Brian Hurd

The Role of Adaptation in the U.S.

Climate Change Adaptation Cover  

Coping with Global Climate Change: The Role of Adaptation in the United States

Prepared for the Pew Center on Global Climate Change
June 2004

By:
William Easterling of Pennsylvania State University
Brian Hurd of New Mexico State University
Joel Smith of Stratus Consulting Inc.


Press Release

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Foreword

 

Eileen Claussen, President, Pew Center on Global Climate Change

Throughout the next century and beyond, global climate change will have significant effects on both important economic sectors and natural resources across the United States.   Global temperatures are projected to increase 2.5-10.4oF by 2100, and at least some of this warming is now unavoidable.   Although the natural streams, wetlands, and biodiversity of the United States have a limited capacity to adapt to a changing climate, those systems that are managed by humans, such as agriculture, water resources, and coastal development can be handled in ways to reduce the severity of adverse impacts. 

Adaptation and Global Climate Change discusses how the United States might cope with anticipated climate change impacts in the coming decades.   This report provides a review of the role of adaptation in addressing climate change, the options available for increasing our ability to adapt, and the extent to which adaptation can reduce the consequences of climate change to the U.S. economy and natural resources.  Report authors Bill Easterling, Brian Hurd, and Joel Smith find:

  • Adaptation is an important complement to greenhouse gas mitigation policies. Reducing greenhouse gas emissions is the only effective mechanism for preventing adverse impacts of climate change.  However, given that additional future climate change is now inevitable regardless of mitigation efforts, adaptation is an essential strategy for reducing the severity and cost of climate change impacts.
     
  • Adapting to climate change will not be a smooth or cost-free endeavor.  Although the United States has diverse options and resources for adapting to the adverse effects of climate change, changes will be made in an atmosphere of uncertainty.  Substantial investments and adjustments will need to be made even with imperfect information or foresight, and successful adaptation will become even more challenging with more rapid rates or greater degrees of warming.
     
  • Managed systems will fare better than natural systems and some regions will face greater obstacles than others. Even if there are some successes in adapting to climate change at the national level, there will still be regional and sectoral losers.  In particular, there is limited ability for humans to improve the adaptive capacity of natural ecosystems, which are not as easily managed and which face degradation from multiple stresses.
     
  • Proactive approaches to adaptation are more likely to avoid or reduce damages than reactive responses.   Anticipatory planning among government institutions and important economic sectors will enhance the resilience to the effects of climate change.  Government at all levels should consider the implications of climate change when making investments in long-lived infrastructure.

The authors and the Pew Center gratefully acknowledge the input of Drs. Gary Yohe and Paul Kirshen on this report.

Executive Summary

 

Climate change resulting from increased greenhouse gas concentrations has the potential to harm societies and ecosystems. In particular, agriculture, forestry, water resources, human health, coastal settlements, and natural ecosystems will need to adapt to a changing climate or face diminished functions. Reductions in emissions of greenhouse gases and their concentration in the atmosphere will tend to reduce the degree and likelihood that significantly adverse conditions will result. Consideration of actions—e.g., mitigation policy—that can reduce this likelihood is reasonable and prudent, and has generally been the primary focus of public attention and policy efforts on climate change. However, recognition is increasing that the combination of continued increases in emissions and the inertia of the climate system means that some degree of climate change is inevitable. Even if extreme measures could be instantly taken to curtail global emissions, the momentum of the earth’s climate is such that warming cannot be completely avoided. Although essential for limiting the extent, and indeed the probability, of rapid and severe climate change, mitigation is not, and this paper argues, should not be, the only protective action in society’s arsenal of responses.

Adaptation actions and strategies present a complementary approach to mitigation. While mitigation can be viewed as reducing the likelihood of adverse conditions, adaptation can be viewed as reducing the severity of many impacts if adverse conditions prevail. That is, adaptation reduces the level of damages that might have otherwise occurred. However, adaptation is a risk-management strategy that is not free of cost nor foolproof, and the worthiness of any specific actions must therefore carefully weigh the expected value of the avoided damages against the real costs of implementing the adaptation strategy.

Adaptation to environmental change is a fundamental human trait and is not a new concept. Throughout the ages, human societies have shown a strong capacity for adapting to different climates and environmental changes, although not always successfully. As evidenced by the widespread and climatically diverse location of human settlements throughout the world, humans have learned how to thrive in a wide variety of climate regimes, ranging from cold to hot and from humid to dry. The resilience and flexibility exhibited in the patterns of human settlements evidence an inherent desire and some measure of capacity to adapt.

For human systems, the success of adaptation depends critically on the availability of necessary resources, not only financial and natural resources, but also knowledge, technical capability, and institutional resources. The types and levels of required resources, in turn, depend fundamentally on the nature and abruptness of the actual or anticipated environmental change and the range of considered responses.

The processes of adaptation to climate change in both human and natural systems are highly complex and dynamic, often entailing many feedbacks and dependencies on existing local and temporal conditions. The uncertainties introduced by the complexity, scale and limited experience with respect to anthropogenic climate change explains the limited level of applied research conducted thus far on adaptation, the reliance on mechanistic assumptions, and widespread use of scenarios and historical analogues. In addition, many social, economic, technological and environmental trends will critically shape the future ability of societal systems to adapt to climate change. While such factors as increased population and wealth will likely increase the potential level of material assets that are exposed to the risks of climate change, greater wealth and improved technology also extend the resources and perhaps the capabilities to adapt to climate change. These trends must be taken into account when evaluating the nature and scale of future adaptive responses and the likelihood that they will succeed.

The implications of climate change are more dire for natural systems, because it will be difficult for many species to change behavior or migrate in response to climate change. While biological systems might accommodate minor (or slowly occurring) perturbations in a smooth continuous fashion, even minor changes in climate may be disruptive for many ecosystems and individual species. In addition, many of the world’s species are currently stressed by a variety of factors including urban development, pollution, invasive species, and fractured (or isolated) habitats. Such conditions, coupled with the relatively rapid rate of anticipated climate change, are likely to challenge many species’ resiliency and chances for successful adaptation.

Key insights and findings on adaptation and its potential for success are summarized below:

  1. Adaptation and mitigation are necessary and complementary for a comprehensive and coordinated strategy that addresses the problem of global climate change. By lessening the severity of possible damages, adaptation is a key defensive measure. Adaptation is particularly important given the mounting evidence that some degree of climate change is inevitable. Recognizing a role for adaptation does not, however, diminish or detract from the importance of mitigation in reducing the rate and likelihood of significant climate change.
     
  2. The literature indicates that U.S. society can on the whole adapt with either net gains or some costs if warming occurs at the lower end of the projected range of magnitude, assuming no change in climate variability and generally making optimistic assumptions about adaptation. However, with a much larger magnitude of warming, even making relatively optimistic assumptions about adaptation, many sectors would experience net losses and higher costs. The thresholds in terms of magnitudes or rates of change (including possible non-linear responses) in climate that will pose difficulty for adaptation are uncertain. In addition, it is uncertain how much of an increase in frequency, intensity, or persistence of extreme weather events the United States can tolerate.
     
  3. To say that society as a whole “can adapt“ does not mean that regions and peoples will not suffer losses. For example, while the agricultural sector as a whole may successfully adapt, some regions may gain and others may lose. Agriculture in many northern regions is expected to adapt to climate change by taking advantage of changing climatic conditions to expand production, but agriculture in many southern regions is expected to contract with warmer, drier temperatures. Individual farmers not benefiting from adaptation may lose their livelihood.  In addition, other individuals or populations in these and other regions can be at risk, because they could be adversely affected by climate change and lack the capacity to adapt.  This is particularly true of relatively low-income individuals and groups whose livelihoods are depending on resources at risk by climate change.
     
  4. Adaptation is not likely to be a smooth process or free of costs. While studies and history show that society can on the whole adapt to a moderate amount of warming, it is reasonable to expect that mistakes will be made and costs will be incurred along the way. People are neither so foolish as to continue doing what they have always done in the face of climate change, nor so omniscient as to perfectly understand what will need to be done and to carry it out most efficiently. In reality, we are more likely to muddle through, taking adaptive actions as necessary, but often not doing what may be needed for optimal or ideal adaptation. Additionally, adaptation is an on-going process rather than a one-shot instantaneous occurrence.  Compounding society’s shortcomings, a more rapid, variable, or generally unpredictable climate change would add further challenges to adaptation.
     
  5. Effects on ecosystems, and on species diversity in particular, are expected to be negative at all but perhaps the lowest magnitudes of climate change because of the limited ability of natural systems to adapt. Although biological systems have an inherent capacity to adapt to changes in environmental conditions, given the rapid rate of projected climate change, adaptive capacity is likely to be exceeded for many species. Furthermore, the ability of ecosystems to adapt to climate change is severely limited by the effects of urbanization, barriers to migration paths, and fragmentation of ecosystems, all of which have already critically stressed ecosystems independent of climate change itself.
     
  6. Institutional design and structure can heighten or diminish society’s exposure to climate risks. Long-standing institutions, such as disaster relief payments and insurance programs, affect adaptive capacity. Coastal zoning, land-use planning, and building codes are all examples of institutions that can contribute to (or detract from) the capacity to withstand climate changes in efficient and effective ways.
     
  7. Proactive adaptation can reduce U.S. vulnerability to climate change. Proactive adaptation can improve capacities to cope with climate change by taking climate change into account in long-term decision-making, removing disincentives for changing behavior in response to climate change (such as removing subsidies for maladaptive activities), and introducing incentives to modify behavior in response to climate change (such as the use of market-based mechanisms to promote adaptive responses). Furthermore, improving and strengthening human capital through education, outreach, and extension services improves decision-making capacity at every level and increases the collective capacity to adapt.

Conclusions

 

As the climate-change research and policy communities fully confront the challenges of understanding and managing adaptation to climate change, the issues framed in this report provide important insight concerning the information needed to make appropriate policy choices regarding adaptation. The following conclusions provide initial guidance to those communities:

  1. Adaptation and mitigation are necessary and complementary for a comprehensive and coordinated strategy that addresses the problem of global climate change. By lessening the severity of possible damages, adaptation is a key defensive measure. Adaptation is particularly important given the mounting evidence that some degree of climate change is inevitable. Recognizing a role for adaptation does not, however, diminish or detract from the importance of mitigation in reducing the rate and likelihood of significant climate change.
     
  2. The literature indicates that U.S. society can on the whole adapt with either net gains or some costs if warming occurs at the lower end of the projected range of magnitude, assuming no change in climate variability and generally making optimistic assumptions about adaptation. However, with a much larger magnitude of warming, even making relatively optimistic assumptions about adaptation, many sectors would experience net losses and higher costs. The thresholds in terms of magnitudes or rates of change (including possible non-linear responses) in climate that will pose difficulty for adaptation are uncertain. In addition, it is uncertain how much of an increase in frequency, intensity, or persistence of extreme weather events the United States can tolerate.
     
  3. To say that society as a whole “can adapt“ does not mean that regions and peoples will not suffer losses. For example, while the agricultural sector as a whole may successfully adapt, some regions may gain and others may lose. Agriculture in many northern regions is expected to adapt to climate change by taking advantage of changing climatic conditions to expand production, but agriculture in many southern regions is expected to contract with warmer, drier temperatures. Individual farmers not benefiting from adaptation may lose their livelihood. In addition, other individuals or populations in these and other regions can be at risk, because they could be adversely affected by climate change and lack the capacity to adapt.  This is particularly true of relatively low-income individuals and groups whose livelihoods are depending on resources at risk by climate change.
     
  4. Adaptation is not likely to be a smooth process or free of costs. While studies and history show that society can on the whole adapt to a moderate amount of warming, it is reasonable to expect that mistakes will be made and costs will be incurred along the way. People are neither so foolish as to continue doing what they have always done in the face of climate change, nor so omniscient as to perfectly understand what will need to be done and to carry it out most efficiently. In reality, we are more likely to muddle through, taking adaptive actions as necessary, but often not doing what may be needed for optimal or ideal adaptation. Additionally, adaptation is an on-going process rather than a one-shot instantaneous occurrence.  Compounding society’s shortcomings, a more rapid, variable, or generally unpredictable climate change would add further challenges to adaptation.
     
  5. Effects on ecosystems, and on species diversity in particular, are expected to be negative at all but perhaps the lowest magnitudes of climate change because of the limited ability of natural systems to adapt. Although biological systems have an inherent capacity to adapt to changes in environmental conditions, given the rapid rate of projected climate change, adaptive capacity is likely to be exceeded for many species. Furthermore, the ability of ecosystems to adapt to climate change is severely limited by the effects of urbanization, barriers to migration paths, and fragmentation of ecosystems, all of which have already critically stressed ecosystems independent of climate change itself.
     
  6. Institutional design and structure can heighten or diminish society’s exposure to climate risks. Long-standing institutions, such as disaster relief payments and insurance programs, affect adaptive capacity. Coastal zoning, land-use planning, and building codes are all examples of institutions that can contribute to (or detract from) the capacity to withstand climate changes in efficient and effective ways. 
     
  7. Proactive adaptation can reduce U.S. vulnerability to climate change. Proactive adaptation can improve capacities to cope with climate change by taking climate change into account in long-term decision-making, removing disincentives for changing behavior in response to climate change (such as removing subsidies for maladaptive activities), and introducing incentives to modify behavior in response to climate change (such as the use of market-based mechanisms to promote adaptive responses). Furthermore, improving and strengthening human capital through education, outreach, and extension services improves decision-making capacity at every level and increases the collective capacity to adapt.

About the Authors

 

Dr. William E. Easterling
Dr. William E. Easterling is the Director of the Institutes of Environment and a professor of geography and agronomy at Pennsylvania State University.   Prior to joining the faculty at Penn State, Dr. Easterling held appointments in the Department of Agricultural Meteorology at the University of Nebraska (1991-1997), Resources for the Future, Inc. in Washington, DC (1987-1991), and the Illinois State Water Survey at the University of Illinois (1984-1987).  He received his doctorate in geography from the University of North Carolina at Chapel Hill.  Dr. Easterling's research concerns the interactions of human activities with their climatic and biotic environment, particularly the potential effects of climate changes from greenhouse warming on agroecosystem productivity and adaptation in both developed and developing countries. He also serves or has served on numerous national and international scientific advisory committees and assessment projects, including those of the National Research Council, the National Science Foundation, the National Aeronautics and Space Administration, the National Oceanic and Atmospheric Administration, and the U. S. Department of Energy. He served as the Acting Director of the Department of Energy's National Institute for Global Environmental Change (1996-1998), and he was a convening lead author for the Third Assessment Report of the United Nations/World Meteorological Organization's Intergovernmental Panel on Climate Change. In the winter of 2003, he co-chaired newly elected Pennsylvania Governor Ed Rendell's Transition Committee on Conservation and Natural Resources and was elected to serve as the Chair of the Penn State University Research Council for 2003-2004.

Brian H. Hurd, New Mexico State University
Brian H. Hurd is an Assistant Professor in the Department of Agricultural Economics and Agricultural Business at New Mexico State University. Dr. Hurd earned his PhD and MS degrees in Agricultural Economics from the University of California, Davis, and holds a BA from the University of Colorado, Boulder.

Dr. Hurd is the author of numerous articles, book chapters and conference presentations on natural and environmental resource economics, water resource economics, and climate change vulnerability and adaptation. He is a delegate to the Universities Council on Water Resources (UCOWR), and is a member of the American Agricultural Economics Association, the Association of Environmental and Resource Economists, the American Water Resources Association, and the Western Agricultural Economics Association. 

Joel B. Smith, Stratus Consulting Inc.
Joel B. Smith is the Vice President of Stratus Consulting Inc. Mr. Smith received a BA from Williams College, and received an MPP from the University of Michigan.

Mr. Smith has examined climate change impacts and adaptation issues for the U.S. Country Studies Program, the U.S. Environmental Protection Agency, the U.S. Department of Energy, the U.S. Agency for International Development, the Office of Technology Assessment, the Electric Power Research Institute, the World Bank, the Global Environment Facility, the United Nations Environment Programme, and the International Institute for Applied Systems Analysis.

Before joining Stratus Consulting, Mr. Smith was the deputy director of the U.S. EPA's Climate Change Division. He was a coeditor of EPA's Report to Congress: The Potential Effects of Global Climate Change on the United States, published in 1989; As Climate Changes: International Impacts and Implications, published by Cambridge University Press in 1995; Adaptation to Climate Change: Assessments and Issues, published by Springer-Verlag in 1996; and Climate Change, Adaptive Capacity and Development published by Imperial College Press in 2003. Mr. Smith worked for the EPA from 1984 to 1992. Besides working on climate change issues, he also served as an analyst examining oceans and water regulations, and was a special assistant to the Assistant Administrator for the Office of Policy, Planning and Evaluation.

Brian Hurd
Joel Smith
William Easterling
0

U.S. Market Consequences of Global Climate Change

US Market Consequences small cover

U.S. Market Consequences of Global Climate Change

Prepared for the Pew Center on Global Climate Change
April 2004

By:
Dale W. Jorgenson, Harvard University
Richard J. Goettle, Northeastern University
Brian H. Hurd, New Mexico State University
Joel B. Smith, et al, Stratus Consulting, Inc.



Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

Over the next century, global climate change is likely to have substantial consequences for the economy of the United States and the welfare of its citizens. As scientists work to narrow remaining uncertainties about the magnitude and timing of future warming, it is becoming increasingly important that we improve our understanding of the likely implications for human and natural systems.

In this report, a team of authors led by Dale Jorgenson of Harvard University developed an integrated assessment of the potential impacts of climate change on the U.S. market economy through the year 2100. The analysis combines information about likely climate impacts in specific market sectors with a sophisticated computable general equilibrium model of the U.S. economy to estimate effects on national measures of productivity, investment, consumption and leisure. To account for uncertainties— both in the trajectory of future climate change and in the ability of different sectors to adapt—a variety of scenarios were modeled to characterize a range of possible outcomes.

The results indicate that climate change could impose considerable, lasting costs or produce smaller, temporary benefits for the U.S. market economy in coming decades. Importantly, potential costs under pessimistic assumptions are larger and persist longer than potential benefits achieved under optimistic assumptions. Because of “threshold effects” in key sectors like agriculture, initial benefits from a moderate amount of warming begin to diminish and eventually reverse as temperatures continue to rise toward the end of the century and beyond. These findings suggest that near-term action to limit the pace and scale of future climate change would be warranted not only because the potential damages outweigh potential benefits (which are transient in any case), but because early intervention would reduce the long-term damage under either set of assumptions, and reduce the need for more costly measures if pessimistic scenarios materialize.

This study makes an important contribution to our current understanding of the potential impacts of climate change, but it represents at best a partial assessment of the full range of those impacts. Certain market sectors (e.g., tourism) and a variety of indirect effects (e.g., climate change induced healthcare expenditures) could not be included because of a lack of data. Even more significantly, the analysis does not account for critical non-market impacts such as changes in species distributions, reductions in biodiversity or loss of ecosystem goods and services. These types of effects are described in a companion Pew Center report—A Synthesis of Potential Impacts of Climate Change on the United States—but remain extremely difficult to value in economic terms. Their inclusion in a more complete evaluation of both market and non-market impacts would almost certainly offset any temporary market benefits and add to the negative impacts, thereby underscoring the case for mitigative action.

The Pew Center and the authors are grateful to Henry Jacoby and Billy Pizer for helpful comments on previous drafts of this report.

Executive Summary

The continued accumulation of heat-trapping gases in the atmosphere is projected to have far reaching consequences for earth’s climate in coming decades. For example, in 2001, the Intergovernmental Panel on Climate Change (IPCC) predicted that average global temperatures could rise anywhere from 1.4oC to 5.8oC (2.5-10.4oF) over the 21stcentury, with warming for the United States as much as 30 percent higher. Climatic shifts of this magnitude would affect human and natural systems in many ways. Therefore, quantifying these impacts and their likely costs remains a critical challenge in the formulation of appropriate policy responses.

This study aims to advance understanding of the potential consequences of global climate change by examining the overall effect on the U.S. economy of predicted impacts in key market activities that are likely to be particularly sensitive to future climate trends. These activities include crop agriculture and forestry, energy services related to heating and cooling, commercial water supply, and the protection of property and assets in coastal regions. Also considered are the effects on livestock and commercial fisheries and the costs related to increased storm, flood and hurricane activity. Finally, the analysis accounts for population-based changes in labor supply and consumer demand due to climate-induced mortality and morbidity. Impacts in each of these areas were modeled to estimate their aggregate effect on national measures of economic performance and welfare, including gross domestic product (GDP), consumption, investment, labor supply, capital stock and leisure.

At present, our knowledge of the direct or indirect impacts of climate change on a broad range of economic activities is incomplete. Accordingly, there are important sectors and activities—such as tourism—that are omitted from this effort. Similarly, there is little information concerning possible interactions among the benefits and costs in different sectors. For example, the impacts on crop and livestock agriculture may have consequences for human health. Given the absence of reliable insights into such externalities or spillovers, these effects are also excluded from consideration. These limitations suggest that the results of this analysis are likely to understate the potential market impacts of climate change.

More importantly, this analysis does not consider the non-market impacts of climate change such as changes in species distributions, reductions in biodiversity, or losses of ecosystem goods and services. These considerations are essential to a complete evaluation of the consequences of climate change but are very difficult to value in economic terms. A companion report, A Synthesis of Potential Impacts of Climate Change on the United States, provides more detail on the relative vulnerability of different U.S. regions to both the market and non-market impacts of climate change.

To capture the range of market consequences potentially associated with climate change in the United States and to address the considerable uncertainties that exist, several distinct scenarios were developed for this analysis. Each incorporates different assumptions about the magnitude of climate change over the next century and about the direction and extent of likely impacts in the market sectors analyzed. Specifically, three different levels of climate change (low, central and high) were considered in combination with two sets of market outcomes (optimistic and pessimistic) for a total of six primary scenarios. In terms of climate, the low, central and high scenarios encompass projected increases in average temperature ranging from 1.7oC to 5.3oC (3.1-9.5oF) by 2100, together with precipitation increases ranging from 2.1 to 6.6 percent and sea-level rise ranging from 17.2 to 98.9 cm (7-40 inches) over the same period. In terms of impacts, the optimistic and pessimistic  scenarios reflect a spectrum of outcomes from the available literature concerning the sensitivity of each sector to climatic shifts and its ability to adapt. As one would expect, the optimistic scenarios generally project either smaller damages or greater benefits for a given amount of climate change compared to the pessimistic scenarios.

Because several of the market sectors included here are especially sensitive to changes in precipitation, two additional scenarios were analyzed. The first assumes the high degree of temperature change combined with lower precipitation (“high and drier”) while the second assumes the low level of temperature change combined with higher precipitation (“low and wetter”).

By introducing the sector-specific damages (or benefits) associated with each of these scenarios into a computable general equilibrium model that simulates the complex interactions of the U.S. economy as a whole, the combined effect of climate impacts across multiple sectors could be assessed in an integrated fashion. Detailed results are described in the body of this report, but five principal conclusions emerge:

1) Based on the market sectors and range of impacts considered for this analysis, projected climate change has the potential to impose considerable costs or produce temporary benefits for the U.S. economy over the 21st century, depending on the extent to which pessimistic or optimistic outcomes prevail. Under pessimistic assumptions, real U.S. GDP in the low climate change scenario is 0.6 percent lower in 2100 relative to a baseline that assumes no change in climate; in the high climate change scenario, the predicted reduction in real GDP is 1.9 percent. Under the additional “high and drier” climate scenario, however, real GDP is reduced more dramatically—by as much as 3.0 percent by 2100 relative to baseline conditions. Furthermore, under pessimistic assumptions negative impacts on GDP grow progressively larger over time, regardless of the climate scenario. In contrast, under optimistic assumptions real U.S. GDP by 2100 is 0.7 to 1.0 percent higher than baseline conditions across the low, central and high climate scenarios, but these benefits eventually diminish over time. Nevertheless, to the extent that responses in certain key sectors conform to the optimistic scenarios, there is a distinct possibility that some degree of climate change can provide modest overall benefits to the U.S. economy during the 21st century.

2) Due to threshold effects in certain key sectors, the economic benefits simulated for the 21st century under optimistic assumptions are not sustainable and economic damages are inevitable. In contrast to the pessimistic scenarios which show increasingly negative impacts on the economy as temperatures rise, the economic benefits associated with optimistic scenarios ultimately peak or reach a maximum. Specifically, the agriculture and energy sectors initially experience significant cost reductions, but only so long as climate change remains below critical levels. Once temperature and other key climate parameters reach certain thresholds, however, benefits peak and begin to decline—eventually becoming damages. Different thresholds apply in different sectors and the time required to reach them depends on the rate at which warming occurs. In the high climate change scenario, the trend toward economic benefits under optimistic assumptions slows and peaks around mid-century, whereas, in the central climate case, this transition appears toward century’s end. In the optimistic, low climate change scenario, benefits continue to accrue throughout the 21st century. Nevertheless, the existence of these thresholds means that continued climate change—even if it proceeds slowly—eventually reverses market outcomes so that predicted economic benefits are only transient and temporary.

3) The effects of climate change on U.S. agriculture dominate the other market impacts considered in this analysis. Currently, the agriculture, forestry and fisheries industries represent about 2.0 percent of total U.S. industrial output and about 3.5 percent of real GDP. However, agriculture accounts for a much larger share of the overall climate-related economic impact estimated in this analysis. For example, across the low, central and high climate change scenarios, field crop and forestry impacts account for over 70 percent of the total predicted effect of climate change on real GDP under optimistic assumptions and almost 80 percent of the total GDP effect under pessimistic assumptions. These figures rise to 75 and 85 percent, respectively, if one includes climate effects on livestock and commercial fisheries. Clearly, significant impacts in relatively small sectors can exert a disproportionate influence on the overall economic consequences of a given climate change.

4) For the economy, wetter is better. All else being equal, more precipitation is better for agriculture —and hence better for the economy—than less precipitation. Not surprisingly, reductions in precipitation are costlier at higher temperatures than at lower temperatures and the negative impacts of drier climate conditions are greater under pessimistic assumptions than they are under optimistic assumptions. These results are driven by model assumptions about the relationship between agricultural output and different levels of precipitation; they do not consider regional or seasonal variability nor do they account for possible changes in the incidence of extreme events such as drought and flooding. To date, variations in precipitation have not been routinely incorporated in assessments of the agricultural impacts of climate change; nevertheless, they are potentially quite important and could  significantly affect actual benefits or damages associated with climate change in this sector of the economy. Therefore, in future assessments, more attention should be paid to the specific effects of precipitation under different climate scenarios.

5) Changes in human mortality and morbidity are small but important determinants of the modeled impacts of climate change for the U.S. economy as a whole. An increase in climate-induced mortality or illness reduces the population of workers and consumers available to participate in the market economy, in turn leading to a loss of real GDP. In this analysis, mortality and morbidity effects alone account for 13 to 16 percent of the aggregate predicted effect of climate change on the economic welfare of U.S. households. Failure to include such effects therefore understates the potential market impacts of climate change as well as the likely benefits of climate-mitigating policies. Furthermore, the economic consequences of the mortality and morbidity effects arising from a given change in temperature are at the low end of mortality valuations found in the reported literature. Hence, the contribution of health effects to the aggregate market impacts of climate change could be even higher than these results suggest.

Taken together, these findings have important implications for current policy debates and for ongoing efforts to further refine our understanding of the likely impacts of global climate change. From a policy standpoint their primary relevance lies in the extent to which they support (or diminish) the case for intervention to avoid or mitigate the impacts being evaluated. Specifically, does the analysis suggest that the likely consequences of future climate change will be sufficiently negative as to warrant near-term actions aimed at reducing greenhouse gas emissions? This question is all the more difficult to answer because the benefits of policy intervention tend to accrue slowly, over a long period of time, while the costs of mitigative action must be borne in the near term.

On the one hand, the results of this analysis clearly point to the possibility that climate change could produce measurable negative impacts on the U.S. economy within this century that might justify anticipatory policy responses. On the other hand, the fact that some of the scenarios analyzed produce positive, albeit temporary, benefits for the U.S. economy in the same timeframe might seem to weigh in favor of forgoing, or at least delaying, such actions.

A number of nuances in these results—together with several larger considerations related to limitations inherent in the study’s design—argue against the latter conclusion. Within the scope of this analysis, perhaps the most important point is the fact that most, if not all, potentially positive impacts of climate change under optimistic assumptions are likely to be transient and unsustainable over the long run in the face of steadily rising temperatures. If, on the other hand, pessimistic assumptions prove to be more correct, the economic impacts of climate change are not only immediately negative, but worsen steadily over time. Thus, the potential for temporary economic benefits must be balanced against the potential for immediate and lasting economic damages.

A second important point is that the modeling results reveal asymmetries in the magnitude of potential benefits versus potential damages. Specifically, the economic losses estimated under pessimistic assumptions are generally larger than the transient benefits gained under optimistic assumptions in all but the low climate change scenarios. Moreover, the asymmetry becomes more pronounced with rising temperatures as certain types of costs—such as those associated with extreme weather events—increasingly offset possible benefits to other sectors of the economy.

A further caution relates to the partial and incomplete nature of the analysis itself. This effort was limited from the outset to considering only market impacts of global climate change within the United States. As has already been noted, it was not possible to include all potentially climate-sensitive market sectors in the analysis; nor was it possible to account for all externalities or spillover effects. Moreover, the results of this analysis are not likely to be representative of other parts of the world, especially for those countries whose overall economic well-being is more closely tied to sectors like agriculture. For these countries, the potential damages associated with future climate change could be a much larger proportion of GDP than in the United States and the downside risks under pessimistic assumptions—especially in regions where climate change is likely to cause increasingly warmer and drier conditions—could be far more substantial.

Even more significant, in terms of drawing policy conclusions from these results, is the fact that the underlying analysis does not address a host of potential non-market impacts associated with climate change. These include shifts in species distribution, reductions in biodiversity, losses of ecosystem goods and services and changes in human and natural habitats. Such impacts—many of which are explored in other Pew Center reports—are probably of great concern to the public and could carry substantial weight in future policy deliberations. They are, however, extremely difficult to value in economic terms. To the extent that they have been assessed—even qualitatively—the results suggest that climate-related impacts on natural systems are far more likely, on the whole, to be negative rather than positive. As such they would tend to add to any negative market impacts associated with future climate change, while offsetting potential market benefits of the kind simulated in this study under optimistic assumptions.

In sum, the disparity in results between optimistic and pessimistic scenarios—and the likelihood that a consideration of non-market impacts would tend to exacerbate this disparity—highlights the continuing uncertainty associated with quantifying climate change impacts. The fact that the economic losses associated with pessimistic scenarios are both larger and more continuous than the transient benefits gained under optimistic scenarios would seem, by itself, to provide some support for cautionary action on climate change. In fact, such action—by slowing the pace and magnitude of temperature increases in the U.S. market consequences of global climate change coming decades—actually could forestall any damages or even improve the odds that optimistic rather than pessimistic outcomes prevail. If, on the other hand, worst-case scenarios appear more likely over time and ultimately justify more dramatic intervention, early efforts to achieve moderate near-term emissions reductions may help avoid the need for more costly measures later on. Meanwhile, high priority should be given to improving and integrating future assessments of market and non-market outcomes and to refining our understanding of the probabilities associated with varying degrees of climate change and the positive or negative responses that follow.

Brian Hurd
Dale W. Jorgenson
Joel Smith
Richard J. Goettle
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Agriculture & Global Climate Change: A Review of Impacts to U.S. Agricultural Resources

Agriculture & Global Climate Change: A Review of Impacts to U.S. Agricultural Resources

Prepared for the Pew Center on Global Climate Change
February 1999

By:
Richard M. Adams, Oregon State University
Brian H. Hurd, Stratus Consulting Inc.
John Reilly, Massachusetts Institute of Technology

Press Release

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Foreword

Eileen Claussen, Executive Director, Pew Center on Global Climate Change

In order to intelligently respond to climate change, we must first understand the likely consequences on our environment and health. This report, the first in a series of environmental impact reports, will explore anticipated effects of climate change on U.S. agriculture. Other reports in this series will assess what is known about the impact of climate change on weather and include analyses of its impact on water resources, coastal areas, human health, ecosystems, and forests. In evaluating the current state of scientific knowledge regarding the anticipated effects of climate change on U.S. agriculture, this report yields several key observations:

AGRICULTURAL SHIFTS ARE LIKELY.
Climate change will result in agricultural shifts and changes across the United States. Given the requisite time and resources to adapt, the United States is likely to continue to be able to feed itself; however, there will clearly be regional winners and losers.

CURRENT PROJECTION SCOULD UNDERSTATE LONG-RANGE IMPACTS.
If the rate of greenhouse gas emissions exceeds projected levels or if unanticipated or more frequent extreme events accompany this change, the outlook for the United States would likely worsen. The projections in this report, for example, are based on a doubling of carbon dioxide (CO2) in the atmosphere which could understate the severity of climate change impacts over the long-term.

GLOBAL IMPACTS COULD BE MORE PROFOUND.
Some countries will experience more negative effects on agriculture associated with climate change. The situation will be particularly acute in developing nations that do not have the same resources as the United States to respond to the agricultural changes projected.

This report broadly outlines projected effects on U.S. agricultural regions. The complexity of the climate system itself and its relationship to agricultural resources make it difficult to project specific effects on individual states or communities. More research is needed to better understand this complex system and to incorporate relevant factors into future climate models and assessments. The report does, however, provide an objective foundation upon which to build and clearly demonstrates the impact climate change will have, both direct and indirect, on U.S. agricultural systems.

In addition to reporting on the environmental impacts of climate change, the Pew Center undertakes analyses on domestic and international policy matters and economics. The Center was established in 1998 by the Pew Charitable Trusts to bring a new, cooperative approach and critical scientific, economic and technological expertise to the global climate change debate.

A number of major corporations have taken a bold and historic step in joining the Center's Business Environmental Leadership Council. In doing so, they have accepted "the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences." Understanding the potential environmental impacts of climate change, as this report illustrates, is an important step toward promoting informed action.

Executive Summary

This paper analyzes the current state of knowledge about the effects of climate change on U.S. food production and agricultural resources. The paper also considers regional changes in agricultural production, including distributional impacts.

The linkages between agriculture and climate are pronounced, often complex, and not always well understood. Temperature increases can have both positive and negative effects on crop yields, with the difference depending in part on location and on the magnitude of the increase. Crop yields in the northern United States and Canada may increase, but yields in the already warm, low-latitude regions of the southern United States are likely to decline. Evidence also suggests positive crop yield effects for mild to moderate temperature increases such as 2°C to 3°C (3.6°F to 5.4°F). However, once average global temperatures rise beyond about 4°C (7.2°F), yields begin to fall. Increases in precipitation level, timing, and variability may benefit semi-arid and other water-short areas by increasing soil moisture, but could aggravate problems in regions with excess water. Although most climate models predict precipitation increases, some regions will experience decreased precipitation, which could exacerbate water shortages and droughts. Higher carbon dioxide (CO2) levels in controlled experiments increase crop growth and decrease water use. However, these experiments often have demonstrated a more positive response than observed under actual field conditions.

Agricultural systems are most sensitive to extreme climatic events such as floods, wind storms, and droughts, and to seasonal variability such as periods of frost, cold temperatures, and changing rainfall patterns. Climate change could alter the frequency and magnitude of extreme events and could change seasonal patterns in both favorable and unfavorable ways, depending on regional conditions. Increases in rainfall intensity pose a threat to agriculture and the environment because heavy rainfall is primarily responsible for soil erosion, leaching of agricultural chemicals, and run off that carries livestock waste and nutrients into water bodies. Currently available climate forecasts cannot resolve how extreme events and variability will change; however, both are potential risks to agriculture. The rate of change is also uncertain. Adjustment costs are likely to be higher with greater rates of change.

Agricultural systems are managed. Farmers have a number of adaptation options open to them, such as changing planting and harvest dates, rotating crops, selecting crops and crop varieties for cultivation, consuming water for irrigation, using fertilizers, and choosing tillage practices. These adaptation strategies can lessen potential yield losses from climate change and improve yields in regions where climate change has beneficial effects. At the market level, price and other changes can signal further opportunities to adapt as farmers make decisions about land use and which crops to grow. Thus, patterns of food production respond not only to biophysical changes in crop and livestock productivity brought about by climate change or technological change, but also to changes in agricultural management practices, crop and livestock prices, the cost and availability of inputs, and government policies. In the longer term, adaptations include the development and use of new crop varieties that offer advantages under changed climates, or investments in new irrigation infrastructure as insurance against potentially less reliable rainfall. The extent to which opportunities for adaptation are realized depends upon a variety of factors such as information flow, access to capital, and the flexibility of government programs and policies.

Climate change can also have a number of negative indirect effects on agro-environmental systems effects that have been largely ignored in climate change assessments. These indirect effects include changes in the incidence and distribution of pests and pathogens, increased rates of soil erosion and degradation, and increased tropospheric ozone levels from rising temperatures. Regional shifts in crop production and expansion of irrigated acreage may stress environmental and natural resources, including water quantity and quality, wetlands, soil, fish, and wildlife.

The focus of this paper is on the impacts of climate change on agriculture. However, agriculture is also a potential source of greenhouse gas (GHG) emissions, and it can play an important role in mitigating these emissions. Methane from rice paddies and livestock, nitrous oxide (N2O) from cultivated soils and feedlots, and CO2 from the cultivation of virgin agricultural lands and intensive production methods contribute to global warming. Changes in management can reduce emissions from these sources. Agriculture can reduce atmospheric CO2 through tree-planting and similar programs that sequester significant amounts of carbon and through increased planting of biofuel crops that could replace fossil fuels.

The following describes the current understanding regarding the potential impacts of climate change on U.S. agriculture:

CROPS AND LIVESTOCK ARE SENSITIVE TO CLIMATE CHANGES IN BOTH POSITIVE AND NEGATIVE WAYS. Understanding the direct biophysical and economic responses to these changes is complicated and requires more research. In addition, indirect effects - such as changes in pests and water quality and changes in extreme climate events - are not well understood.

THE EMERGING CONSENSUS FROM MODELING STUDIES IS THAT THE NET EFFECTS ON U.S. AGRICULTURE ASSOCIATED WITH ADOUBLING OF CO2 MAY BE SMALL; HOWEVER, REGIONAL CHANGES MAY BE SIGNIFICANT (I.E., THERE WILL BE SOME REGIONS THAT GAIN AND OTHERS THAT LOSE). Beyond a doubling of CO2 , the negative effects are more pronounced both in the United States and globally.

THE IMPACT OF CLIMATE CHANGE ON U.S. AGRICULTURE IS MIXED. Climate change is not expected to threaten the ability of the United States to produce enough food to feed itself through the next century; however, regional patterns of production are likely to change. Regions such as the Northern Great Plains and Great Lakes may have increased productivity while the Southern Plains, Delta states, and possibly the Southeast and portions of the Corn Belt could see agricultural productivity fall. However, the form and pattern of change are uncertain because changes in regional climate cannot be predicted with a high degree of confidence.

CONSIDERATION OF ADAPTATION AND HUMAN RESPONSE IS CRITICAL TO THE ACCURATE AND CREDIBLE ASSESSMENT OF CLIMATE CHANGE IMPACTS.However, because of the long time horizons involved in climate change assessments and uncertainties concerning the rate at which climate will change, it is difficult to predict accurately what adaptations people will make. This is particularly challenging since adaptations are influenced by many factors, including government policy, prices, technology research and development, and agricultural extension services.

BETTER CLIMATE CHANGE FORECASTS ARE KEY TO IMPROVE DASSESSMENTS OF THE IMPACTS OF CLIMATE CHANGE. In the meantime, farmers and the agricultural community must consider strategies that are economically and environmentally viable in the face of uncertainty about the course of climate change.

AGRICULTURE IS A SECTOR THAT CAN ADAPT, BUT THERE ARE SOME FACTORS NOT INCLUDED IN ASSESSMENTS THAT COULD CHANGE THIS CONCLUSION.Changes in the incidence and severity of agricultural pests, diseases, soil erosion, and tropospheric ozone levels, as well as changes in extreme events such as droughts and floods, are largely unmeasured or uncertain and have not been incorporated into estimates of impacts. These omitted effects could result in a very different assessment of the true impacts of climate change on agriculture. If the rate or magnitude of climate change is much greater than anticipated, adaptation could be more difficult and impacts could be greater than currently expected.
Overall, the consensus of economic assessments is that global climate change of the magnitudes currently being discussed by the Intergovernmental Panel on Climate Change (IPCC) and other organizations (i.e., +0.8°C to +4.5°C or +1.4°F to +8.1°F) could result in some lowering of global production but will have only a small overall effect on U.S. agriculture and its ability to provide sufficient food and fiber to both domestic and global customers over the next 100 years. However, distributional effects within the United States can be significant because consumers, producers, and local economies will gain in some regions and lose in others.

Warming beyond that reflected in current studies (i.e., associated with a continued rise in CO2 beyond the doubling that has been commonly investigated) is expected to impose greater costs, decreasing agricultural production in most areas of the United States and substantially limiting global production. This reinforces the need to determine the magnitude and rate of warming that may accompany the CO2 and greenhouse gas build-up currently underway in the atmosphere.

About the Authors

Richard M. Adams
Oregon State University, Corvallis, OR

Richard M. Adams received his Ph.D. in Agricultural Economics from the University of California, Davis, in 1975. He is currently a professor of Agricultural and Resource Economics at Oregon State University, a position he has held since 1983. His research interests include the economic analysis of resource and environmental issues, with emphasis on the consequences of environmental change. Professor Adams has served on numerous governmental advisory and research committees dealing with environmental issues. He has published over 160 journal articles, book chapters and research reports, including 20 on the effects of climate change on agriculture and agricultural resources. He has served on the editorial boards of five journals and w as editor of the American Journal of Agricultural Economics from 1992 to 1994.

Brian H. Hurd
Stratus Consulting Inc., Boulder, CO

Brian H. Hurd is a Senior Associate in the climate change group at Stratus Consulting, a Boulder-based environment and energy research firm. He received his Ph.D. in agricultural economics from the University of California, Davis in 1992, where he analyzed technology changes in production agriculture. His passion for interdisciplinary research and for contributing to public decision-making regarding natural resources has led to his current focus on climate change. He has developed regional and national models of water resource impacts, analyzed land use changes in forestry and agriculture, and investigated adaptation and mitigation strategies, while serving a variety of public- and private-sector clients such as U.S. EPA, U.S. Department of Energy, National Science Foundation, National Institute for Global Environmental Change, and the Electric Power Research Institute.

John Reilly
Massachusetts Institute of Technology, Cambridge, MA

Dr. Reilly is the Associate Director for Research in the Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology. He spent 12 years with the Economic Research Service of USDA, most recently as the Acting Director and Deputy Director for Research of the Resource Economics Division. He has been a scientist with Battelle's Pacific Northwest National Laboratory and with the Institute for Energy Analysis, Oak Ridge Associated Universities. He received his Ph.D. in economics from the University of Pennsylvania in 1983 and holds a BS in economics and political science from the University of Wisconsin. He has conducted research on the economics of climate change for 19 years. He was a principal author for the Intergovernmental Panel on Climate Change's Second Assessment Report and has served on many Federal government and international committees on climate change and agricultural research.

 

 

Brian Hurd
John M. Reilly
Richard M. Adams
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