"It's the positive side of global warming..."

Economics is the study of trade-offs:  Costs versus benefits, wants versus needs.  We have all heard about the costs of global woarming.  Today, the New York Times reports on some of the benefits.

Even before the polar ice began shrinking more each summer, countries were pushing into the frigid Barents Sea, lured by undersea oil and gas fields and emboldened by advances in technology. But now, as thinning ice stands to simplify construction of drilling rigs, exploration is likely to move even farther north.

Last year, scientists found tantalizing hints of oil in seabed samples just 200 miles from the North Pole. All told, one quarter of the world's undiscovered oil and gas resources lies in the Arctic, according to the United States Geological Survey.

The polar thaw is also starting to unlock other treasures: lucrative shipping routes, perhaps even the storied Northwest Passage; new cruise ship destinations; and important commercial fisheries.

We all know that global warming has its costs.  But as an economist, I am forced to recognize the benefits too.  Do the benefits outweigh the costs?  I doubt it, but who knows.  It's all about the trade-offs.

Comments

[John Whitehead]

Dag-gum-it! Tim beat me to this post by less than one hour. Here is my intro:

Many studies find that the economic effect of global warming is small, insignificant or nil (or even positive). The deal is that some people in climates closer to the poles gain and some in climates closer to the equator and water lose.

And my conclusion:

This is one of the problems that arises when trying to address global warming. Some of the losses are huge, yet these are partially (or maybe even wholly) offset by gains. The trick is determining how to weight the gains and losses in a benefit-cost analysis.

[Tim Haab]

Unbelievable. I finally beat you to one.

[M1EK]

The studies that assert a net gain or even a small net loss from global warming generally suffer from a common flaw - simplistic thinking about climate.

An analogue with sea level rise is particularly telling - some folks assert that if sea level goes up by 10 feet, they'll invest in beachfront property in Houston, for instance, ignoring the fact that all of the sand on the beaches is now 10 feet underwater. Your new 'beach' is a parking lot lapped by ocean waves where if you try to go out for a swim, you're going to be navigating through piles of old buildings and whatnot. So, Houston's "gain" in waterfront property is true - but it's going to be really really crappy waterfront property. To claim that this is no net loss because Galveston's lost oceanfront property was balanced by Houston's gained property is ludicrous, yet that's effectively what they do.

Likewise with food production - if you go more than a few inches deep on the issue, you realize that many species are highly adapted to where they're grown today and even small perturbations in climate have huge effects on their production (almost always negative). And you can't just 'move north' - the soil 200 miles north is rarely going to be as good as where you started; if there even is any (marginal increases in production on the existing plots up there are unlikely to make up for the huge losses further south; new farms would have to be found, and they won't enjoy Mississippi River sediment).

Iowa's loss in corn production can't possibly be made up for by North Dakota's (or Canada's) gain - the odds that the same growing conditions (other than weather) will exist up there are not good.

[Tim Haab]

"Houston's "gain" in waterfront property is true - but it's going to be really really crappy waterfront property."

I disagree. Assuming the rise does happen (a very uncertain prediction at this point) the waterfront property may be different, but not necessarily 'crappy.' Entrepreneurs are ingenious. They'll figure out a way to make that property valuable to tourists. And imagine all the scuba diving opportunities along what is now the coast but will be offshore in your hypothetical.

As for food production, we might have to grow different crops or use different technologies, but it's not going to eliminate U.S. farming.

Yes I'm being somewhat facetious. My point is there are benefits and costs and we don't know what either are right now--with certainty. But as long as the change is gradual and doesn't result in complete human extinction, people will adapt. Call me an optimist, but I just don't foresee a complete economic collapse. Maybe a net loss, but that's not even certain.

[M1EK]

"I disagree. Assuming the rise does happen (a very uncertain prediction at this point) the waterfront property may be different, but not necessarily 'crappy.'"

A sea level rise of 10 feet in a timeframe of decades means that essentially every beach in the world is gone (since the geological processes that create beaches can't work that fast to replace them at a higher altitude). If you can come up with a similarly valuable way to use parking lots and flooded houses, you're the biggest genius the world has ever known.

[Robert Schwartz]

"some folks assert that if sea level goes up by 10 feet, they'll invest in beachfront property in Houston, for instance, ignoring the fact that all of the sand on the beaches is now 10 feet underwater."

This argument won't hold water. "Beaches" are for the most part artifacts maintained, with great effort by men. Houstonians would do what Floridians do. Hire dredges and pump the sand from its old location to where it is wanted.

"many species are highly adapted to where they're grown today and even small perturbations in climate have huge effects on their production (almost always negative)."

If crops are highly adapted to their locations it is because farmers (and even more importantly, seed companies) have adapted them. The fact that maize is grown everywhere from the tropics to well past 40° North shows that crops are highly adaptable. Not only that, but our ability to modify crop genomes is increasing and will further aid in adaptation. All agricultural crops are grown in lands far away from their origin. This argument does not carry any weight either.

"And you can't just 'move north' - the soil 200 miles north is rarely going to be as good as where you started;"

Not so. Agricultural soils are human creations. The immensely rich farm land to the west of where I (and Tim) live was a malaria swamp before it was drained, graded and fertilized. Read Charles Mann's new book about the pre-Columbian history of the Americas. The Indians manufactured enormous amounts of agricultural acreage, without backhoes.

"new farms would have to be found, and they won't enjoy Mississippi River sediment"

What are you talking about. Blind men can find farms in the Dakotas, there really isn't much else. And Mississippi River sediment is not a factor in agriculture north of Cape Giradeau.

"Iowa's loss in corn production can't possibly be made up for by North Dakota's (or Canada's) gain - the odds that the same growing conditions (other than weather) will exist up there are not good."

That has to be just plain wrong.

M1EK's argument is more of the same hysteria. It does not hold water or anything else.

[Tim Haab]

But human ingenuity and technology works faster than geological processes. I've seen many beaches replenished and reconstructed in less than a year after a hurricane completely changes the landscape. Parking lots and houses are temporary.

Besides...I still need the 10ft sea level rise explained to me. I'm not a physicist, but when the ice melts in my full glass of water at home, the glass doesn't overflow (my second grader just showed me the results of the experiment she did in science). What am I missing? Where's all the new water coming from? Hasn't the ice already displaced the mass that will be replaced with the melted ice? I guess some will run off of Antarctica and Greenland, but is that really enough to cause a 10 ft rise in surface water levels globally? (Seriously, I don't know. Can someone please explain it to me).

[Tim Haab]

Great points Robert. My comment above is aimed at M1EK's comments. I must have been typing my response as Robert was posting his.

[Joshua corning]

It is my understanding that the effects of the mideavil warming period were for the most part possitive...and the increase in tempreture was far more pornounced then the current warming period. I find it strange that as we have become less dependant on the climent through irrigation, air conditioning, insulation etc that you assume that the negitives will now out weigh the negatives.

Anyway if the sun keeps heating the earth up as it is now the possitives to be inluded are: longer growing seasons, greater presipitaion, larger areas that can support more biodiversity, higher crop yeilds, more board feet of wood per acre less deaths due to cold weather...i will think of some more. :)

[Dano]

There are a number of myths in this thread about agriculture:

If crops are highly adapted to their locations it is because farmers (and even more importantly, seed companies) have adapted them.

No. Think about temperatures and corn, wheat, winter wheat, and why so much money is in R&D for rice surviving over 90 oF, and why productivity falls off when temps rise.

Agricultural soils are human creations.

Wow. Scary.

I guess decomposers and plants have nothing to do with it then. Whatever did earth do before humans evolved?

the positives to be included are: ...greater precipitation...

It appears likely that soil moisture will be less, as the precip will be in greater events, more widely spaced.

There's more, but so little time...

HTH,

D

"It appears likely that soil moisture will be less, as the precip will be in greater events, more widely spaced."

In some areas yes...in others no. The net effect being greater global precipitation.

[M1EK]

"I've seen many beaches replenished and reconstructed in less than a year after a hurricane completely changes the landscape"

(several other similar comments about how man'll just dredge up the sand)

TODAY, many people believe we can't afford the amount we're spending on beach renourishment in several places which might add up to 0.00001% of US beach by length. (and yes, having grown up in South Florida, I'm well acquainted with the renourishment process and how well it 'works').

And you guys think we can save a non-trivial number of beaches given a 10-foot sea level rise?

[Dano]

In some areas yes...in others no. The net effect being greater global precipitation.

Citation plz?

D

[Robert Schwartz]

"Think about temperatures and corn, wheat, winter wheat, and why so much money is in R&D for rice surviving over 90 oF, and why productivity falls off when temps rise."

This is incoherent. One more time. Farmers and seed companies adapt crops to climates. That is why maize can grow in the tropics and in Iowa. Your claim that productivity falls off over 90 is not borne out by my experience, perhaps you would like to add a citation.

"Agricultural soils are human creations. Wow. Scary. I guess decomposers and plants have nothing to do with it then. Whatever did earth do before humans evolved?"

It did not have agriculture. And yes. they are human creations. Without tillage, drainage and amendment soils lose their productivity. This is why slash and burn peoples have to keep moving.

[Robert Schwartz]

M1EK wrote: "many people believe we can't afford the amount we're spending on beach renourishment"

I like that many people. Who are they and what do they want.

"in several places which might add up to 0.00001% of US beach by length."

Sandy beaches are a small percentage of the coastline which is dominated by rocks, mud, and swamp. I take it your percentage is inflated for rhetorical effect.

"And you guys think we can save a non-trivial number of beaches given a 10-foot sea level rise?"

I don't take the given, but my answer is yes. (If you can operate in a fact free zone, so can I)

[Dano]

This is incoherent. One more time. Farmers and seed companies adapt crops to climates. That is why maize can grow in the tropics and in Iowa. Your claim that productivity falls off over 90 is not borne out by my experience, perhaps you would like to add a citation.

It's coherent. And you don't have to repeat yourself. And I thought I typed '90 oF' [deg f], but maybe it didn't go thru.

We conclude that gradual temperature changes have had a measurable impact on crop yield trends. The slope of regression (ry) indicates a roughly 17% relative decrease in both corn and soybean yield for each degree increase in growing season temperature...On the basis of this investigation, there is a clear and present need to synthesize crop yield and climate data from different areas, perhaps with more detailed information on management, to provide critically needed observational constraints to projections of both climate change and management impacts on future food production.

[emphasis added, footnotes omitted]

Lobell and Asner 2003. Climate and Management Contributions to Recent Trends in U.S. Agricultural Yields. Science 299, 1032 DOI: 10.1126/science.1077838.

Plenty more of those where that came from. You can't change basic physiology. There are upper bounds on heat tolerance. Period. The rule of thumb is ~10% for each degree increase, as most crops are at the upper bounds of their heat tolerance.

Without tillage, drainage and amendment soils lose their productivity. This is why slash and burn peoples have to keep moving.

Soils have been around - and productive - for far longer than humans. Except tropical soils, which are not very fertile (which is why slash and burn peoples in the tropics must keep moving)

Unless you mean agricultural productivity, but then the above statement neglects no-till agriculture, rice paddies, etc.

HTH,

D

[Eric H]

I doubt that heat tolerance is the limiting factor; drought, pest, and poor soil tolerance are the main topics of research at the local ag school (where heat is a daily consideration - I'm still wearing shorts!). My guess is that global warming will have a mixed effect on the first (more precipitation in some areas, less in others), a negative on the second (no winter freeze = more pests), and no effect on the third (warmth or coldth doesn't effect salinity and pH). However, a warmer winter means you can adjust your growing season later or earlier, possibly getting two crops (as many farmers do already). Further, anything that will grow in the Southwest US, or in heavily irrigated Egyptian fields, will grow in Iowa when it is 1 degree warmer. Has anyone told the Canadians that they couldn't *possibly* grow enough to make up for the 10%-60% loss in Iowa's production in the next 100 years (assuming the 10%/degree is correct and using the estimates of a 1-6 degree rise over 100 years)? They might be surprised, especially given the radical increase in productivity over the last 100 years *despite* a 1.5 degree rise.

[M1EK]

"Has anyone told the Canadians that they couldn't *possibly* grow enough to make up for the 10%-60% loss in Iowa's production in the next 100 years"

My position rests on the contention that the best farmable land in Canada is probably already being farmed. Probably no increases in production on their existing farmland due to pests overwhelming longer growing seasons.

The land we farm in the MidWest was laid down over thousands of floods of those rivers. Human ingenuity can make some crops grow in poor-quality soils, but it's no match for Nature - otherwise, the Southwest would be as productive as Iowa.

[odograph]

Skimming the replies I don't see it put simply:

The winners and losers will break out on a regional (or continental?) scale.

From the studies I've skimmed (I rarely "read" in the Internet age), the west coast of the US may be a winner.

It has occurred to me that such regional studies might be driving Washington's response ... if they think they win, with global warming.

[M1EK]

"Sandy beaches are a small percentage of the coastline which is dominated by rocks, mud, and swamp. I take it your percentage is inflated for rhetorical effect."

Sandy beaches dominate most of the US Atlantic coast, at least. I'm not as familiar with the Pacific coast to guess there, but the economic activity along the Atlantic beaches is much larger anyways.

And the amount of Florida's cost alone which was undergoing beach renourishment at any time was a tiny, tiny, tiny miniscule fraction of that, yet we heard constant complaining about the cost.

(and typically in Florida you have to renourish again after 15 or 20 years).

[M1EK]

"The winners and losers will break out on a regional (or continental?) scale."

I think it's more likely to be a few winners, mostly losers; with an overall large loss. Most of our food species don't react well to sudden changes in climate. ("sudden" meaning decadal rather than millenial - i.e. no time to gradually change their range and gradually adapt to new conditions).

As with Peak Oil, some people need to realize that the physical world doesn't always follow neat economic models. Some plants will doubtless thrive in the turmoil of suddenly hotter weather. But can we eat kudzu?

[Dano]

I doubt that heat tolerance is the limiting factor; drought, pest, and poor soil tolerance are the main topics of research at the local ag school (where heat is a daily consideration - I'm still wearing shorts!).

You can fix your limiting factors with water (for a while) and chemicals - you can't fix the heat issue [how much did Europe's harvests fall short in the heat wave of 2003?].

From the studies I've skimmed...the west coast of the US may be a winner.

Only if you count lower snowpack and more drought complicating water resource allocation as being a winner.

As with Peak Oil, some people need to realize that the physical world doesn't always follow neat economic models.

Excellent comment. Environmental refugees will move inland overwhelming infrastructure, and 3B more people by century's end will need 1B more hectares of land, some of which will be arable, further complicating matters.

These pressures on top of warming will strain our societies, and I'm not sure how we can say the benefits will outweigh the costs...

Best,

D

[odograph]

For what it's worth, here are the state-by-state impacts, calculated by the EPA:

http://yosemite.epa.gov/oar/globalwarming.nsf/content/ImpactsStateImpacts.html

If they've done that, you know they've also done us-versus-themm regional analysis.

[John Whitehead]

Odograph,

That link isn't working for me ... is something missing?

Dano says "These pressures on top of warming will strain our societies, and I'm not sure how we can say the benefits will outweigh the costs..."

The original post points out that there will be winners from global warming but no mention of whether the gains outweigh the losses. The first comment (mine) points out that under certain scenarios, some research finds that the agricultural net gain might be positive.

I'm sure that the net effect of global warming for the U.S. and the world is negative. In other words, global warming is most likely a problem that should to be addressed. My opinion only.

[odograph]

It works for me in firefox if I'm careful about copying the line ... but it was probably bad from for me to just past it in, when I could create a nice link