Oren Cass’ House Testimony on the Costs of Climate Change

Back in June, Oren Cass testified before the U.S. House Committee on the Budget on the costs of climate change. His testimony drew on the economics of climate change peer-reviewed research, in order to show (among other points) that humans do not face a climate crisis. Scenarios featuring harmful climate change, even in the standard models used by the UN and Obama EPA, are only projected to unfold over many decades. The alarmist camp either downplays or completely ignores the fact that humans will grow richer and adapt to whatever changes lie in store. The “consensus” projections still foresee humans in 2100 being much richer than we are today, with climate change policies merely influencing how much richer.

A Rising Tide Lifts All Boats

To illustrate how the public has been misled, Cass discusses the November 2018 release of the U.S. Global Change Research Program’s Fourth National Climate Assessment, or what is commonly called the NCA. The New York Times headline proclaimed, “U.S. Climate Report Warns of Damaged Environment and Shrinking Economy.”

Yet as Cass points out, no, that’s not what the NCA warned of. Rather than a shrinking economy, the NCA warned that climate change would mean a more slowly growing economy. Specifically, the NCA report suggests that America by the year 2100 would be 4.0x richer without climate change, but “only” 3.9x richer with climate change. Cass also illustrates the situation in terms of growth:

Per EPA (and notwithstanding the New York Times), the economy will still be growing. Assuming even a modest 1.5% annual growth rate, the damage from climate change represents two years of growth. In other words, a climate-change-afflicted America might not achieve until 2102 the level of economic prosperity that a climate-change-free America might achieve by 2100. [Bold added.]

When you think of the costs of climate change in these terms, it seems far less dramatic, doesn’t it?

Senator Markey Abuses the Science

Cass then illustrates a version of “the telephone game” in which a claim morphs upon each retelling. In this case, an outlier data point in one of the charts in the NCA showed a potential 10% loss of GDP from climate change, under extreme warming of 8°C of warming. This led a New York Times story to run the subheadline: “Reduction of Up to 10 Percent of GDP.”

Yet that takeaway is very misleading, because the NCA’s own analysis doesn’t contemplate such extreme warming. (After all, I could draw a chart showing 100% GDP loss in a scenario where the earth warms by 50 degrees Celsius and everybody immediately dies. It would be very misleading to say, “Murphy just showed the loss from climate change could be as high as 100%.”) As Cass explains in his testimony, the NCA actually projected much more modest warming:

But that level of warming [needed to reach the 10% GDP loss—rpm] is not contemplated by the NCA. In its “Higher Scenario,” the NCA estimates warming by century’s end of only 2.4–4.7°C, which would correspond in its damage chart to roughly 1–4% of GDP. This did not stop Senator Ed. Markey (D-MA) from announcing via Twitter that “According to the Trump admin’s National Climate Assessment, with no action, climate change will result in 10% GDP loss by 2090,” and that “A #GreenNewDeal addresses this climate reality.”

As this episode illustrates, what often happens in the climate change debate is that a particular claim from the literature is stripped of context and trumpeted to the public, leading them to believe that the situation is far more dire than it actually is.

Adaptation

We’ve seen that the National Climate Assessment (NCA) projected tolerable damages from climate change, especially when viewed in the context of impacts that will only occur over the course of many decades as the economy continues to grow.

Yet even the modest estimated costs are unrealistically high. As Cass notes, the in the fine print underneath one of the NCA’s graphics, it explains that “results assume limited or no adaptation.”

But of course, humans will adapt to a changing climate, and this will minimize its possible harm. Farmers will switch what crops they plant, people will adopt more air conditioning, and so on.

I hasten to add that hoping adaptation can cushion the blow isn’t some sci-fi pipe dream. As I explained in a previous post (which itself summarized analysis from Cass), some of the most pessimistic forecasts of the dangers of climate change contain absurd results. For example, they project that if a northern city like Philadelphia becomes as warm as a southern city like Houston, then it will have a far higher rate of heat-related fatalities in the year 2100 than Houston does right now. This is clearly nonsense, and the problem is that the study in question looked at the spike in heat-related deaths in Philadelphia during unusually hot summers, and then extrapolated. But of course, in reality if Philadelphia became permanently hotter—and ended up like Houston—then its residents would adopt more air conditioning just like the people in Houston do. Furthermore, people living in a warmer climate are better able to tolerate high temperatures; this is (partly) why the heat-related death rate in Houston right now isn’t as large as we would expect if we had only looked at Philadelphia mortality data.

Conclusion

In his recent testimony before the House Budget Committee, Oren Cass took pains to emphasize that he wasn’t “denying” the underlying climate science, but instead was showing how it had been distorted when converted into claims about economic impacts and the proper government policy responses. Since the forecasted climate change is projected to happen over many decades, one of the most robust “policy responses” is to make sure the market economy is left with the freedom to adapt. A steadily growing economy is one of the best ways humans can cope with climate change and thereby contain its costs.

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