Monday, November 23, 2015

In cost-benefit calculation of climate action, Bjorn Lomborg forgets benefits

Sol and I had a letter to the editor in the Wall Street Journal today, responding to an earlier editorial by Bjorn Lomborg.  Below is what we wrote.  The best part is that I am "Prof. Marshall Burke" and Sol is "Solomon Hsiang, PhD" and we are both at Berkeley.  Apparently bylines are not the purview of the WSJ fact-checker (although Sol does have a PhD and is at Berkeley).


Bjorn Lomborg's "Gambling the World Economy on Climate" (op-ed, Nov. 17) argues that emissions reductions are bad investments because of costBut he never considers the value of the asset we are buying. Smart policy should carefully weigh the costs and benefits of possible actions and pursue those that yield the strongest return for society. Mr. Lomborg became famous advocating for this approach, but now he seems to forget his own lesson.
Our research shows that the climate is a valuable asset and paying billions to prevent it depreciating is a bargain. Our recent study published in Nature shows rising temperatures could cost 23% of global GDP by 2100 -- and that there is a 50-50 chance it could be worse. Mr. Lomborg rightly advocates for lifting up the world's poor, but we calculate that failing to address climate change will cost the poorest 40% of countries three-quarters of their income. By 2030 alone, we show that climate change could reduce annual global GDP by $5 trillion.
These are only the effects of temperature on productivity. Other impacts will add to the price tag. For example, we estimate avoiding intensification of tropical cyclones from climate change is worth about $10 trillion. And warming could increase conflict roughly 30% in 2050; what is that worth?
Mr. Lomborg says that $730 billion a year in 2030 is too much to pay to avoid many trillions in losses. This math is easy.
Prof. Marshall Burke
Solomon Hsiang, Ph.D.
University of California, Berkeley
Berkeley, Calif.

What we know about climate change, conflict, and terrorism

Ever since Bernie Sanders' remarks about climate change causing terrorism, a lot of folks have been asking about what we know on this and related issues. I worked with Marshall and Tamma Carleton to put together this short brief for those interested in knowing what we know quickly. (For those looking for a long answer, see here.)

Summary points:
  1. Research clearly demonstrates that hotter temperatures cause more individual level violence (e.g. homicides in the US) and more large-scale violence (e.g. civil wars in Africa), and that extreme rainfall leads to violence in agrarian contexts.
  2. Climate change to date, via warmer temperatures, has likely increased the risk of conflict, although this has not yet been empirically proven.
  3. Attributing the Syrian conflict to climate change is difficult.  What we can say is that drought and hot temperatures increase the likelihood of these types of conflict.
  4. There is currently little evidence for or against a systematic relationship between climate and terrorism. 

Risky Business and Financial Disclosure

Nature recently requested clarification on whether I should have issued a financial disclosure for my recent paper with Marshall and Ted for a grant originating with the Risky Business Project, based on a inquiry from a concerned reader (at least one is here). For transparency, in case there are other concerned readers out there, our reply is pasted below.

The Risky Business Project provided a 1 year grant to Hsiang that ended in the summer of 2014. The grant was to work on new methods for estimating the economic impact of climate change in the United States with a larger research team comprised of researchers from Rutgers University, Columbia University, Risk Management Solutions and Rhodium Group. That work was released in the summer of 2014 as the American Climate Prospectus and then subject to peer review and publication as a book by Columbia University Press: “Economic Risks of Climate Change: An American Prospectus” in the summer of 2015 ( That research program was entirely independent of the diverse views of the members of the Risky Business Project, and none of those funds were used to support any of the work in our recent Nature publication.

At the time when Hsiang’s grant concluded, i.e. when the American Climate Prospectus was released in 2014, The Risky Business Project described itself as:

“The Risky Business Project is a joint partnership of Bloomberg Philanthropies, the Paulson Institute, and TomKat Charitable Trust. All three organizations provided substantive staff input to the Risky Business Project over the past 18 months, and supported the underlying independent research being released today. Additional support for this research was provided by the Skoll Global Threats Fund and the Rockefeller Family Fund. Staff support for the Risky Business Project is provided by Next Generation, an independent 501c3 organization.”

Thus there is no profit-driven element of the organization and Hsiang’s research funding ultimately came from philanthropic foundations, analogous to the Gates Foundation. Further, Hsiang has no financial interest in any of the organizations contributing to the Risky Business Project. For these reasons, Hsiang did not believe it was necessary or appropriate to disclose the grant as a financial conflict of interest at the time of publication. 

Nevertheless, due to this inquiry, Hsiang double checked this logic with members of the UC Berkeley administration to make sure this reasoning was consistent with the University’s view. He received a reply that confirmed this interpretation: 

“Based on the description of Risky Business that you provided, it would appear that it is a philanthropic sponsor of research and therefore would not benefit financially from the results of the research you published in Nature, nor do you have a financial interest in the affairs of Risky Business.  According to Nature's "competing financial interests" policy, authors are required "to declare to the editors any competing financial interests in relation to the work described."  As Risky Business can reap no financial benefit from your research and you have no financial interest in Risky Business, it does not seem to me that you have any obligation to disclose your previous Risky Business grant.  Indeed doing so would be misleading as it would erroneously suggest that you and  Risky Business have such interests.”

For all of these reasons, we do not feel that it is necessary to publish any correction.

Monday, November 9, 2015

El Niño and Global Inequality (guest post by Kyle Meng)

El Niño is here, and in a big way. Recent sea-surface temperatures in the tropical Pacific Ocean, our main indicator of El Niño intensity, is about as high as they were prior to the winter of 1997/98, our last major El Niño (and one of the biggest in recorded history). Going forward, median climate forecasts suggest this intensity will be sustained over the coming months, and could even end up stronger than the 1997/98 El Niño. This will have important global consequences over the next 12 months not just on where food is produced but also how it is traded around the planet.

First, a quick primer. The El Niño Southern Oscillation (ENSO) is a naturally occurring climatic phenomenon, arguably the most important driver of global annual climate variability. It is characterized by two extreme states: El Niño and La Niña. Warm water piles up along the western tropical Pacific during La Niña. During El Niño, the atmospheric and oceanographic forces that maintain this pool of warm water collapse resulting in a large release of heat into the atmosphere that is propagated around the planet within a relatively short period. ENSO’s impact on local environmental conditions around the planet are known as its “teleconnections.” To a rough first order, El Niño makes much of the tropics (from 30N to 30S latitude, shown in red in figure below) hotter and dryer and the temperate regions (shown in blue in figure below) cooler and wetter.

Countries where the majority of the population experience hotter conditions under El Niño are shown in red. Countries that get cooler under El Niño are shown in blue (reproduced from Hsiang and Meng, American Economic Review, May 2015).

There are two features of El Niño that have important implications on global food markets. First, El Niño creates winners and losers across the planet. Sol Hsiang and I have shown in a paper published in the American Economic Review Papers and Proceedings, that between 1960-2010, country-level cereal output in the tropics drop on average by 3.5% for every degree increase in the winter ENSO index. For a large event like 1997/98, or the one anticipated this winter, we estimate a 7% decrease in cereal output across the tropics. Conversely, the relatively more favorable environmental conditions experienced by temperate countries during the same year results in a 5% increase in cereal output. Interestingly, if you sum up the gains and losses across the world, you end up with a positive number: El Niño actually increases global cereal output. 

Second, El Niño impacts are highly spatially correlated, organizing winners and losers to roughly two spatially contiguous blocks across the planet: temperate and tropical countries (which are also mostly just countries south of 30N because there are few countries south of 30S). This means under El Niño, countries suffering crop failures deep in the tropics are also surrounded by neighbors that are likely experiencing similar food shortages at the same time. Why is the spatial scale of El Niño impacts important? Basic economics tells us that the primary driver for international trade is productivity differences across countries. When El Niño occurs, tropical neighbors that normally engage in bilateral trade experience similar crop losses and thus may be less likely to trade with each other. To find an exporter that experiences bumper yields under El Niño, tropical countries have to source food from temperate countries (i.e. North America, Europe, North Asia), that are much further away, for which the cost of trade is higher. The predicted result is that El Niño has two effects on countries in the tropics: it causes direct crop losses and limits the ability of imports to offset such losses. 

Is this happening? In ongoing work with Sol and Jonathan Dingel, we detect exactly these trade effects. From 1960-2010, when an El Niño occurs, cereal output fall in the tropics with some extra imports arriving. However, these imports do not offset all losses such that countries deep in the tropics experience large spikes in food prices. Stay tuned for that paper.

We think this is important beyond food prices during El Niño. In an article published in Nature in 2011, Sol and I, together with Mark Cane, detected that the likelihood of civil wars breaking out in the tropics doubles during strong El Niño years relative to strong La Niña years. Many have asked us about the mechanisms behind this large effect. We now think that direct crop losses together with the limits of trade during El Niño are important parts of the story.

What can be done? Sol and I recently wrote an op-ed in the Guardian on El Niño and its impact on global equality with some policy prescriptions. In the short-term, we argue that aid agencies, peacekeeping groups, refugee organizations, and other international institutions should be prepared to send food to the tropics as local conditions deteriorate. We also argue, in the long-term, that investments should be made to better integrate global food markets and improved access to other financial instruments such as like crop insurance. 

Finally, the spatial nature of El Niño events has similarities with that of anthropogenic climate change, which we know from Marshall, Sol, and Ted’s work is expected to generate winners and losers across the planet. As such adaptation to climate change will involve not just local investments but also global efforts to improve how markets redistribute the unequal effects of climate change.

This is a guest post by Kyle Meng, an Assistant Professor at UC Santa Barbara.