Damages of Climate Change

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 Agriculture Sea Level Rise  Forests Water Supply Increased Energy Use    Insurance Health Air Pollution  Water Pollution Migration                                    Human amenity Ecosystem and  biodiversity lossExtreme weather events 

Agriculture

Climate change may also produce gains for the agriculture sector in some regions, even in the United States.  As climate change occurs, the higher atmospheric concentrations of carbon dioxide may increase photosynthesis.  Laboratory experiments have shown that the anticipated doubling of CO² atmospheric concentrations could increase crops such as wheat, rice, soybeans by 34%.  These same experiments also suggest that climate change may induce a 40% increase in maize and sorghum crop yields{3}.  A most recent study also suggests that crop yields of citrus fruits and tomatoes may also increase as a result of climate change{5}.  However, it is disputed whether the results of laboratory experiments can be replicated in open field conditions due to potential limits on the availability of water and nutrients {2,4}.

Because of the disagreements concerning the effects of climate change on crop production, estimates of damages to agriculture are equally conflicting.  The discrepancies in estimates listed below are primarily a product of differing assumptions about the effect of CO2 fertilization, the assumed changes in temperature and precipitation, and the inclusion of adaptation and trade effects {3}.

The results of some of the more prominent studies concerning the impacts of climate change are presented in the table below.

Damage Estimates of the Agriculture Sector

Sources:   Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996; The Impact of Climate Change of the United States Economy.  Cambridge:  Cambridge University Press, 1999. 

Sea Level Rise

 Listed in the table below are several studies that have estimated damage caused from sea level rise, the assumptions of these studies, and their actual cost estimates.

Damage Estimates of Sea Level Rise

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996. 

Forests

damages were  based on an early study by Sedjo and Solomon (1989), who estimated equilibrium doubling of CO₂ would decrease the biomass boreal forests by 40%, decrease temperate forests biomass by 1.3%, and increase tropical forests by 12%{2,3}. 

Transient effects over as much as three centuries are expected to be much more severe.  While the boundaries for growth of species will migrate poleward 600 km-100 km over the next century, forests can normally only adapt to a 100 km-200 km migration within this time span. As a result, dieback within the low latitudes is expected to exceed growth in the poleward boundaries{2,3}. As a result, forests in the Great Lakes Region could lose 23-54% of this biomass while forests in the Western Region may lose up to 40% of their biomass{2,3}.

Listed below is a table of models that have estimated the impacts of climate change on forests, the major assumptions of these models, and damage estimates.

Damage Estimates of Forest Loss

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996; The Impact of Climate Change of the United States Economy.  New York:  Cambridge University Press, 1999. 

Water Supply

Due to anticipated changes in precipitation, climate change may place considerable stress on water supplies in some areas.  Changes in the rates, timing, and intensity of precipitation combined with changes in evapotranspiration rates will ultimately decrease soil moisture.  If precipitation in some area actually decreases or does not increase enough to account for increase evaporation rates induced by increasing temperatures, this disparity between precipitation and evaporation rates will lead to decreases in soil moisture {3}. 

Coastal areas are another region that will potentially suffer from considerable stress on water supplies.  In many coastal areas affected by sea level rise, saltwater will likely intrude freshwater supplies.  Thus, considerable stress will be placed on the water supplies of these areas as well {3}.

Damages Estimates of Stress to Water Supply

Sources:  Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996; The Impact of Climate Change of the United States Economy.  New York:  Cambridge University Press, 1999; Global Warming:  The Economic Stakes.  Washington, D.C.: Institute for International Economics, 1992.

Increased Energy Use in Cooling and Heating

Due to increasing average temperatures, climate change is anticipated to increase cooling costs for some regions and decrease heating costs for other areas.  The EPA has estimated a 20-30% increase in electricity demand in the South; a 10-20% increase in the Rocky Mountain and North Central States; a 10-20% increase in California and the Mid-Atlantic states; and a decrease in energy demand in the most northeastern states{2}. However, its net effect on energy costs is highly disputed.  

The table below suggests some of the different estimates economics have provided for increased energy use.

Damage Estimates of Increased Energy Use

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. Cambridge:  Cambridge University Press, 1996;The Impact of Climate Change of the United States Economy.  Cambridge:  Cambridge University Press, 1999. 

Insurance

The insurance industry has been burdened by insurance claims by a string of extreme weather events since 1987.  If climate change signals a trend toward increase frequency and severity of storms, then insurance companies may not be able to honor their contracts, and will thus weaken other important economic sectors such as banking.  To prevent such an occurrence, insurance companies may have to increase premiums or deny to coverage to some people living in the climate change-expanded areas of vulnerability{4}.  Regardless of which of these scenarios becomes reality, either case is likely to have significant impacts on social and economic welfare. 

Health

The impacts of climate change on health are numerous and varied.  Climate change may increase the number of heat-related deaths, the occurrence of respiratory diseases, and instances of vector-borne infectious diseases.  However, it is anticipated that the number of winter related deaths will decrease.  Nevertheless, there is a general consensus that the number of deaths will more than off-set the decrease in winter related mortality{3}. 

According to various studies, there is a U-shaped relationship between death and temperature, with mortality increasing as a product of temperature extremes.  Consequently, the lowest death rates occur when temperatures remain between 16^oC and 25^oC{3}.  

Cline (1992) and Faukhauser (1995) used a statistical analysis by Kalkstein (1989) that sought to predict the relationship between death and temperature to estimate the increased mortality rates that may occur as a result of climate change.  According to their estimates, human mortality may increase by 27-40 persons per million in population, depending on the rate of climate change.    Using this prediction as a guideline, this increase in human mortality translates into at least 6,000-9,000 additional deaths annually for the US population{3}.

Damage Estimates of Increased Human Mortality Rates

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996. 

Due to changes in temperatures and precipitation patterns, climate change may also increase deaths by expanding the area in which disease-carrying insects can live.  For instance, the World Health Organization has suggested that area in Ethiopia, Indonesia, and Kenya that were previously unaffected by such diseases, may be invaded by disease-carrying vectors.  A study on Indonesia has predicted a 20-25% increase in the number of malaria cases by the end of the twenty-first century.  A global study predicted a 10-30% increase in malaria cases{3}.  Cline (1992) addresses the issue, but makes minor efforts to quantify damages, commenting that a mere .5% increase in annual health costs would be over $3 B{2}.Although studies concerning the potential increases in Malaria cases in the United States are inconclusive, it is recognized that climate change will have a indirect effect on mortality rates in other regions by introducing new areas to deadly diseases. 

Air Pollution 

Climate change is also expected to increase urban problems with air pollution.  Numerous studies have confirmed that there is a positive relationship between temperature and atmospheric concentrations of ozone.  The EPA has estimated that a 2.5^oC increase in global temperatures would increase ozone concentrations by 10%.  This would double the number of cities out of compliance with current air quality standards{3}.    

The results of studies conducted on this issue appear in the table below. 

Damage Estimates of Air Pollution

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. Cambridge:  Cambridge University Press, 1996. 

Water Pollution

In addition to decreases in air quality, climate change is also anticipated to have negative impacts on water quality due to declines in runoff and river flow.  Since rivers often carry wastes, decreases in river flows will increase the amount of pollutants that will have to removed from areas through cleanup efforts.  Furthermore, increases in temperatures can also decrease the amount of dissolved oxygen content and increase algae growth in lakes{3}.

Migration 

Estimates of the damages from this increase in migration may be found in the table below. 

Damage Estimates of Migration

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. Cambridge:  Cambridge University Press, 1996. 

Human Amenity

Increased temperatures due to climate change are likely to have negative impacts on human amenity in some areas and negative effects on those living in other areas.  It would increase the occurrence of heat waves by at least three times than normal witnessed in some area, and yet reduce disamenities associated with cold winters in other areas.  

Presumably people would be willing to pay something to avoid the disamenity associated with increasing temperatures.  Cline estimated that if people are willing pay a mere .5% of their personal income for this purpose, then damages cause by such a disamenity would be $10 B annually in the United States{2}.

  Ecosystem and Biodiversity Loss

Although past research in this area is limited, climate change is likely to cause significant damage to ecosystems and biodiversity. Efforts to identify the value of species have been conducted through contingent valuation while damages incurred because of the loss of plant species have been estimated according to the probability that these species will prove useful to humans for medicinal purposes.  Because of the inherent difficulties of assessing the value of a species and uncertainties about which species shall be affected by climate change, estimates of these damages are necessarily tentative and will certainly require further research.  

The US EPA (1989) has indicated that climate change is likely to have serious implications for biodiversity because of destruction of habitat, predator/prey relationships, and physiological changes caused by increasing temperatures and the poleward migration of tree species.  The effects of temperature and species migration are amplified by the existence of natural and manmade barriers to resettlement{3}.    

Pearce (1993) attempted to elicit the values of various species and ecosystems through a contingent valuation, and the results of that survey are recorded in the table below.  

Valuation of Endangered Species and Prized Habitats

Pearce also evaluated the value of individual plant species, although his study focused on their potential medicinal uses.  Pearce (1993) noted that the use of approximately 40 plant species used for various prescription drugs drew $15-20 billion in sales during the 1980s (at 1990 prices).  He implied that the individual value of these species was $300 million.  Since it has been predicted that approximately 60,000 plant species will become extinct over the next 50 years, and the probability of a plant species being useful for medicinal purposes is between 1:10,000 and 1:1,000, Pearce inferred that 6-60 plant species with medicinal value could be lost.  Using a mean loss of 30 species and a value of $300 million per species, Pearce estimated the annual losses to the United States to be between $8.8 billion and $180 billion per year.  Assuming that climate change would account for just 10% of those losses, he estimated that the loss of plant species due to climate change to be in order of $1 billion to $18 billion per year{3}.   

Both of Pearce's studies have been used by other economists who have produced comprehensive estimates of damages from climate change, as the table below describes.    

Damage Estimates of Ecosystem and Biodiversity Loss

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. Cambridge:  Cambridge University Press, 1996. 

Extreme Weather Events

The impact of climate change on the occurrence of hurricanes is quite controversial.  Some scientists say that climate change will lead to an increase in the frequency and intensity of hurricanes as such weather is related to ocean surface temperatures.  Emanuel (1987), who has been cited by economists making relevant damage estimates, has argued there is a positive relationship between the occurrence of tropical storms and predicts a 40-50% increase in the destructive capabilities of hurricanes with a doubling in atmospheric concentrations of CO2.  Other scientists dispute these assertions.  Some scientists have found that climate change will have no impact on the frequency of hurricanes, while others believe that the number of hurricanes will actually decrease in intensity because of climate change.  Despite the lack of consensus on this issue, damage estimates of this impact are still included in a majority of comprehensive estimates of damages from climate change{3,4}.  

Climate change is also expected to increase the occurrence of river floods, drought, and hot and cold spells.  Little information is available concerning the social and economic impacts of these events.  Additionally, the impacts of drought and hot and cold spells have been addressed in considerable detail in other sections.  Therefore, this analysis shall focus on the impacts of hurricane damage. 

If climate change does induce the occurrence of extreme weather, governments will need to build dikes, reinforce structures to withstand strong winds and rain, encourage personal savings in preparation for extreme events, ensure adequate insurance coverage to compensate homeowners for losses, and restructure social programs to help people in dire need of financial assistance{3}.Predictions of damages expected due to increased frequency and intensity of hurricanes are described in the table below.

Damage Estimates from Increased Occurrence and Frequency of Hurricanes

Source:  Climate Change 1995: Social and Economic Dimensions of Climate Change. New York:  Cambridge University Press, 1996.