The Benefits of Global Warming

by William Yeatman on March 27, 1999

The Benefits of Global Warming

Several economic studies have attempted to determine the economic costs of a rise in global temperatures. Most have found that global warming will have a significant negative impact. The Intergovernmental Panel on Climate Change, for example, found that the costs of global warming would range from 1.5 to 2 percent of GDP for the world and about 1 to 2 percent for the U.S. Fred Singer, an atmospheric scientist and president of the Science and Environmental Policy Project, notes that several sectors were not included in the IPCC analysis and that non-market sectors all suffered from negative impacts and much of the time the impacts were greater than in the market sectors. Since no reliable or agreed upon metric to measure non-market impacts exists, those results are little more than an assumption by the IPCC.

A new book, titled The Impact of Climate Change on the United States Economy (Cambridge University Press, Cambridge 1999) by Robert Mendelsohn at the Yale School of Forestry and Environmental Studies and James E. Neumann with Industrialized Economics, Inc. finds a different result. Mendelsohn and Neumann assume a doubling of CO2 that would lead to a 2.5 degree C increase in global temperatures. They also include sectors of the economy that were ignored by the IPCC, such as commercial fishing. Other improvements included the possibility of adaptation, reliance on natural climate experiments, in towns with different temperature changes, and so on.

Mendelsohn and Neumann found that overall the economic impact of global warming on the U.S. is positive, about a 0.2 percent increase in GDP. This includes large positive impacts on agriculture and smaller positive impacts on forestry and recreation. All other sectors experience negative impacts, but far smaller than found by the IPCC. There were 26 economists involved with the writing and reviewing of the book. Not only were individual chapters reviewed but also several economists reviewed the overall work. A review of the book can be found at www.sepp.com.

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