Some Monetary Estimates
17. Total Damage and Conclusions
Results of the previous sections are summarized and added up in Table 1 t o obtain the total damage for each region. With the exception of China and the former USSR, total damage is on the order of about 1.3% t o 1.5%
of GNP. Our estimates are thus slightly higher than those by Cline (1992, for the US) and Nordhaus (1991a,b; US extended t o the world), which both come up with a best guess of about 1% GNP. The figures are, of course, neither exact nor complete and one should allow for a range of error of a t least f 50%. Even so, the results are still roughly within the Nordhaus range of 0.25 t o 2% of GNP.
Despite the broad agreement in the overall result, the three studies con- siderably differ for the individual damage categories, as can be seen from the detailed comparison of the US results in Table 4. Agriculture and forestry, for example, which constitute the main damage in Cline (1992), are far less important in the present study - the impact on forestry even being positive.
This discrepancy is primarily due to different predictions on the quantitative impacts of 2 x COz (yield effects, see Section 6), and thus mainly mirrors the scientific uncertainty still inherent in all impact forecasts. For other categories the estimated impacts roughly correspond quantitatively, but dif- ferences occur in the valuation of these effects. This is the case, for example, with the wetland loss and water estimates, and the life/morbidity figures.
At first sight, the estimate of coastal defense costs and dryland loss is within the same order of magnitude as Cline's. It should be remembered, though, that with 50 cm we assume a lower rise than both Nordhaus and Cline. Under the one meter assumption adopted by Cline, for example, defense costs would rise by a factor of about 2.5 and the area of lost dry- and wetland would increase by about 50%. Worldwide damage would mount t o 1.6% of Gross World Product. For the US, even a "worst case damage" -
assuming a one meter rise in sea levels and taking for each category the most pessimistic prediction of Table 4 - is still below 2% of GNP. Albeit tending towards the upper bound, our results thus broadly support Nordhaus' range, a t least for industrialized countries.
In the developing world, on the other hand, the impacts are likely t o be far more severe. Leaving the special case of the former Soviet Union aside, our results predict a damage of about 86 bn$ in the non-OECD regions.
Table 4. US damage compared t o Cline and Nordhaus (bn$ 1988).
This Study Cline (1992)a Nordhaus (1991a.b)b Coastal defense
Although this is less than a third of total worldwide damage, it corresponds t o about 2.8% of GNP in these regions, twice the OECD average. The main causes for this high estimate are health impacts and the high portion of wetlands found in developing countries. The situation could be further ag- gravated by a failure t o implement the cost efficient precautionary responses (e.g. coastal protection), something which is quite likely t o happen if the necessary funds are not made available. Although the data are weaker in the case of non-OECD countries, it seems fair t o say that global warming will have its worst impacts in the developing world, with a damage of at least 2.5% of GNP for 2
x
COz.Regional differences can, however, be substantial, as is exemplified by the estimates for the former USSR and China. For the former Soviet Union, damage could be as low as 0.7% of GNP, about halve the world average.
Even this low level may come as a surprise t o some people, however, as it has often been suggested that northern regions may benefit from global warming. Clearly, such a hope is fallacious. In the case of the former Soviet
Union, the positive impacts on forestry and human amenity are more than offset by the costs of sea level rise and the particularly high health costs.
Similarly surprising may be the high agricultural damage, but even under the more favorable agriculture scenario A, which implies positive impacts on Soviet agriculture (see Section 6), 2
x
C 0 2 will still be clearly harmful.The extremely high estimate for China is caused by two factors, agricul- tural loss and lifelmorbidity impacts. Especially the former is very volatile in the case of China, and the probability range of total damage is there- fore particularly wide for this country. For an agricultural damage based on the optimistic scenario A, for example, overall damage would fall to 2.6%
of GNP, compared to 9.6% if scenario B was used. The example clearly underlines the sensitivity of the results.
The emphasis in the damage discussion has so far been mainly on agri- culture and sea level rise. In the light of the present analysis it seems that, although both are indeed main sources of damage, this view tends to over- look aspects which could be as important, particularly the effects on the supply of water, on health and on human wellbeing in general. This bias, which has already been deplored by Ausubel (1991) may partly be explained by the fact that these latter aspects are far more difficult to predict. How- ever, while this is an explanation, it cannot be a justification and further research is thus needed, especially in these areas.
A word of caution is needed with respect to the policy implications of unclear. Cline's work suggests that damage will increase exponentially with concentration (Cline, 1992). Scientists speculate about the existence of dis- continuities (see Nordhaus, 1991c) and crossing certain ecological thresholds may well lead to nasty surprises. Not least for these reasons global warming still deserves our attention.
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