Editor's note: On May 16, Oren Cass testified before the House Committee on Science, Space, and Technology in a hearing on “Using Technology to Address Climate Change.” Learn more on the committee website.
Summary of Major Points
- Assumptions about how human society will adapt to climate change are central to our understanding of the challenges that the phenomenon presents and the costs that it will impose.
- This issue does not concern climate science but rather climate economics, which attempts to address the question of how the changes to our physical environment anticipated by climate science will affect human society via their influence on public health or infrastructure or the economy.
- In recent years, prominent studies that purport to forecast the cost of climate change have begun to rely on statistical analyses of the effects of temperature variation. These correlation-based, temperature-impact studies—“temperature studies”—start with present-day relationships between temperatures and outcomes such as mortality or economic growth. They extrapolate from those relationships a proportionally larger response to long-term projected climate warming and assign dollar values to the very large impacts that appear to emerge.
- The fallacies underlying this framework are (a) that the same responses detected for small, random variations in historical temperatures will manifest themselves proportionally in large, gradual, permanent future changes, and (b) that society will not change or adapt in any way to mitigate the effects.
- The GAO’s 2017 report, “Climate Change: Information on Potential Economic Effects Could Help Guide Federal Efforts to Reduce Fiscal Exposure,” derives the vast majority of its costs from such studies, accepting absurd forecasts like one created by EPA that finds Pittsburgh’s extreme-heat mortality rising to 75 times the level experienced in Phoenix or Houston today.
- Another emerging line of research seeks to link rising temperatures directly to changing rates of economic growth, again leading to bizarre predictions like Iceland and Mongolia becoming the world’s leading economies while India’s economy begins rapidly contracting. The Federal Reserve Bank of Richmond has recently published a working paper that uses a similar methodology.
- Analyses that do not properly account for adaptation describe an alternative universe that does not exist; the estimates they produce are not plausible forecasts of future costs and should not be credited by policymakers.
- Instead, policymakers should focus on understanding what adaptation is likely to be necessary, in what circumstances it will be difficult, and how better public policy can create the information and incentives to facilitate its occurrence.
Good morning Chairman Smith, Ranking Member Johnson, and Members of the Committee. Thank you for inviting me to participate in today’s hearing.
My name is Oren Cass. I am a senior fellow at the Manhattan Institute for Policy Research where my work addresses environmental policy including the economics of climate change. This testimony focuses on the role that adaptation may play in the human response to climate change and the importance of accounting for such adaptation when conducting economic analyses of climate costs and when formulating climate policy. I addressed this topic recently in a Manhattan Institute report titled “Overheated: How Flawed Analyses Overestimate the Costs of Climate Change.”
My primary message to the committee is this: The assumptions that we make about how human society will adapt to climate change are central to our understanding of the challenges that the phenomenon presents and the costs that it will impose. Relative to most problems that we encounter in public policy, climate change is a gradual process; its most dangerous effects will appear on decades- and even centuries-long timescales. Yet analysts frequently analyze these effects as if they will happen now, without accounting for how our economy, society, and technology are likely to evolve independent of climate change and—especially—in response to climate change. Analyses that do not properly account for adaptation describe an alternative universe that does not exist; the estimates they produce are not plausible forecasts of future costs and should not be credited by policymakers.
Let me pause here to clarify that this issue does not concern climate science. I believe that mainstream climate science, particularly as summarized by the UN’s Intergovernmental Panel on Climate Change, provides the best available assessment of the changes to our physical environment that a given level of greenhouse-gas emissions will cause and that policymakers should use it as the starting point for their own work. But we depart the world of climate science for that of climate economics when we turn to the question of how those changes will affect human society via their influence on public health or infrastructure or the economy.
The common failure to consider adaptation has profound consequences for how people conceptualize climate change, leading to what I call climate catastrophism. If the entire brunt of a century of climate change were to land on civilization tomorrow—if a substantial share of agricultural output suddenly vanished, if sea levels were suddenly several feet higher, if regions accustomed to temperate summers suddenly experienced outdoor temperatures to which they were unaccustomed, if hundreds of millions of people were suddenly displaced—the result might well be catastrophic. But if those changes occur gradually (as they are expected to), if they emerge in a world far wealthier and more technologically advanced than today’s (as we expect it to be), and if policymakers ensure that people have the information and incentives to plan well (something over which we have control), then climate change will impose real costs but ones that we should have confidence in our ability to manage.