Bjorn Lomborg economics

I’ve just seen a tweet of Bjorn Lomborg’s from the other day (yes, I’m a couple of days behind) on the cost of climate change versus the costs of mitigation. Here it is:

If you view his tweet on Twitter you will see that quite a few people have accused him of misrepresenting the report. For instance:

and

Is he making a false comparison? His 6% comes from this table in the Summary for policy makers:

MitCosts

Presumably he’s referring to the 2.1-6.2% reduction in consumption relative to a baseline in the row for 450ppm CO2eq. If so, then he’s chosen the upper value of the range which he tweets as being “Cost of policy higher than 6%”. This figure is also relative to a baseline, not annually. According to this IPCC presentation “this is equivalent to a reduction in consumption growth over the 21st century by about 0.06 (0.04-0.14) percentage points a year (relative to annualized consumption growth that is between 1.6% and 3% per year).”

Meanwhile, the IPCC WGII Summary for Policymakers puts the cost of climate change as:

With these recognized limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (±1 standard deviation around the mean) (medium evidence, medium agreement). Losses are more likely than not to be greater, rather than smaller, than this range (limited evidence, high agreement).

On his Facebook page, Bjorn Lomborg says the 0.2-2% comes from a temperature rise of 2°C which we’ll reach sometime between 2055-2080. This seems to be consistent with the paragraph from the Summary for Policymakers above.

He’s comparing global economic losses annually with a reduction in consumption relative to a baseline. Is this a fair comparison?

11 Comments

  1. I think I’ve worked out his argument. I think it’s the following. His suggestion is essentially that there is an underlying non-CC/non-mitigation growth rate. If we warm by 2 degrees by 2070, then the losses will be 2% of GDP. If we mitigate, then we will reduce the growth rate by between 0.04 and 0.14%. If you determine the cumulative effect of this reduction then that means GDP will be up to 6.2% lower than if we didn’t mitigate. Hence mitigation reduces the GDP in 2070 by more than CC alone.

    My guess is that his assumption that the CC losses do not effect the growth rate is wrong. Presumably there must also be CC related losses prior to 2070. If these don’t affect the growth rate then why would they be losses? They’ll just be costs that contributed to economic activity. So, my guess is that his assumption that we can determine the effect of climate change as being an underlying growth rate with a loss in each year that reaches 2% by 2070 is wrong.

    Another thing to bear in mind is that if we consider the underlying growth rate (say 2.5% per year) then GDP will be 5 times higher in 2070 than today. If we choose to mitigate and if it reduces the growth rate by 0.14%, then GDP will be 4.6 times in greater in 2070 than today. So, he’s essentially arguing that we should just accept losses of 2% of GDP every year rather than mitigating and reducing our economic growth rate by an amount that will change how much richer our future generation is by a relatively small amount. So, we risk our ecosystems because GDP being 4.6 time higher in 2070 is just not good enough, when 5 times higher is? Seems like a very weak argument to me. If this is the economic impact of mitigating, I think we should start right away 🙂

  2. Thanks so much for this! So his comparison is essentially correct. But is it right to compare GDP losses with consumption losses? I know consumption is a large component of GDP but is it valid to compare the two? If they’re the same thing then why didn’t the IPCC just refer to GDP in their table?

    What you say in the last paragraph really puts it into perspective and does make his argument very weak. I also saw your tweet about the figures he uses for annual losses – 0.2-2% of GDP – being the losses *with* mitigation. Although I can’t find your tweet now but Simon Donner seems to take objection to this comparison:

  3. One way to judge how reliable someone is, is to look at his statements on something you are knowledgeable about.

    I know that the IPCC AR4 (previous IPCC report) made an estimate of sea level rise based upon a limited number of mechanisms and left out an estimate for sea level rise due to the melting of land ice sheets. This additional mechanism was expected to make the estimated rise considerably higher, but at the time people did not agree upon a confidence range yet.

    Now when Lomborg uses this limited number as the prediction of the IPCC without mentioning any caveats, then I know he is not a reliable source.

    In the unlikely case he is right when it comes to economics, I will patiently wait until a reliable source makes a similar claim.

    1. Victor,

      In the unlikely case he is right when it comes to economics, I will patiently wait until a reliable source makes a similar claim.

      I think that this is a very sensible strategy. You just have to convince everyone else to do the same; that may not be as easy as one might hope.

  4. Victor,

    I have also seen Bjorn Lomborg make mistakes before. This one comes to mind:

    And so I am a little dubious of his claims too. But this is supposed to be his area of expertise, right? I know he’s not an economist but he used to be a professor at the Copenhagen Business school so he ought to know this stuff. I’m also conscious that I don’t want to sound like Skeptics who think they know more than the people who are experts in their field.

  5. 2070/80 ? The cost of producing sustainable energy systems would span decades and the running costs thereafter neglible. Failure means capital losses, high running costs, high repair costs and GDP losses that would span centuries and may be indefinite even if eventually moderated. 2070/80 ! this is a measure suited to the projected needs of business, not this planet and it’s people. aargh 😡

  6. Graham,

    Yes, you’re right. These are short-term numbers and even Bjorn Lomborg admits that the costs of climate change go up as the temperature goes up. Without mitigation, vast swathes of the Earth will become uninhabitable. What number do you put on that? So while his numbers may be correct, his conclusion is wrong.

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