics makes afternoon work nigh-impossible reducing productive labor hours. These increases are causally linked to economic harms. The magnitude & scaling characteristics of said harm need to be computed, but the direction of harm is obvious.
Increasing climate uncertainty affects farm yields. It increases insurance costs for everyone in the food supply-chain, with zero productivity gains. Increasing flood likelihood in places like Miami is making them impossible to insure. That's causal. Bleaching of corals is causally linked to rising ocean temperatures which is causally linked to diving related tourism in South East Asia. I could keep going.
There are causal economic opportunities too. The opening of year round Arctic trade-routes and the availability of somewhat fertile southern-Siberian lands should help increase GDP in Russia and Kazakhastan.
The authors correctly point out that nations are often going through events that are more disruptive than climate change (economic liberalization in India, Genocides in Africa). These events overwhelm the measurable impact on economics due to climate change. But of course. That's trivially correct. Trying to use observational studies on chaotic systems was always a fools errand. Like trying to tighten a bolt with a screwdriver.
There are direct and causal economic impacts of climate change. We can disagree on the extent and what regions would be worst affected. We can disagree on whether disproportionate impact on the tropics due to disproportionate consumption from temperate zones warrants a disproportionate burden towards energy transition. We can disagree on whether these impacts will bear out over the new few years, decades, or generations. But there will be an impact, that's for sure.
Trillion dollar economic decisions are routinely made in presence of little evidence. At a national level, most economic experiments have trillion dollar implications and they have a spotty track record at best. After all, Communism was a world wide economic experiment that lasted generations.
Climate change driven economic policies are comparatively conservative. The transition to renewable energy & full-electrification in appliances was inevitable. Funding the infrastructure build-out for renewables & large-scale electrification made sense even if climate change wasn't real. Energy independence & decreasing reliance on exhaustible resources were worthwhile goals in-and-of-themselves.
Personally, as much as left-elite institutions have hand wrung (virtue signaled?) about climate change for decades, their actions haven't matched the urgency of their speech. Even at the peak of their powers, there was limited action towards combating climate change. If a vibe change leads to a further reduced action on that front, then we may undershoot the infrastructure build out needed to combat even the conservative estimates of climate change related economic impact.
I am not ranting at the authors specifically. The paper is solid and the conclusions are correct. I just wish economists didn't treat observational statistics and RCTs as the only means for establishing truth.
I'm partly responding to the self-congratulatory tone of climate-change-"skeptics" in the linked MR thread's comment sections. They will read 'no evidence = not happening'. I should know better than engage with this real but distant straw-man. But, alas.
Does it? Why not burn gas? Gas shows up when its needed, rain or shine.
There's no evidence that renewables alone can run a competitive industrial economy. It may even be that a renewables-only grid is innately unstable due to the different electrical signatures that solar outputs as compared to water-boiling huge-metal-rotor spinning power plants, which have a certain frequency stability rooted in physics. It's fine to try new things but the risk of failure should be considered, especially if jettisoning a mature system that underpins our entire civilization.
Why not transition to nuclear power? France shows us that a nuclear electrical grid is possible in principle and the changeover can be conducted quickly. Renewables take decades and decades to build out. The countries that have invested heavily in renewables and replaced their coal power base with renewables (China has not done this) seem to suffer very high power prices and often rely on French electricity exports.
Perhaps the issue is that constructing anything in the West is far more expensive than it should be and it's not renewables specifically that is the problem. But it's not clear that renewables are a path to a competitive, reliable grid. No such competitive, reliable, renewable grid has emerged without relying on hydro.
Climate change driven energy policy is not conservative, it doesn't even make sense in climate terms. Once CO2 is emitted, it's going to stay there and keep warming the planet regardless of whether we keep burning coal or not. Transitioning from fossil fuels only marginally slows the rate at which the climate heats up. A far more economical way of controlling planetary temperature is using sulphate aerosols, which have a direct and potent effect.
It's good to move away from coal and oil in order to reduce air pollution. But it's also good to have cheap energy. Cheap energy is at the very heart of industrial civilization and is required for just about everything. What good is it investing heavily in renewables and ending up like Germany, having your chemical and manufacturing sectors wither away without Russian gas?
A renewables only grid is obviously possible, it just involves using a lot of batteries to create synthetic inertia and last through the night, which is just power engineering. It’s not some magic future technology, it’s just a question of execution. There are tons of privately funded solar projects just waiting for utility hookup. Also, there are renewables without the base load problem. Hydro is the biggest one in use right now, but next gen geothermal seems pretty promising (thanks Texas!), and as you pointed out nuclear is great though technically not renewable.
I do agree that Germany did some very silly stuff, and you shouldn't prematurely kill fossil fuels, but we are getting to a point where solar can compete on its own merits and at that point we should let it win.
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Everyone does not have a self-sufficient domestic supply of gas. Gas does not show up when the strait of Hormuz is blocked. Gas is a geopolitical liability.
Gas pollutes. Tail pipe emissions are a major issue in dense cities, which are the norm outside the US. The noise and tail pipe emissions benefits are sufficient reason to electrify or at least hybridize all cars.
Going by cursory google search, Natural Gas will run out between 2060-2070, is an energy transition isn't started. If it is inevitable, why wait for the 11th hour ? Gas is an end-of-life technology. On the other hand, solar and wind are becoming cost competitive with gas (as of 2026), their YOY cost reduction curve implies it will only get cheaper with time.
I should have clarified. I put nuclear in the renewables bucket. Agree with you on all counts on nuclear.
Nuclear as flywheel aside, concerns about the duck curve have been mitigated by the decreasing price of batteries. Seasonal variations will remain, but daily variations can be managed.
No need for a 'perhaps'. It is THE problem plaguing the west right now.
Fair enough, my ideal energy policy is stopgaps now + nuclear while pushing towards nuclear fusion or at least breeder reactors for a longer term solution, I don't think we're far apart.
On the other hand, there are opportunities for gas that aren't exploited, fracking in much of the non-US world. For example the UK still has a decent amount of North Sea resources but they refuse to offer new exploration licenses. In Australia we had all these politicians investing in 'green hydrogen'. $17 billion AUD has already been committed...
Renewable power economics seems like an overly complicated system with solar and wind and batteries, requiring all this sophisticated grid management, power going back and forth, lots of new HVDC, negative prices at noon. I know there are all these studies saying that renewable energy has lower levelized cost of energy or some similar statistic yet I just can't bring myself to believe them when real-world power prices seem to rise and rise continually and the countries that invest most in renewables have the most expensive electricity, unless they're hydrologically blessed.
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Economists definitely get more than one data point a quarter. I think you’re handwaving away a whole field without good reason.
I exaggerated for effect, but the point still stands.
Economics is useful. They are generally correct that "If someone affects GDP, then it is significant". On the internet, I observe a hubris driven undercurrent of (pop?)-economists who believe the inverse as well : "A thing isn't real until is shows up in GDP numbers".
Much like X-ray machines, economics is useful. But the MRI and ultrasound machines exist for a reason. (My recent shoulder dislocation causally affects my analogies, that's for sure)
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How do you have any idea what order of magnitude the impact will be? How do you have any idea what the sign of the impact will be?
Sign - yes. It will be a net negative.
Magnitude and scaling characteristics - no.
All the promising positive effects are associated with warming in the north. Based on my previous research, Canada's North is a rocky shelf with a thin soil layer and Siberia's newly defrosted regions will be acidic marshes. There may be agricultural gains in the southern reaches of the Lena/Ob/Yenisei, but those will be limited. The Northern trade routes will reduce dependency on the Panama and Suez, but won't create any novel ground breaking trade routes per-se. Unless birth rates see radical change, the north simply isn't a place with enough people to require the sort of shipping activity that would benefit from Northern trade routes.
If I had to guess, the impact equation would be super-linear with a near impossible to compute constant term.
Economic loss = Humanly_computable_linear_term * temperature_rise^(1<super_linear_exponent_a<2) + Expected_penalty_from_catastrophic_outcomeTo me, catastrophic outcomes = simultaneous famine in multiple bread baskets, AMOC weakens, irreversible drop in marine life.
The discussion devolves into a philosophical shouting match because the
Expected_penalty_from_catastrophic_outcomeinvolves multiplying infinitesimally small probabilities with negative infinities. The combination leads to a sensitive tail that can collapse to zero or balloon to negative infinity depending on which set of plausible assumptions you start with. Objectivity goes out the door at that point.More options
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Yeah it’s literally impossible. First, climate science itself is based on thousands of different interactions that are hard to model out with degree of accuracy.
Then teasing out that highly uncertain future impact on the economy is nigh impossible.
A limited precaution principle is reasonable but a destroy the economy one isn’t
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And this is why I am extremely skeptical of "Pigouvian" taxes. If you don't know the sign and magnitude of the externality, you can't tax (or subsidize) it to compensate.
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