Economic Risks of Climate Change

Economic Risks of Climate Change An American Prospectus Trevor Houser Rhodium Group Michael Delgado Rhodium Group Roger Muir-Wood RMS Solomon Hsiang UC Berkeley Amir Jina Columbia University DJ Rasmussen Rhodium Group Robert Kopp* Rutgers University Michael Mastrandrea Stanford University James Rising Columbia University Kate Larsen Rhodium Group Shashank Mohan Rhodium Group Paul Wilson RMS Foreword by Michael R. Bloomberg, Henry M. Paulson, and Thomas F. Steyer Presented by Robert Kopp (robert.kopp@rutgers.edu) Maryland Climate Change Commission August 5, 2015 ECONOMIC R SKS OF CL MATE CHANGE An American Prospectus 10 East 40 th Street, Suite 3601, New York, NY 10016 Contributions by Karen Fisher-Vanden, Michael Greenstone, Geoffrey Heal, Michael Oppenheimer, Nicholas Stern, and Bob Ward Resources for the Future American Climate Prospectus: Economic Risks in the United States Tel: +1.212.532.1158 Fax: +1.212.532.1162 Web: www.rhgroup.net # www.climateprospectus.org TREVOR HOUSER, SOLOMON HSIANG, ROBERT KOPP, AND KATE LARSEN

Overview www.climateprospectus.org 2

Global temperatures are rising Degrees Fahrenheit 58.5 58.0 95% Confidence interval Global Average Temperature 57.5 57.0 56.5 56.0 55.5 1850 1863 1875 1888 1900 1913 1925 1938 1950 1963 1975 1988 2000 2013 www.climateprospectus.org 3

and we know the main reason why. World primary energy use, 1850-2008 EJ 600 550 500 450 400 350 300 250 200 New renewables Nuclear Hydropower Gas Oil Coal Biomass Global Energy Assessment (2012) Microchip Nuclear energy WWW Internet 150 100 50 Steam engine Electric motor Gasoline engine Vacuum tube Commercial aviation Television 0 1850 1875 1900 1925 1950 1975 2000 2008 www.climateprospectus.org 4

We ve changed the atmosphere in a way unprecedented in our species history. 2014: 400ppm 400 10.0 5.0 CO2 Concentrations, ppm 350 300 250 200 150 CO2 Concentrations (ppm) Antarctic Temperature Change (F) 0.0 Antarctic Temperature, F -5.0-10.0-15.0-20.0-800,000-700,000-600,000-500,000-400,000-300,000-200,000-100,000 0 Year CE www.climateprospectus.org 5

An Independent Assessment for a Climate Risk Committee Analytical Support for the Risky Business Project (riskybusiness.org) www.climateprospectus.org 6

Research approach Spatial Empirical Adaptive Global-to-Local Assessment System (SEAGLAS) Downscaled, probabilistic physical climate projections Impact estimates based on metaanalysis of econometric research Integrated economic analysis with CGE model, consideration of potential adaptations Complementary detailed sectoral models www.climateprospectus.org 7

Scope of coverage Far from comprehensive focus on impacts quantifiable in a 1-year analysis www.climateprospectus.org 8

Physical Climate Projections www.climateprospectus.org 9

We can shape the path of future greenhouse gas emissions. parts per million carbon dioxide concentrations 1000 900 800 700 600 500 400 300 200 RCP8.5 RCP6.0 RCP4.5 RCP2.6 Historical 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 ( Business as Usual: Our Current Path ) ( Small emissions reduction ) ( Medium emissions reduction ) ( Large emissions reduction ) 2050 2075 2100 www.climateprospectus.org 10

Those choices affect the future temperature trajectory of the planet. Temperature projections ( F) from the MAGICC simple climate model, courtesy Malte Meinshausen 12 RCP 8.5 95% 12 10 RCP 6.0 RCP 4.5 Likely Range 10 8 RCP 2.6 Historical (10-year avg.) 5% 8 6 Historical (annual) 6 4 4 2 2 0 0-2 1900 1925 1950 1975 2000 2025 2050 2075 2100 2020-2039 2040-2059 2080-2099 2080-2099 -2 www.climateprospectus.org 11

And of the United States. Median and 1-in-20 chance summer temperature projections ( F) RCP 8.5 (high emissions) www.climateprospectus.org 12

Average summer temperature in Maryland Degrees Fahrenheit 92 90 88 86 84 82 80 Florida 1981-2010 average South Carolina 1981-2010 average 78 76 74 72 1981-2010 average (74.5 ) 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 13

Average winter temperature in Maryland Degrees Fahrenheit 50 48 46 South Carolina 1981-2010 average 44 42 North Carolina 1981-2010 average 40 38 36 1981-2010 average (35.5 ) 34 32 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 14

Number of days above 95 F in Maryland Average days/year, population-weighted 120 100 80 60 40 20 0 1981-2010 average (6.4) 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 S. Carolina 1981-2010 avg. www.climateprospectus.org 15

Number of freezing days in Maryland Average days/year, population-weighted 100 90 1981-2010 average (90) 80 70 60 North Carolina 1981-2010 average 50 40 South Carolina 1981-2010 average 30 20 10 0 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 16

They will also affect precipitation. Median projected % precipitation change, RCP 8.5 (high emissions) in 2080-2099. In the faded regions, an increase and an decrease are both about equally likely. www.climateprospectus.org 17

ACP Humid Heat Stroke Index It s not just the heat; it s the humidity. ACP HHSI Peak Wet Bulb Temperature Descrip9on (ho>est part of day) I 74 F- 80 F Uncomfortable. Typical of much of summer in the Southeast. II III IV 80 F- 86 F 86 F- 92 F >92 F Dangerous. Typical of most humid parts of Texas and Louisiana in hoeest summer month, and most humid summer days in Washington and Chicago. Extremely dangerous. Comparable to Midwest during peak days of 1995 heat wave. Extraordinarily dangerous. Exceeds all U.S. historical records. Heat stroke likely for fit individuals aver less than one hour of moderate acwvity in the shade. www.climateprospectus.org 18

They will also affect humidity extremes. Expected number of Category 3+ (extremely dangerous) in a typical year 2180-2199 RCP 2.6 RCP 4.5 RCP 8.5 2080-2099 <1 every 10 years 0.1 www.climateprospectus.org 1 5 10 20 30 40 50 60 90 19

Number of dangerously humid (Category II+) days in average Maryland summer 80 70 60 50 40 30 20 10 0 Louisiana 1981-2010 average Mississippi 1981-2010 average 1981-2010 average (1.4) 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 20

Number of extremely dangerously humid (Category III+) days in average Maryland summer (Note logarithmic scale!) 10 1 0.1 0.01 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 21

They also drive rising sea levels, both globally Feet global mean sea-level rise above year 2000 levels 4.0 3.5 3.0 2.5 RCP8.5 RCP4.5 RCP2.6 Historic RCP 2.6/8.5, 1-in-200 chance: 2030: 0.7 ft 2050: 1.4/1.6 ft 2100: 4.6/5.8 ft 2.0 95% 1.5 Likely Range 1.0 0.5 5% 0.0-0.5-1.0 1880 1895 1910 1925 1940 1955 1970 Full analysis in Kopp et al. (2014), Earth s Future 1985 2000 2015 2030 2045 2060 2075 2090 2100 www.climateprospectus.org 22

and here in Maryland. Feet Baltimore sea-level rise above year 2000 levels 5.0 4.0 3.0 95% RCP8.5 RCP4.5 RCP2.6 Historic RCP 2.6/8.5, 1-in-200 chance: 2030: 1.2 ft 2050: 2.1/2.3 ft 2100: 5.6/6.8 ft 2.0 Likely Range 1.0 5% 0.0-1.0 1900 1915 1930 1945 1960 1975 1990 2005 2020 2035 2050 2065 2080 2095 2100 Sea-level rise in enhanced in Maryland due to the ongoing response to the end of the last ice age, changes in the Gulf Stream, and the gravitational and rotational effects of Antarctic mass loss. www.climateprospectus.org 23

Economic projections www.climateprospectus.org 24

Climate change will have unevenly distributed economic impacts. Figure 8.3: Climate C impact on o heat and cold-related mortalitty RCP 8.5 median www.climateprospectus.org largest increases in morttality rates (deaths per 100,000 and Neew Jersey) expeerience net red ductions in mo ortality 26

Energy demand % increase in annual residential + commercial energy expenditures Percent Impact function calibrated against RHG Rutgers University American Climate Prospectus: Economic Risks in the United States 27

Coastal impacts Rutgers University American Climate Prospectus: Economic Risks in the United States 28

Increased average annual coastal storm damage due to sea-level rise Average annual coastal flood damage RCP 8.5 2050 (percent increase by state) (property + business interruption, in today s economy) 250% 1-in-20 200% Likely Range 150% 1-in-20 100% 50% 0% www.climateprospectus.org AL CT DC DE FL GA LA MA MD ME MS NC NH NJ NY PA RI SC TX VA 29

Climate change will make extremes more commonplace. Expected number of extreme fatal heat waves nationally Number of extreme years per 20 years 10 5 0 1-in-2 year event 1-in-5 year event 1-in-10 year event Historic RCP 8.5 RCP 4.5 RCP 2.6 2000 2020 2040 2060 2080 Beginning of 20-year interval www.climateprospectus.org 30

Climate change will make extremes more commonplace. Expected number of extreme low-productivity heat waves nationally Number of extreme years per 20 years 20 15 10 5 RCP 2.6 RCP 4.5 RCP 8.5 Historic Historic 1-in-2 year event 1-in-5 year event RCP 8.5 RCP 4.5 RCP 2.6 1-in-10 year event 0 2000 2020 2040 2060 2080 Beginning of 20-year interval www.climateprospectus.org 31

Climate change will make extremes more commonplace. Expected number of extreme crop loss events nationally Number of extreme years per 20 years Beginning of 20-year interval www.climateprospectus.org 32

Climate change will make extremes more commonplace. Expected number of extremely damaging ($100B) hurricanes nationally (accounting only for sea-level rise, not storm changes) Expected # of $100B losses per 20 yr 2 1.5 1 0.5 0 Historic RCP 8.5 RCP 4.5 RCP 2.6 2020 2040 2060 2080 2100 Year www.climateprospectus.org 33

Our mitigation choices make a real difference but we will have to prepare for some impacts even under low emissions. Crop yields (% increase) Labor productivity (% increase) Mortality (add l deaths/100k/year) Violent crime (% increase) Energy expenditures (% increase) Coastal damages (billion $/year) 30% 0.5% 40 6% 35% $60 20% 10% 0% -10% -20% -30% -40% -50% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% 35 30 25 20 15 10 5 0-5 5% 4% 3% 2% 1% 0% 30% 25% 20% 15% 10% 5% $50 $40 $30 $20 $10-60% 8.5 4.5 2.6-3.5% 8.5 4.5 2.6-10 8.5 4.5 2.6-1% 8.5 4.5 2.6 0% 8.5 4.5 2.6 $0 8.5 4.5 2.6 www.climateprospectus.org 34

Total cost and sectoral breakdown differ by region RCP 8.5, median case, 2080-2099, % of GSP SOUTHEAST NORTHEAST USA Connecticut Delaware Maine Maryland Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont West Virginia Alabama Arkansas Florida Georgia Kentucky Louisiana Mississippi North Carolina South Carolina Tennessee Virginia Coastal (Historical Activity) Agriculture Labor Energy Crime Mortality (Market) Mortality (VSL) MIDWEST Illinois Indiana Iowa Michigan Minnesota Missouri Ohio Wisconsin GREAT PLAINS Kansas Montana Nebraska North Dakota Oklahoma South Dakota Texas Wyoming SOUTHWEST Arizona California Colorado Nevada New Mexico Utah NW Idaho Oregon Washington -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% www.climateprospectus.org 35

Maryland is slightly less exposed than national average. RCP 8.5, median case, 2080-2099, % of GSP USA Maryland New York New Jersey Pennsylvania Delaware Virginia Coastal (Historical Activity) Agriculture Labor Energy Crime Mortality (Income) Mortality (VSL) North Carolina South Carolina Georgia Florida -2% 0% 2% 4% 6% 8% 10% 12% 14% www.climateprospectus.org 36

Direct damages in Maryland as % of GSP RCP 8.5, 2080-2099 1.4% 5% 1.2% 1.0% 0.8% 4% 3% 0.6% 2% 0.4% 0.2% 0.0% 1% 0% -0.2% -1% Coastal Agriculture Labor Energy Crime Morality (Income) Mortality (VSL) www.climateprospectus.org 37

Increased mortality in Maryland Additional annual deaths per 100,000 35 30 25 20 15 10 5 0-5 1800 1200 600 0 Total annual deaths assuming current population -10 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 - 600 www.climateprospectus.org 38

Decreased labor productivity in high-risk sectors (~20% of workers) in Maryland 1% 0% -1% -2% -3% -4% 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 39

Increased residential & commercial energy expenditures in Maryland % above year 2012 base ($9.0 billion) 24% 18% 12% 6% 0% -6% 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 40

Increased average annual coastal storm damage Million dollars per year (assuming current property distribution) 900 800 700 600 500 400 300 200 2000 baseline: $197 million 100 0 Diamonds indicate 99th percentile (1-in-100) projection. 8.5 4.5 2.6 8.5 4.5 2.6 8.5 4.5 2.6 2020-2039 2040-2059 2080-2099 www.climateprospectus.org 41

Reminder: Scope of coverage Far from comprehensive focus on impacts quantifiable in a 1-year analysis Rutgers University American Climate Prospectus: Economic Risks in the United States 42

Take-aways By 2040-2059 under RCP 8.5, median projected summer temperature in Maryland will be comparable to that in Georgia today; the expected number of dangerously humid days will exceed those of Mississippi today. Economic impacts are unevenly distributed across the country, with Maryland losses close to but slightly below national average. Of impacts examined, in Maryland, labor productivity, mortality, and energy demand are the largest by late century. Median projected increase in Maryland deaths under RCP 8.5, 2080-2099, is about 7 per 100,000 (about 400 additional people in current Maryland population), similar to current homicide rate. Mitigation benefits largest and most certain for labor, mortality, energy, and crime. Agriculture benefits less clear because of carbon fertilization; coastal because of slow response of the system. Rutgers University American Climate Prospectus: Economic Risks in the United States 43