Transcript Climate Change Impact Assessment

Economic Vulnerability under Climate Change
: With an Agricultural Emphasis
Energy
Bruce A. McCarl
Distinguished Professor of Agricultural Economics
Texas A&M University [email protected]
http://agecon2.tamu.edu/people/faculty/mccarlClimate Change Adaptation
bruce/
Climate Change Mitigation
Climate Change Effects
Ramblings from an Ongoing and Never Ending Effort
Presented at the Climate Change Class, March 2003
Economic Issues in Climate Change
• Assessment of Impact
• Externality and Market Failure
• Mitigation Policy
• Cost Benefit Analysis
Economic Issues – Assessment of Impact
• Measuring Economic Value
• Income Distribution
• Inter-generational Equity
Basic Setting
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Quantity
Basic Setting
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D
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a
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d f
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g
CS0 =a+b+d+f
PS0 =c+e+g
TSW0 =a+b+c+d+e+g
CSc =a
PSc = b+c
TSWc =a+b+c
∆CSc =-b-d-f
PSc = b-e-g
TSWc =-d-e-f-g
Quantity
Basic Setting between regions
D
Sregion1
Sregion2
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r
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demand
region1
Quantity
region2
Basic Setting between regions
D
SCCregion1
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Sregion1
Sregion2
SCCregion2
demand
region1
Quantity
region2
Basic Setting between regions
No Climate change
Sregion2
Sregion1
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ED
region2
region1
Quantity
Basic Setting between regions
No Climate change
D
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Sregion2
Sregion1
ED
P
Qs1
Qd
Qs2
region2
region1
Quantity
Basic Setting between regions
With Climate change
SCCregion1
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P
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Sregion2
Sregion1
SCCregion2
ED
Region 1 loses mkt share
and produces less
P
PCC
Region 2 gains mkt share
and produces more
QCC
QCCs1
s1
Qs1
region1
Qd QCCd
QCCs2
Qs2
region2
Quantity
Consumers gain
All producers gain (I think)
Economic Issues – Cost/Benefit Analysis
• Extent of Damages
• Uncertainties in Impact Assessment
• Assumptions on scope of impact
• Economic approach to estimating welfare
Would Climate Change
Hurt/Benefit ?
Assessment Methodology - Summary Steps
• Identify sectors and physical effects
• Determine spatial and time scales
• Develop scenario regarding non-climatic factors
• Obtain GCM projections
• Chose analytical framework (econ theory foundation and
models to be used) and adapt or estimate models
• Assess physical impact of GCM projections
• Make assumptions about unmodeled phenomena
• Incorporate physical impact into economic models
• Incorporate data on possible adaptations to climate change
• Do analysis including sensitivity analysis
Scope of Assessment
• Identify sectors and physical effects
– The question relates to the choice of sector of the economy for
impact assessment – agriculture, water, etc. Can this really be
treated independently?
• Economic and geographic scale
– Firm level or sector level assessment, regional or national or
international
• Time frame
– Climate change is a long-term phenomenon that requires analysts
to decide the time frame of analysis, which would determine
impact assessment results
– Dynamic Vs Static Analysis
Scenario Development
• Non-climatic Scenarios
• Climate change Scenarios
• Time frame and uncertainty
Non Climatic - Socio-Economic
Scenarios
• Population
• Demand (Product/Input Markets)
• Economic growth
• Economic structure
Non climate scenarios
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Include at least two scenarios "baseline" or "reference" scenario and
"mitigation scenario"
Assumptions e.g. economic growth, technology, etc.
Figure TS.1: Qualitative directions of SRES scenarios for different indicators
Source: CC 2001 mitigation p. 24 at http://www.grida.no/climate/ipcc_tar/wg3/015.htm#24
Climate Change Scenarios
• Synthetic scenarios
• Assumed changes in temperature and precipitations
• Kaiser et al.; Mendelsohn, Adams et al.
• Global Circulation Models (GCMs)
• Model based predictions of temperature and
precipitations for certain geo-graphic resolution
• US national assessment, Rosenzweig and Hillel
Obtain GCMs Projections
• Data Distribution Center of IPCC maintains GCM
projections (http://ipcc-ddc.cru.uea.ac.uk/)
• Decide GCM scenarios whose projections you would use
(Ref. Guide to GCM Scenarios - DDC)
• Visualization pages /Downloadable files
• Chose GCMs that have better calibrated base climate for
the assessment country/region
• Compuate percentage changes in temp. and precipt for a
grid and apply to weather stations
• Choose more than one GCMs for sensitivity analysis
GCM Projections climate change
- What is projected
Climate
models
predict
increasing
emissions
will cause
a temp
increase
Source : IPCC AR4t
Where we are
GCM Projections
Precipitation Projections
John Nielson –Gammon, TAMU
GCM - Geographic Scale
• Circa 2001
• HADCM: 3.75 x 2. 5 deg. (96X72 grids)
• CGCM: 3.75 x 3.75 deg. (96*48 grids)
• GDFL: 7.5 x 4.5 deg. (48*40 grids)
• Texas was covered by 4 grids
(Rosenzweig and Hillel)
Time scale What is projected
Hotter
Effects to Consider
Temp
Rainfall CO2 SeaLevel ExtremeEvents
Plants
Crop and forage growth
Crop /forage water need
X
X
X
X
Soils
Soil moisture supply
Irrigation demand
Soil fertility
X
X
X
X
X
X
Animals
Performance
Pasture/Range Carry cap
X
X
X
X
Irrigation Water Supply
Evaporation loss
Run-off/general supply
Non-AG competition
X
X
X
X
X
X
X
X
X
X
X
X
Other
Water borne transport
Port facilities
Pest and diseases
Insurance
X
X
X
X
X
X
X
X
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X
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X
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X
Choose Analytical Framework
• Spatial Analogue/current data
• Structural Approach
Analytical Framework - Spatial Analogue
• Ricardian Land Rent Approach
• Profit Function Approach
• In both cases
EconValue = f(controls,climate)
Analytical Framework - Structural App.
• Modeling biophysical and physical
sensitivity to climate change
• Modeling demand/supply sensitivity to
unmodeled climate sensitivity
• Integrated Assessment Modeling
Appraisal Approaches
• Physical assessments that only consider
changes in physical character (e.g.
changes in yield)
• Changes in cost as estimated in Chen and
McCarl (Land rent, and Profit)
• Welfare estimates (market and nonmarket)
Physical Impacts to Economic Impacts
• Estimate physical impacts using
structural or spatial analogue
• Make assumptions about unmodeled
phenomenon
• Incorporate physical impacts into
economic/empirical models
Analytical Framework
Climate Scenarios –
GCMs
Crop Simulation –
regional crop yields (dry and irrigated)
regional irrigated crop water use
Hydrologic simulation – irrigation water supply,
Expert opinion –
livestock performance,
Range and hay simulation and calculation -livestock pasture usage,
animal unit month grazing supply
Other studies –
international supply and demand
Regression –
pesticide usage
Economics –
ASM sector model
Adaptations to Climate Change
• Sensitivity vs Vulnerability
• Nature of Adaptations
• Producers
• Markets/Policy
• Technology
• Cost of Adaptations
Analysis and Senstivity Analysis
• Analysis
• Assumptions and limitations
• Policy relevance/Know your audience
• Sensitivity Analysis
• Identify factors of sensitivity
• Analyze results within realistic bounds
Selected Assessments
Fischer et al. (1996)
Mendelsohn, Morrison, and Andronova
(2000)
U.S. National Assessment (Adams et al.)
Assessment - Fischer et al. (1996)
• Scope: Global (112 sites from 18 countries)
• Sector: Food production
• Timeframe: 2030, 2060
• Socio-Econ Scenario: Pop. and Tech (Ag.)
• GCMs: GISS, GFDL, and HADCM models
• Assess. Meth.: Structural approach (Ag.)
• Adaptations: Two levels of adaptation
• No major global loss in global production of food
• Marked regional differences in impacts
Assessment - Mendelsohn, Morrison, and
Andronova (2000)
• Global (184 countries)
• Agriculture, Forestry, and Coastal Areas
• Timeframe: 2060
• Socio-Econ Scenario: Pop. and GDP growth
• GCMs: Assumed 2 deg. temp. increase
• Assess. Meth.: Spatial Analogue
• Adaptations: Implicitly imbeded in model results
• $0.278 bil. loss, with $215 bil. from ag.
• OECD gains $69 bil., while rest of world loses $348 bil.
U.S. National Assessment
• Scope: National
• Sectors: Agri., Forest, Water, Coastal Area, & Health
• Timeframe: 2060
• Socio-Econ Scenario: Only climate changed (Ag.)
• GCMs: HADCM and CGCM
• Assess. Meth.: Structural approach
• Adaptations: Planting schedule, tech., market
• $0.5 bil. loss, with $12.5 bil. gain
• Gains from trade
Emerging or Untreated Issues in Assessment
• Probability and severity of extreme events
• Valuation of non-market impacts (loss of life and bio-diversity)
• Distributional issues (weights)
• Aggregation and extrapolation from limited geographic studies
hides heterogeneity of responses to climate change
• How can we alter policy/research innovation investment to
achieve a more desirable mix of CC effects