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I think the vibes have fully shifted on climate change damage estimates. Tyler Cowen posted this morning with a terse:
He's referring to this paper and this thread about it. They perform an empirical review of previous major estimates, focusing on replicating them and analyzing the methodology. One thing I found interesting is that they distinguished between damage estimates, themselves, and applications of damage estimates, like SCC. They say that the latter have already been show to be irreducibly uncertain, though even if the damage->SCC pathway was not irreducibly uncertain, they are arguing that since the damage estimates, themselves, are irreducibly uncertain, so too would be things like SCC.
They spell out multiple factors that create identification challenges and show how small changes to the inputs of prior models can result in huge changes in the outputs, in strange and unstable ways. They don't necessarily think prior authors did anything actively bad or malicious in their approach, just that the entire endeavor is probably doomed from the start:
Their tweet thread has the typical disclaimer needed to get out in front of the typical objections one would immediately hear upon taking such a position:
I feel a bit vindicated by the vibe change, because I had been arguing something similar a full decade ago at the old old old place, pretty much on my lonesome. Obviously, I didn't have the exact set of empirical critiques that these authors present today, but I feel like it's a good example of where you can have very strong theoretical knowledge in a related/relevant area (timescale-separated dynamical systems) that leads to a correct intuition along the lines of, "I don't actually have to know the details of the methods they're using (though I did look at several back in the day); I can't imagine they could possibly accomplish what they're setting out to accomplish, just because of the nature of the type of system they're working with."
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?
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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