Economics in the National Climate Assessment

by Fran Sussman

The draft National Climate Assessment (NCA)—which became available for review this past January–is the third to be produced since the Global Change Act of 1990 (P.L. 101-606) mandated that the U.S. Global Change Research Program (USGCRP) provide Congress and the President with periodic assessments of trends in global climate and the impacts of global change on natural and human systems in the U.S. Despite providing an impressive review of the literature on the science and physical effects of climate change, the assessment does not—intentionally—take the next step of assessing what we know about projected economic impacts and adaptation costs.

I did a search of the recent draft of the report—all 1100 or so pages –looking for the words “cost” and “dollars” or dollar signs. While these terms appeared a few dozen times, for the most part the references were to resources at risk or discussions of the importance of various industries, such as fishing or tourism, to local economies. In other cases, the reference was to historical examples of damages or adaptation costs associated with past events, such as hurricanes or droughts, or the damages or costs associated physical effects that have been linked to climate change, such as algal blooms or soil erosion. Only a handful of references were to estimates of the dollar magnitude of damages or the costs of responding to projected climate change.

To some extent, this lack reflects the fact that the peer reviewed literature does not contain a significant body of knowledge on the damages associated with projected climate change or adaptation costs (see October 18 blog on adaptation costs). Our understanding of the science and pathways by which climate change will affect human and natural systems far exceeds our ability to make quantitative statements about the physical impacts of climate change on human and natural systems, much less provide monetary valuations of these impacts. But to the extent that this economics literature does exist, it is not represented in its entirety—or even covered systematically–in the current draft of the NCA.

Pulling together the NCA is a massive undertaking, and the USGCRP and the government agencies and other institutions that contribute resources and expertise are to be applauded. Moving forward, the USGCRP is developing a sustained process that will build assessment capacity and “provide the scientific basis to inform and enable timely decisions on adaptation and mitigation” (see the USGCRP webpage for more information)—an ambitious and farsighted goal.

Bringing economic analysis and the economics literature into the NCA will not be a trivial undertaking.  Recognizing this, the USGCRP has formed a Social Sciences Task Force “to better integrate a broad range of knowledge and expertise from across the breadth of the social sciences in order to achieve its goals and objectives for the next decade.” Hopefully, by the time of the next assessment, the USGCRP will be able to make existing economic analyses more accessible to decision makers and policy analysts, and so meet a growing need and demand for economic analysis.

But more may be needed than the USGCRP is, realistically, in a position to accomplish.  Economic analysis is not an end in itself.  For ongoing research to be truly useful,  it must reflect the nature of the need for economic information to contribute to decision making.  USGCRP, funding agencies, and academic institutions should work together to identify critical research priorities, to disseminate good practices (for example, in the presentation of results and model output and the treatment of uncertainty), and promote comparability by encouraging the use of common socioeconomic scenarios or climate scenarios.

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