Skepticism of the Takakura paper / economic modelling of climate damages
I’m somewhat skeptical of the Takakura paper you mention. First, 2% loss in GDP relative to the counterfactual at 2.7 degrees just seems way too small. I think this is partly due to this paper, which whilst a bit emotive, seems to point out some quite major flaws in Nordhaus’ methodology for calculating climate damages (e.g. 90% of GDP will be unaffected as it happens indoors) who also arrived at 2.1% at 3 degrees warming. Keen in that paper also seems to think that due to the assumption above, plus using the impact of current temperatures on GDP (as you did at the end of your comment, see below), Nordhaus might be underestimating climate damages by an order of magnitude, bringing it to 20%. I feel like a model which has serious methodological flaws (Nordhaus) which produces answer similar to Takakura indicates that Takakura also has things that it hasn’t accounted for.
Independently, it is just hard to see why 3K would do such massive damage. The world has warmed by nearly a degree since 1980 and average living standards increased by several hundred %. What is the actual mechanism whereby an extra 2K would cause the collapse of civilisation?
Like above, I think due to nonlinearity in climate impacts/damages, it doesn’t make sense to that a 1.2 degree temperature increase with little/no impact on living standards will scale up to 3 degrees of warming with also very little impact on living standards.
In terms of the mechanism, there’s credible IPCC estimates that put forced migration due to climate change between 25-1000 million people, with a potential median of 200 million people by 2050. In my opinion, forced migration of that scale could play a role in societal destabilisation, even though the chances of this happening might only be quite small (e.g.5%). For example, there is nothing in Takakura about impact of forced migration, civil unrest, etc, which could also mean they’ve underestimated the GDP impacts. There’s probably many other mechanisms they’ve not been able to include, and the world is very complex, so it seems overconfident to put a lot of weight on one paper that only models 9 specific impacts.
Uncertainty on GDP being a good predictor of x-risk
Otherwise, I’m not even sure that GDP is the best indicator of the probability of x-risk posed by climate change. Even in Takakura’s paper, they say that:
We used the percentage of GDP as an impact indicator but we do not claim it is the best or only indicator to evaluate the impacts of climate change.
For example, one could make a similar claim for AI analogous to what you said about climate:
The world has warmed by nearly a degree since 1980 and average living standards increased by several hundred %.
namely: “AI and ML algorithms have developed exponentially in the past 50 years, yet living standards have only gotten better. So how could additional improvements in ML or AI lead to existential risk?”
Whilst this example probably isn’t perfect, I think it highlights how the past isn’t necessarily a good predictor of future x-risk from certain scenarios. Whilst the AI scenario might lead to more of a rapidly worsening scenario if we develop misaligned AGI, it’s feasible that passing climate tipping points would trigger a serious increase in x-risk that economic models or past GDP metrics fail to account for.
Note that the Takakura paper was not cherry picked as shown in the chart below from the IPCC
The big outlier in green is Burke, but the structural modelling studies that add up the costs of climate change in different sectors tend to put the costs of climate change at <10%.
I don’t think a criticism of Nordhaus’ model is a criticism of Takakura’s model. They are quite different. I agree that the Nordhaus stuff is very flawed. Unfortunately, I think that because of these flaws, people have written off the whole of climate economics, which on the whole produces similar findings to Nordhaus, and not all of which is flawed. I checked their references, and Takakura uses up to date literature on all of the impact mechanisms.
I agree that they don’t cover indirect risks. I would view the literature as a good estimate of the direct costs of climate change, which are less than 10% of GDP. It is still a useful corrective to views like Lynas and others that due to the direct effects on agriculture and the like, the chance of civilisational collapse is at 3C is like 30%.
To be clear, they are not measuring costs that would show up in GDP statistics. They are measuring the welfare costs of climate change expressed in monetised terms, so including effects on health, output and so on.
I take the ding on the AI/ML growth analogy.
If the claim is that the indirect risks of 3C are large enough to destabilise civilisation because displacement would lead to nuclear war or something then we can argue the toss on that one (perhaps now?). But if the claim is that the direct costs are sufficient to destroy civilisation, as Lynas and others seem to think, I just think that is just clearly wrong
Skepticism of the Takakura paper / economic modelling of climate damages
I’m somewhat skeptical of the Takakura paper you mention. First, 2% loss in GDP relative to the counterfactual at 2.7 degrees just seems way too small. I think this is partly due to this paper, which whilst a bit emotive, seems to point out some quite major flaws in Nordhaus’ methodology for calculating climate damages (e.g. 90% of GDP will be unaffected as it happens indoors) who also arrived at 2.1% at 3 degrees warming. Keen in that paper also seems to think that due to the assumption above, plus using the impact of current temperatures on GDP (as you did at the end of your comment, see below), Nordhaus might be underestimating climate damages by an order of magnitude, bringing it to 20%. I feel like a model which has serious methodological flaws (Nordhaus) which produces answer similar to Takakura indicates that Takakura also has things that it hasn’t accounted for.
Like above, I think due to nonlinearity in climate impacts/damages, it doesn’t make sense to that a 1.2 degree temperature increase with little/no impact on living standards will scale up to 3 degrees of warming with also very little impact on living standards.
In terms of the mechanism, there’s credible IPCC estimates that put forced migration due to climate change between 25-1000 million people, with a potential median of 200 million people by 2050. In my opinion, forced migration of that scale could play a role in societal destabilisation, even though the chances of this happening might only be quite small (e.g.5%). For example, there is nothing in Takakura about impact of forced migration, civil unrest, etc, which could also mean they’ve underestimated the GDP impacts. There’s probably many other mechanisms they’ve not been able to include, and the world is very complex, so it seems overconfident to put a lot of weight on one paper that only models 9 specific impacts.
Uncertainty on GDP being a good predictor of x-risk
Otherwise, I’m not even sure that GDP is the best indicator of the probability of x-risk posed by climate change. Even in Takakura’s paper, they say that:
For example, one could make a similar claim for AI analogous to what you said about climate:
namely: “AI and ML algorithms have developed exponentially in the past 50 years, yet living standards have only gotten better. So how could additional improvements in ML or AI lead to existential risk?”
Whilst this example probably isn’t perfect, I think it highlights how the past isn’t necessarily a good predictor of future x-risk from certain scenarios. Whilst the AI scenario might lead to more of a rapidly worsening scenario if we develop misaligned AGI, it’s feasible that passing climate tipping points would trigger a serious increase in x-risk that economic models or past GDP metrics fail to account for.
Hi James, thanks for this.
Note that the Takakura paper was not cherry picked as shown in the chart below from the IPCC
The big outlier in green is Burke, but the structural modelling studies that add up the costs of climate change in different sectors tend to put the costs of climate change at <10%.
I don’t think a criticism of Nordhaus’ model is a criticism of Takakura’s model. They are quite different. I agree that the Nordhaus stuff is very flawed. Unfortunately, I think that because of these flaws, people have written off the whole of climate economics, which on the whole produces similar findings to Nordhaus, and not all of which is flawed. I checked their references, and Takakura uses up to date literature on all of the impact mechanisms.
I agree that they don’t cover indirect risks. I would view the literature as a good estimate of the direct costs of climate change, which are less than 10% of GDP. It is still a useful corrective to views like Lynas and others that due to the direct effects on agriculture and the like, the chance of civilisational collapse is at 3C is like 30%.
To be clear, they are not measuring costs that would show up in GDP statistics. They are measuring the welfare costs of climate change expressed in monetised terms, so including effects on health, output and so on.
I take the ding on the AI/ML growth analogy.
If the claim is that the indirect risks of 3C are large enough to destabilise civilisation because displacement would lead to nuclear war or something then we can argue the toss on that one (perhaps now?). But if the claim is that the direct costs are sufficient to destroy civilisation, as Lynas and others seem to think, I just think that is just clearly wrong