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Economists Greatly Underestimate Climate Risks, Researchers Say

Climate
The artwork "Come Hell or High Water" by Michael Pinsky. Akuppa John Wigham / Flickr / CC BY 2.0

The economic models policymakers rely upon greatly underestimate the economic risks posed by climate change, according to a policy brief released Monday by experts from the Environmental Defense Fund, Harvard University and London School of Economics and Political Science (LSE), an LSE press release reported.


The paper, published in Review of Environmental Economics and Policy, urged the Intergovernmental Panel on Climate Change (IPCC) to improve how it explains the results of economic models as it works on its Sixth Assessment Report to be published between 2021 and 2022, in order to bridge the gap between the projected scientific and economic impacts of global warming.

"These discrepancies between the physical and the economic impact estimates are large, and they matter. However, physical impacts are often not translated into monetary terms and they have largely been ignored by climate economists," the paper's authors, Thomas Stoerk of the Environmental Defense Fund, Gernot Wagner of the Harvard University Center for the Environment and Bob Ward of the ESRC Centre for Climate Change Economics and Policy and Grantham Research Institute at LSE, wrote.

For example, the IPCC's Fifth Assessment Report found that risks associated with "global aggregate," or economic, impacts were only moderate for up to three degrees Celsius of warming above pre-industrial levels, while risks associated with threats to species and habitats, extreme weather, threats to developing nations and the poor and "large-scale high-impact events" were reported to be high.

One of the reasons for this discrepancy, the paper found, was that the economic models used did not adequately account for the possibility of "tipping points" that can make economic and climate outcomes suddenly much worse, especially if global temperatures rise by more than two degrees Celsius.

The Dynamic Integrated Climate–Economy (DICE) model, for instance, projects that global economic output would only fall by 10 percent if the world warmed by six degrees Celsius. However, research cited in the paper found that, when the possibility of passing physical tipping points was used to introduce a more extensive "damage function" into the model, global output was predicted to fall by 50 percent in a six-degree warmer world.

"Thus climate policy recommendations based on the current framework seriously underestimate the economic value of climate damages," the paper concluded.

The paper urged the IPCC to, first, "strengthen its focus on decision making under uncertainty," and second "focus on estimating how the uncertainty itself affects economic and financial cost estimates of climate change."

The researchers directly flagged their paper in a letter to the co-chairs of the IPCC Working Group II, professor Hans-Otto Pörtner and professor Debra Roberts.

The current warning comes little over a week after one of the first studies to consider the economic benefits of honoring the Paris agreement's stricter goal of limiting global warming to 1.5 degrees Celsius found that doing so could save the world economy $20 trillion.

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A volcano erupts on New Zealand's Whakaari/White Island on Dec. 9, 2019. Michael Schade / Twitter

A powerful volcano on Monday rocked an uninhabited island frequented by tourists about 30 miles off New Zealand's coast. Authorities have confirmed that five people died. They expect that number to rise as some are missing and police officials issued a statement that flights around the islands revealed "no signs of life had been seen at any point,", as The Guardian reported.

"Based on the information we have, we do not believe there are any survivors on the island," the police said in their official statement. "Police is working urgently to confirm the exact number of those who have died, further to the five confirmed deceased already."

The eruption happened on New Zealand's Whakaari/White Island, an islet jutting out of the Bay of Plenty, off the country's North Island. The island is privately owned and is typically visited for day-trips by thousands of tourists every year, according to The New York Times.

Michael Schade / Twitter

At the time of the eruption on Monday, about 50 passengers from the Ovation of Seas were on the island, including more than 30 who were part of a Royal Caribbean cruise trip, according to CNN. Twenty-three people, including the five dead, were evacuated from the island.

The eruption occurred at 2:11 pm local time on Monday, as footage from a crater camera owned and operated by GeoNet, New Zealand's geological hazards agency, shows. The camera also shows dozens of people walking near the rim as white smoke billows just before the eruption, according to Reuters.

Police were unable to reach the island because searing white ash posed imminent danger to rescue workers, said John Tims, New Zealand's deputy police commissioner, as he stood next to Prime Minister Jacinda Ardern in a press conference, as The New York Times reported. Tims said rescue workers would assess the safety of approaching the island on Tuesday morning. "We know the urgency to go back to the island," he told reporters.

"The physical environment is unsafe for us to return to the island," Tims added, as CNN reported. "It's important that we consider the health and safety of rescuers, so we're taking advice from experts going forward."

Authorities have had no communication with anyone on the island. They are frantically working to identify how many people remain and who they are, according to CNN.

Geologists said the eruption is not unexpected and some questioned why the island is open to tourism.

"The volcano has been restless for a few weeks, resulting in the raising of the alert level, so that this eruption is not really a surprise," said Bill McGuire, emeritus professor of geophysical and climate hazards at University College London, as The Guardian reported.

"White Island has been a disaster waiting to happen for many years," said Raymond Cas, emeritus professor at Monash University's school of earth, atmosphere and environment, as The Guardian reported. "Having visited it twice, I have always felt that it was too dangerous to allow the daily tour groups that visit the uninhabited island volcano by boat and helicopter."

The prime minister arrived Monday night in Whakatane, the town closest to the eruption, where day boats visiting the island are docked. Whakatane has a large Maori population.

Ardern met with local council leaders on Monday. She is scheduled to meet with search and rescue teams and will speak to the media at 7 a.m. local time (1 p.m. EST), after drones survey the island, as CNN reported.