The Unexpected Impact of Climate Change
Why is it important to study climate impact?
- To know the truth, the whole truth and nothing but the truth
- Climate change is impacting our daily life, now
- And probably more severely in the near future
- Inform climate policy
- Help to evaluate trade-offs
- Guide adaptation efforts
- Who is getting hurt, to what extent?
- What can we do to help?
Economists can help in two ways
- Evaluate trade-offs
- “I like to think that my greatest strength as an environmental economist is that I’m not an environmentalist”
- Economics is essentially about trade-offs
- At some point, as a society we are unwilling to sacrifice other societal welfares for the environment
- Healthcare
- Education
- Veteran’s welfares
Will it be worthwhile to:
- Provide Flint, MI with adequate clean water supply in the wake of the crisis?
- Immediately stop generating power from all fossil fuels (coal, natural gas, etc.)?
The second way economists can help
- The credibility revolution
- Correlation is not enough, we want “causal” relationship
- Especially important in complex social systems
- Policy prescriptions will be mis-leading if we instead focus on spurious relationships
- Climate change presents a unique challenge
- Climate is correlated with other geographic characteristics
There is a strong correlation between
- US spending on science, space and technology vs. Suicides by hanging, strangulation and suffocation
- Divorce rate in Maine vs. US Margarine consumption per capita
- US GDP vs. your age
…
Spurious Correlation
- Fact 1: A larger proportion of citizens in the US South believes in Christian fundamentalism
- Human species literally come from Adam and Eve
Fact 2: Climate is considerably warmer in the South
- Conclusion 1: Warmer climate causes people to believe in Christian fundamentalism
Conclusion 2: With 5 degree warming, Boston will become a fundamentalist town
What is wrong in the above analysis?
And it is the economists’ job to:
- Probe the actual causal mechanisms
- The use of:
- Natural Experiments
- Random weather fluctuations
- Understand societal impact of climate change beyond correlation
How Physicist works
- Run experiment
- Observe facts
- Repeat experiment until patterns emerge
Is this approach applicable to study climate change?
What we can do
- Weather is the realization of the underlying climate distribution
- Observe impacts of the same person exposed to different weather, at different times
- Observe impacts of different people, exposed to different weather, at the same time
How does climate change affect:
What does climate change have to do with beer???
- Barley yield will decrease by 17% under RCP 8.5, more so in Europe and Asia
- Supply shrinks, beer price skyrockets
- People will drink much less beer
What does climate change have to do with academic performance?
Picture yourself siting in a room, starring at the answer sheet for the PSAT. It is 95 degree outside, and the classroom does not have AC or a fan. Your face is full of sweats, and your cloth gets wet. You just want to breathe.
What do you think the exam is going to go?
Park (2018)
- New York City, Regents’ exam
- Needs a 65 to pass the exam
- Exam dates and times are fixed by subject
Regents exams
Comparing to taking the test on a day of 70F, taking the test on a day of 90F will:
- Lower the test score by 0.15 standard deviation
- 1/4 of the Black-White score gap
- 3/4 of the within-school Black-White score gap
- Lower the chance of graduation by over 10%
- That particular day has a persistent effect on future academic achievement
Picture yourself in the same situation, 95 degree without AC or fan. Your professor is up there talking jibber-jabber. And you just want to take a sip of your favorite ice-cream.
Do you think you can learn anything from the class?
Goodman et al. (2019)
- PSAT exam, repeated takers
- Measures temperature up to a year from the exam
- Measures an adaptation mechanism
Results
- Extreme heat in the past year significantly decreases PSAT score
- Sustained exposures are more damaging
- Only affecting weekdays, not weekends
What could be an effective adaptation mechanism for extreme heat?
Adaptation
- AC significantly mitigates impacts from heat
- Classroom w/ AC: virtually no effect from heat days
- Classroom w/o AC: negative effects are 4 times larger than average
- No AC in classroom or home: negative effects are 6 times larger
Human Capital
- Humans are susceptible to adverse climates
- Extreme Heat
- Extreme Cold
- Heat-related mortalities
- Reductions in cognitive capability
The climate and mortality link (Deschenes and Greenstone 2011)
- Extreme weather will increase mortality in the US
- Especially if temperatures are above 90F
- Temperatures below freezing are harmful too
Impact of heat and cold waves
- One more day above 90F increases mortality rate by about 1 in 100,000
- One more day below 30F increases mortality rate by about 0.6 in 100,000
- No significant effects between 30-90F
- Mortality effect from heat waves are almost completely offset by the installation of AC
- Humans adapt to climate better over time
- With the help of technology
Climate and Conflict
What does climate have to do with wars?
Some historical note
- Little Ice Age: 1300-1850
- Medieval society, agricultural production was still dominating output in most part of the world
- Conflict with increased frequency & prolonged duration
- The Hundred Years War (1337-1453)
- The Ottoman-Habsburg War (1526-1791)
- The Li Zicheng Rebellion (1629-1645)
- The Sengoku Period (1467-1600)
“Winter is coming, and conflicts are coming with it”
- Colder climate decreases agricultural productivity
- Less resource + more people: land, labor, and capital become scarce
- Conflict follows: fighting for scarce resources
Igiyun(2017)
- Dug up scrolls in the library, manually transcribed every war/battle in Europe between 1400-1900
- Measured average temperature over 50 years in a 0.5*0.5 degree grid cell
- About 1500 km2, the size of the Metro-Boston area
- Every degree of cooling cause 0.2-0.4 extra wars in a grid
- Effect is persistent: cooling 200 years before can still cause conflicts
- Indicates deeper societal change
Some modern evidence
- Higher temperature and excess rainfall induce:
- Inter-group conflicts: civil conflicts, wars, riots and land invasions
- Political Instability
- 1 sd change in weather -> 11% increase in conflicts
- Most evident in Sub-Saharan African (why?)
Inter-personal conflicts
- Inter-personal conflicts: assault, robbery, rape
- Extreme heat increases crime even in developed countries: USA, Australia
- Excess rainfall leads to violence in India, Philippines, Tanzania
- 1 sd change in weather -> 2% increase in interpersonal violence
Estimates on inter-personal conflict
Why?
We are not sure at this point, but here’s some suspected mechanisms:
- Agricultural productivity
- Non-agricultural productivity
- Income shock
- Population density
What is similar in all three cases?
- Compare individuals quantitatively
- Same individual exposed to different weather at different times
- Different individuals exposed to different weather at the same time
- Estimate the adverse effects of weather
- Reduced barley production
- Impaired cognitive ability / ability to concentrate
- Diminished resource outputs that are crucial to a society
- Impacts are transmitted within human society
- Beer prices go up, consumption go down
- Lower academic performance, later-life achievements
- Groups fighting for resources, leading to conflicts and wars
- Project that into the future
- Climate == Probability distribution of weather events
- We have: how societies are affected by some particular weather event
- Future impact = current impact * changes in the weather distribution
To make that happen, we need
- High-quality data on weather, measures of societal outcomes
- Comparing apples to apples
- Gender, ethnicity, income
- institutional settings
- Measuring adaptation if possible
- Apply irrigation for barley production
- Install AC in classroom, especially for under-privileged communities
- International assistance, robust local institutions
Takeaways
- Climate change is affecting our society right now
- Probably more so in the future
- More heats, droughts, floods, hurricanes
- Important to “do the math right”
- The role of adaptation
Questions
- What are the trade-offs involved in this case?
- What do you think is the best way forward?
- Will the situation be different in another place / under a different culture?
Taiwan’s problem
- Taiwan used to have three nuclear power plants, and are constructing a fourth (Nuclear IV)
- 20% of total power generation
- Fukushima Daiichi disaster hit in 2011, citizens of Taiwan were terrified
- What are the risks of a similar nuclear disaster?
- Massive protests against nuclear power on the street
- The Democratic Progressive Party (DPP, liberals) led the campaign to remove nuclear in the energy balance
- A failed referendum in 2014
- Candidate Tsai Ing-Wen ran on a nuclear-free platform in 2016, aim to achieve nuclear-free in 2025
- Tsai, a Harvard and LSE grad, won the election in 2016
- Began to implement her campaign promise of nuclear-free in 2025
- But there is just one problem:
- Taiwan didn’t have enough power generation capacity to begin with
- Alternative were coal-fired power plants, which were already under-capacity
The 8/15 power outage
- On 8/15/2017, six generators at the Tatan power plant fully tripped
- With limited backup generating capacity, the entire Taipei city blacked out
- Huge economic losses
- Hospital reported two incidents of stopped respirators, an ongoing surgery was cancelled
It is not only the black-out
- After the blackout, Tsai’s administration began increasing capacity for coal-fired power plant
- That leads to another problem: air pollution (and climate change)
- Increased capacity of coal-fired power plants just exacerbated the problem
- DPP constituents in the Southern part were especially hurt
- The Kuomintang (KMT, conservatives) led a huge anti-pollution campaign in 2017
- Demanding changes in energy and environmental policy
- More stringent environmental regulation
- Shifts in the energy balance
Tsai caved in
- Facing political pressure, Tsai walked back on her campaign promise
- A 2018 referendum successfully terminated the nuclear-free 2025 plan
- Nuclear IV is still on hold, but Tsai is facing increasing pressure to resume it
Questions
- What are the trade-offs involved in this case?
- What do you think is the best way forward?
- Will the situation be different in another place / under a different culture?
Agriculture
“We thank Lord for giving us this food.”
- Agricultural production depends on climate
- Plants need the right temperature and rainfall to develop
- Not too hot, but not too cold
- Not too dry, but not too wet
- When climate changes, so do agricultural productivity
Production-based studies
- Small-scale field experiments on one single crop
- Varying level of temperature, precipitation, and carbon dioxide
- Predict severe yield reductions
- Do not account for adaptation
The Ricardian Method (Mendelsohn Nordhaus and Shaw 1994, AER):
- Value of land == net present value of all future cash streams from land (David Ricardo)
- More productive lands will have higher value
- Climatic conditions determines agricultural productivity -> land values
Change in Land Value with a 5 Degree Warming
But wait, this is not the entire story
- Climate change not only increases the “average” temperature
- It also drives much more “extreme heat” days, harmful to most crops
- Without irrigation, extreme heats will be detrimental to crop development
Role of extreme heat (Schlenker and Roberts 2009, PNAS)
- After accounting for heat, climate change damages to agriculture are robustly negative
- 20% to 70% damage expected over the next 50 years
- Still room for adaptation: irrigation can mitigate the effect of extreme heat
