The American Climate Prospectus: a risk-centered analysis of the economic impacts of climate change

Abstract:

The American Climate Prospectus (ACP), the analysis underlying the Risky Business project, quantitatively assessed the climate risks posed to the United States’ economy in six sectors - crop yields, energy demand, coastal property, crime, labor productivity, and mortality [1]. The ACP is unique in its characterization of the full probability distribution of economic impacts of climate change throughout the 21^st century, making it an extremely useful basis for risk assessments.

Three key innovations allow for this characterization. First, climate projections from CMIP5 models are scaled to a temperature probability distribution derived from a coarser climate model (MAGICC). This allows a more accurate representation of the whole distribution of future climates (in particular the tails) than a simple ensemble average. These are downscaled both temporally and spatially. Second, a set of local sea level rise and tropical cyclone projections are used in conjunction with the most detailed dataset of coastal property in the US in order to capture the risks of rising seas and storm surge.

Third, we base many of our sectors on empirically-derived responses to temperature and precipitation. Each of these dose-response functions is resampled many times to populate a statistical distribution. Combining these with uncertainty in emissions scenario, climate model, and weather, we create the full probability distribution of climate impacts from county up to national levels, as well as model the effects upon the economy as a whole.

Results are presented as likelihood ranges, as well as changes to return intervals of extreme events. The ACP analysis allows us to compare between sectors to understand the magnitude of required policy responses, and also to identify risks through time. Many sectors displaying large impacts at the end of the century, like those of mortality, have smaller changes in the near-term, due to non-linearities in the response functions. Other sectors, like coastal damages, have monotonically increasing costs throughout the 21^st century. Taken together, the results from the ACP presents a unique and novel view of the short-, medium-, and long-term economic risks of climate change in the US.

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