Managing U.S. climate risk through mitigation: Insights from the American Climate Prospectus

Abstract:

The American Climate Prospectus (ACP), the technical analysis underlying the Risky Business project, quantitatively assessed the economic risks posed to the United States by six categories of climate change impacts: crop yield, energy demand, coastal storm damage, criminal activity, labor productivity, and mortality [1]. At a national level, measured by impact on gross domestic product, increased mortality and decreased labor productivity pose the large risks, followed by increased energy demand and coastal damages. Changes in crop yield and crime have smaller impacts.

The ACP was not intended to conduct a benefit-cost analysis of climate change mitigation. It assessed the economic consequences of future impacts on an economy with a structure equivalent to that of the current economy, not accounting for socio-economic development and adaptation, and did not assess the cost of mitigation. One of its primary goals was to inform adaptation decisions that are conventionally considered 'endogenous' in economic analyses of climate change. Nonetheless, its results provide insight into the potential of mitigation to manage climate risk.

Differences between RCP 8.5 (moderately-high business-as-usual emissions), RCP 4.5 (moderate mitigation) and RCP 2.6 (extremely strong mitigation) are not apparent until mid-century and become significant only late in the century. For all impacts except coastal damages, mitigation significantly reduces uncertainty in late-century impact estimates. Nationally, mitigation significantly and monotonically reduces median projected labor productivity losses and violent crime.

Switching from RCP 8.5 to RCP 4.5 also significantly reduces median projections of mortality and energy demand, but the domestic value to the U.S. of further mitigation to RCP 2.6 is less clear. The marginal benefits decline in part because some regions of the country (especially the Northwest) may experience increased crop yields, reduced mortality, and reduced energy demand under all RCPs. Because of the slow response time of sea level to change in emissions, the coastal risk reduction in the current century from mitigation is least clear.

References: [1] T. Houser et al. (2014), American Climate Prospectus, www.climateprospectus.org.