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Norgaard I 178
Climate Costs/Losses/United States: The original United States Environmental Protection Administration (USEPA) studies of the damages from climate change were exclusively concerned with measuring effects in the United States (Smith and Tirpak 1989)(1). The analyses examined the consequences of the equilibrium climate that would be caused by doubling carbon dioxide (CO2) concentrations in the earth (550 ppm). The USEPA studies did not address the dynamics of impacts over time. For example, the coastal, forestry, and ecosystem studies involve sectors that take decades if not centuries to adjust. The studies did not capture how these costs evolved over time. The USEPA studies revealed that a limited number of economic sectors were vulnerable to climate change: agriculture, coastal, energy, forestry, infrastructure, and water. In addition, several non‐market sectors were also vulnerable including recreation, ecosystems, endangered species, and health.
Subsequent economic studies attempted to value the US economic damages associated with these impacts in terms of dollars (Nordhaus 1991(2); Cline 1992(3); Titus 1992(4); Fankhauser 1995(5); Tol 1995(6)). These economic results were summarized in the Second Assessment Report of the Intergovernmental Panel on Climate Change (Pearce et al. 1996)(7). The aggregate damage estimates to the US for doubling greenhouse gases (550 ppm) range from 1.0 to 2.5 percent of GDP.
The damage estimates varied widely across the different authors reviewed even though each author relied on the same original USEPA sectoral studies. Most of the other authors [excluding Cline and Frankhauser] assumed that ecosystem change would not necessarily be this harmful.
Norgaard I 179
Climate Costs/Losses: Two studies went beyond the US and predicted impacts across the world (Fankhauser 1995(5); Tol 1995(6)). Unfortunately, there was little evidence at the time to base this extrapolation upon other than population and income. They predicted global impacts from doubling CO would range from 1.4 to 1.9 percent of Gross World Product (GWP). They predicted that the bulk of these damages would fall on the OECD (60 to 67 percent) because they assumed that damages were proportional to income. Only 20 to 37 percent of the damages were predicted to fall on low latitude countries, although this would amount to a higher fraction of their GDP (over 6 percent). Africa, southern Asia, and southeast Asia (not including China) were predicted to be the most sensitive to warming with losses over 8 percent of GDP (Tol 1995)(6). If temperatures could rise to 10 °C in future centuries, damages could rise to 6 percent of GWP (Cline 1992)(3).
Vs: (…) this is based largely on just extrapolating the results of the doubling experiment rather than upon additional research concerning higher temperatures.
(…) the current present value of a ton of carbon would lead to damages on the order of $5 to $12 per ton (Pearce et al. 1996)(7). This is equivalent to $1.4 to $3.3 per ton of carbon dioxide. This social cost of carbon should rise over time at approximately a 2 percent rate to account for the rising marginal damages associated with accumulating greenhouse gases in the atmosphere. Such low prices will not stop greenhouse gases from accumulating over this century, they will simply slow them down (Nordhaus 1991)(2).
Climate Costs/Catastrophes: The IPCC report also considered catastrophe. If temperatures were 6°C warmer by 2090, ‘experts’ predicted an 18 percent chance that damages would be greater than 25 percent of GWP (Nordhaus 1994)(8). In this case, experts included economists but also natural scientists unfamiliar with damage estimation. The three catastrophes identified in the IPCC report are a runaway greenhouse gas effect, disintegration of the West Antarctic ice sheet, and major changes in ocean currents (Pearce et al. 1996)(7).


1. Smith, J., and Tirpak, D. 1989. Potential Effects of Global Climate Change on the United States. Washington, DC: US Environmental Protection Agency.
2. Nordhaus, W. 1991. To slow or not to slow: The economics of the greenhouse effect. Economic Journal 101: 920–37.
3. Cline, W. 1992. The Economics of Global Warming. Washington, DC: Institute of International Economics.
4. Titus, J. G. 1992. The cost of climate change to the United States. In S. Majumdar, L. Kalkstein, B. Yarnal, E. Miller, and L. Rosenfeld (eds.), Global Climate Change: Implications, Challenges, and Mitigation Measures. Easton, PA: Pennsylvania Academy of Sciences.
5. Fankhauser, S. 1995. Valuing Climate Change: The Economics of the Greenhouse. London: Earthscan.
6. Tol, R. 1995. The damage costs of climate change: Towards more comprehensive estimates. Environmental and Resource Economics 5: 353–74.
7. Pearce, D. et al. 1996. The social cost of climate change: Greenhouse damage and the benefits of control. Pp. 179–224 in Intergovernmental Panel on Climate Change, Climate Change 1995: Economic and Social Dimensions of Climate Change. Cambridge: Cambridge University Press.
8. Nordhaus, W. 1994. Managing the Global Commons. The Economics of Climate Change. MIT Press, Cambridge, MA.



Mendelsohn, Robert: “Economic Estimates of the Damages Caused by Climate Change”, In: John S. Dryzek, Richard B. Norgaard, David Schlosberg (eds.) (2011): The Oxford Handbook of Climate Change and Society. Oxford: Oxford University Press.


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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
United States
Norgaard I
Richard Norgaard
John S. Dryzek
The Oxford Handbook of Climate Change and Society Oxford 2011


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