What the Science Says
The Enemy of My Enemy: When Firms Support Climate Change Regulation
Amanda Kennard
International Organization, forthcoming
Abstract:
Policies to mitigate global climate change entail significant economic costs. Yet a growing number of firms lobby in favor of regulation to mitigate carbon emissions. Why do firms support environmental regulations that directly increase production costs? This question is all the more puzzling in a globalized economy where regulation may undermine the competitiveness of domestic firms at home and abroad. By imposing differential costs on participants in the domestic market, policies designed to mitigate carbon emissions shift market share toward firms with low anticipated adjustment costs. I develop and test a model of climate change policymaking in the presence of market competition and open borders. Heterogeneity in adjustment costs induces a preference for regulation among low-cost firms. Firms facing import pressure — or export competition — may prefer stringent regulation if costs are sufficiently asymmetric. Firms embedded in global value chains also benefit if regulation raises the costs of domestically produced intermediate goods.
Do Investors Care about Carbon Risk?
Patrick Bolton & Marcin Kacperczyk
NBER Working Paper, April 2020
Abstract:
This paper explores whether carbon emissions affect the cross-section of U.S. stock returns. We find that stocks of firms with higher total CO2 emissions (and changes in emissions) earn higher returns, after controlling for size, book-to-market, momentum, and other factors that predict returns. We cannot explain this carbon premium through differences in unexpected profitability or other known risk factors. We also find that institutional investors implement exclusionary screening based on direct emission intensity in a few salient industries. Overall, our results are consistent with an interpretation that investors are already demanding compensation for their exposure to carbon emission risk.
Natural Hazards, Disasters, and Demographic Change: The Case of Severe Tornadoes in the United States, 1980–2010
Ethan Raker
Demography, April 2020, Pages 653–674
Abstract:
Natural hazards and disasters distress populations and inflict damage on the built environment, but existing studies yielded mixed results regarding their lasting demographic implications. I leverage variation across three decades of block group exposure to an exogenous and acute natural hazard — severe tornadoes — to focus conceptually on social vulnerability and to empirically assess local net demographic change. Using matching techniques and a difference-in-difference estimator, I find that severe tornadoes result in no net change in local population size but lead to compositional changes, whereby affected neighborhoods become more White and socioeconomically advantaged. Moderation models show that the effects are exacerbated for wealthier communities and that a federal disaster declaration does not mitigate the effects. I interpret the empirical findings as evidence of a displacement process by which economically disadvantaged residents are forcibly mobile, and economically advantaged and White locals rebuild rather than relocate. To make sense of demographic change after natural hazards, I advance an unequal replacement of social vulnerability framework that considers hazard attributes, geographic scale, and impacted local context. I conclude that the natural environment is consequential for the sociospatial organization of communities and that a disaster declaration has little impact on mitigating this driver of neighborhood inequality.
The Environmental Bias of Trade Policy
Joseph Shapiro
NBER Working Paper, May 2020
Abstract:
This paper documents a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little.
The projected timing of abrupt ecological disruption from climate change
Christopher Trisos, Cory Merow & Alex Pigot
Nature, 23 April 2020, Pages 496–501
Abstract:
As anthropogenic climate change continues the risks to biodiversity will increase over time, with future projections indicating that a potentially catastrophic loss of global biodiversity is on the horizon. However, our understanding of when and how abruptly this climate-driven disruption of biodiversity will occur is limited because biodiversity forecasts typically focus on individual snapshots of the future. Here we use annual projections (from 1850 to 2100) of temperature and precipitation across the ranges of more than 30,000 marine and terrestrial species to estimate the timing of their exposure to potentially dangerous climate conditions. We project that future disruption of ecological assemblages as a result of climate change will be abrupt, because within any given ecological assemblage the exposure of most species to climate conditions beyond their realized niche limits occurs almost simultaneously. Under a high-emissions scenario (representative concentration pathway (RCP) 8.5), such abrupt exposure events begin before 2030 in tropical oceans and spread to tropical forests and higher latitudes by 2050. If global warming is kept below 2 °C, less than 2% of assemblages globally are projected to undergo abrupt exposure events of more than 20% of their constituent species; however, the risk accelerates with the magnitude of warming, threatening 15% of assemblages at 4 °C, with similar levels of risk in protected and unprotected areas. These results highlight the impending risk of sudden and severe biodiversity losses from climate change and provide a framework for predicting both when and where these events may occur.
Large contribution from anthropogenic warming to an emerging North American megadrought
Park Williams et al.
Science, 17 April 2020, Pages 314-318
Abstract:
Severe and persistent 21st-century drought in southwestern North America (SWNA) motivates comparisons to medieval megadroughts and questions about the role of anthropogenic climate change. We use hydrological modeling and new 1200-year tree-ring reconstructions of summer soil moisture to demonstrate that the 2000–2018 SWNA drought was the second driest 19-year period since 800 CE, exceeded only by a late-1500s megadrought. The megadrought-like trajectory of 2000–2018 soil moisture was driven by natural variability superimposed on drying due to anthropogenic warming. Anthropogenic trends in temperature, relative humidity, and precipitation estimated from 31 climate models account for 47% (model interquartiles of 35 to 105%) of the 2000–2018 drought severity, pushing an otherwise moderate drought onto a trajectory comparable to the worst SWNA megadroughts since 800 CE.
Future of the human climate niche
Chi Xu et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
All species have an environmental niche, and despite technological advances, humans are unlikely to be an exception. Here, we demonstrate that for millennia, human populations have resided in the same narrow part of the climatic envelope available on the globe, characterized by a major mode around ∼11 °C to 15 °C mean annual temperature (MAT). Supporting the fundamental nature of this temperature niche, current production of crops and livestock is largely limited to the same conditions, and the same optimum has been found for agricultural and nonagricultural economic output of countries through analyses of year-to-year variation. We show that in a business-as-usual climate change scenario, the geographical position of this temperature niche is projected to shift more over the coming 50 y than it has moved since 6000 BP. Populations will not simply track the shifting climate, as adaptation in situ may address some of the challenges, and many other factors affect decisions to migrate. Nevertheless, in the absence of migration, one third of the global population is projected to experience a MAT >29 °C currently found in only 0.8% of the Earth’s land surface, mostly concentrated in the Sahara. As the potentially most affected regions are among the poorest in the world, where adaptive capacity is low, enhancing human development in those areas should be a priority alongside climate mitigation.
Three Prongs for Prudent Climate Policy
Joseph Aldy & Richard Zeckhauser
NBER Working Paper, April 2020
Abstract:
For three decades, advocates for climate change policy have simultaneously emphasized the urgency of taking ambitious actions to mitigate greenhouse gas (GHG) emissions and provided false reassurances of the feasibility of doing so. The policy prescription has relied almost exclusively on a single approach: reduce emissions of carbon dioxide (CO2) and other GHGs. Since 1990, global CO2 emissions have increased 60 percent, atmospheric CO2 concentrations have raced past 400 parts per million, and temperatures increased at an accelerating rate. The one-prong strategy has not worked. After reviewing emission mitigation’s poor performance and low-probability of delivering on long-term climate goals, we evaluate a three-pronged strategy for mitigating climate change risks: adding adaptation and amelioration – through solar radiation management (SRM) – to the emission mitigation approach. We identify SRM’s potential, at dramatically lower cost than emission mitigation, to play a key role in offsetting warming. We address the moral hazard reservation held by environmental advocates – that SRM would diminish emission mitigation incentives – and posit that SRM deployment might even serve as an “awful action alert” that galvanizes more ambitious emission mitigation. We conclude by assessing the value of an iterative act-learn-act policy framework that engages all three prongs for limiting climate change damages.
Fossil fuel combustion is driving indoor CO2 toward levels harmful to human cognition
Kristopher Karnauskas, Shelly Miller & Anna Schapiro
GeoHealth, forthcoming
Abstract:
Human activities are elevating atmospheric carbon dioxide concentrations to levels unprecedented in human history. The majority of anticipated impacts of anthropogenic CO2 emissions are mediated by climate warming. Recent experimental studies in the fields of indoor air quality and cognitive psychology and neuroscience, however, have revealed significant direct effects of indoor CO2 levels on cognitive function. Here we shed light on this connection, and estimate the impact of continued fossil fuel emissions on human cognition. We conclude that indoor CO2 levels may indeed reach levels harmful to cognition by the end of this century, and the best way to prevent this hidden consequence of climate change is to reduce fossil fuel emissions. Finally, we offer recommendations for a broad, interdisciplinary approach to improving such understanding and prediction.
Detected climatic change in global distribution of tropical cyclones
Hiroyuki Murakami et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
Owing to the limited length of observed tropical cyclone data and the effects of multidecadal internal variability, it has been a challenge to detect trends in tropical cyclone activity on a global scale. However, there is a distinct spatial pattern of the trends in tropical cyclone frequency of occurrence on a global scale since 1980, with substantial decreases in the southern Indian Ocean and western North Pacific and increases in the North Atlantic and central Pacific. Here, using a suite of high-resolution dynamical model experiments, we show that the observed spatial pattern of trends is very unlikely to be explained entirely by underlying multidecadal internal variability; rather, external forcing such as greenhouse gases, aerosols, and volcanic eruptions likely played an important role. This study demonstrates that a climatic change in terms of the global spatial distribution of tropical cyclones has already emerged in observations and may in part be attributable to the increase in greenhouse gas emissions.
Partisan asymmetry in temporal stability of climate change beliefs
Hank Jenkins-Smith et al.
Nature Climate Change, April 2020, Pages 322–328
Abstract:
Existing literature on climate change beliefs in the US suggests that partisan polarization begets climate change polarization and that the climate beliefs of those on both sides of the partisan divide are firmly held and invariable. Here, we use data from a large panel survey of Oklahoma residents administered quarterly from 2014 through 2018 to challenge this perspective. Contrary to the expectation of rough symmetry in partisan polarization on climate change, we find that partisans on the political right have much more unstable beliefs about climate change than partisans on the left. An important implication is that if climate beliefs are well anchored on the left, but less so on the right, the latter are more susceptible to change. We interpret this to suggest that, despite polarizing elite rhetoric, public beliefs about climate change maintain the potential to shift towards broader acceptance and a perceived need for action.
Changing yields in the Central United States under climate and technological change
Emily Burchfield et al.
Climatic Change, April 2020, Pages 329–346
Abstract:
This paper projects the race between technologically driven increases in crop yields and changing climatic conditions in the central USA, one of the world’s most productive agricultural regions. Using the highest, average, and lowest decadal rates of technologically driven increases in crop yields over the 1980 to 2017 period, we develop spatially explicit yield scenarios to the end of the twenty-first century under RCP4.5 and RCP8.5. We find that with static technological innovation, severe climate change will decrease yields by an average of 22.4% (26.1 bu. ac−1) for maize, 27.9% (8.83 bu. ac−1) for soybeans, and 20% (7.14 bu. ac−1) for winter wheat in the central USA; however, with even the lowest rates of technological yield growth, yields increase by an average of 25.0% (40.5 bu. ac−1) for maize and 30.2% (14.2 bu. ac−1) for soybeans. We conclude that technology has the potential to overcome the negative impacts of climate change on the yields of maize, soybeans, and winter wheat in the central USA, but if these increases are to be environmentally sustainable, technological developments must be information-intensive rather than input-intensive.
The European Union Emissions Trading System reduced CO2 emissions despite low prices
Patrick Bayer & Michaël Aklin
Proceedings of the National Academy of Sciences, 21 April 2020, Pages 8804-8812
Abstract:
International carbon markets are an appealing and increasingly popular tool to regulate carbon emissions. By putting a price on carbon, carbon markets reshape incentives faced by firms and reduce the value of emissions. How effective are carbon markets? Observers have tended to infer their effectiveness from market prices. The general belief is that a carbon market needs a high price in order to reduce emissions. As a result, many observers remain skeptical of initiatives such as the European Union Emissions Trading System (EU ETS), whose price remained low (compared to the social cost of carbon). In this paper, we assess whether the EU ETS reduced CO2 emissions despite low prices. We motivate our study by documenting that a carbon market can be effective if it is a credible institution that can plausibly become more stringent in the future. In such a case, firms might cut emissions even though market prices are low. In fact, low prices can be a signal that the demand for carbon permits weakens. Thus, low prices are compatible with successful carbon markets. To assess whether the EU ETS reduced carbon emissions even as permits were cheap, we estimate counterfactual carbon emissions using an original sectoral emissions dataset. We find that the EU ETS saved about 1.2 billion tons of CO2 between 2008 and 2016 (3.8%) relative to a world without carbon markets, or almost half of what EU governments promised to reduce under their Kyoto Protocol commitments. Emission reductions in sectors covered under the EU ETS were higher.
Temperature and self-reported mental health in the United States
Mengyao Li, Susana Ferreira & Travis Smith
PLoS ONE, March 2020
Abstract:
This study estimates the association between temperature and self-reported mental health. We match individual-level mental health data for over three million Americans between 1993 and 2010 to historical daily weather information. We exploit the random fluctuations in temperature over time within counties to identify its effect on a 30-day measure of self-reported mental health. Compared to the temperature range of 60–70°F, cooler days in the past month reduce the probability of reporting days of bad mental health while hotter days increase this probability. We also find a salience effect: cooler days have an immediate effect, whereas hotter days tend to matter most after about 10 days. Using our estimates, we calculate the willingness to pay to avoid an additional hot day in terms of its impact on self-reported mental health.
Daily weather only has small effects on wellbeing in the US
Paul Frijters, Chitwan Lalji& Debayan Pakrashi
Journal of Economic Behavior & Organization, forthcoming
Abstract:
Average surface temperatures in the US are now 1.11° Celsius higher than a century ago, and the last years witnessed above-average precipitation. We combine the daily Gallup data and the Agricultural Analytics dataset to address the question of whether such changes in the weather have increased or decreased wellbeing. We find that warmer days are associated with reduced physical health, but higher levels of subjective wellbeing and a higher prevalence of positive emotions. These findings turn out to be completely non-robust, with effects reversing signs when one includes area and behavioural factors that themselves are endogenous. The only consistent result is that, irrespective of what one controls for, the effects are small, with equivalent wellbeing income variations for a 2° Celsius increase worth 0.3% of income.
The costs of achieving climate targets and the sources of uncertainty
Detlef van Vuuren et al.
Nature Climate Change, April 2020, Pages 329–334
Abstract:
Effective climate policy requires information from various scientific disciplines. Here, we construct a metamodel from climate and integrated assessment models that assesses the emissions budget, costs and uncertainty sources of achieving temperature targets. By calibrating to the model-based literature range, the metamodel goes beyond the parametric uncertainty of individual models. The resulting median estimates for the cumulative abatement costs (at 5% discount rate) for 2 °C and 1.5 °C targets are around US$15 trillion and US$30 trillion, but estimates vary over a wide range (US$10–100 trillion for the 1.5 °C target). The sources determining this uncertainty depend on the climate target stringency. Climate system uncertainty dominates at high warming levels, but uncertainty in emissions reductions costs dominates for the Paris Agreement targets. In fact, costs differences between different socio-economic development paths can be larger than the difference in median estimates for the 2 °C and 1.5 °C targets. This simple metamodel helps to explore implications of scenario uncertainty and identify research priorities.
Extreme rainfall triggered the 2018 rift eruption at Kīlauea Volcano
Jamie Farquharson & Falk Amelung
Nature, 23 April 2020, Pages 491–495
Abstract:
The May 2018 rift intrusion and eruption of Kīlauea Volcano, Hawai‘i, represented one of its most extraordinary eruptive sequences in at least 200 years, yet the trigger mechanism remains elusive1. The event was preceded by several months of anomalously high precipitation. It has been proposed that rainfall can modulate shallow volcanic activity2,3, but it remains unknown whether it can have impacts at the greater depths associated with magma transport. Here we show that immediately before and during the eruption, infiltration of rainfall into Kīlauea Volcano’s subsurface increased pore pressure at depths of 1 to 3 kilometres by 0.1 to 1 kilopascals, to its highest pressure in almost 50 years. We propose that weakening and mechanical failure of the edifice was driven by changes in pore pressure within the rift zone, prompting opportunistic dyke intrusion and ultimately facilitating the eruption. A precipitation-induced eruption trigger is consistent with the lack of precursory summit inflation, showing that this intrusion — unlike others — was not caused by the forceful intrusion of new magma into the rift zone. Moreover, statistical analysis of historic eruption occurrence suggests that rainfall patterns contribute substantially to the timing and frequency of Kīlauea’s eruptions and intrusions. Thus, volcanic activity can be modulated by extreme rainfall triggering edifice rock failure — a factor that should be considered when assessing volcanic hazards. Notably, the increasingly extreme weather patterns associated with ongoing anthropogenic climate change could increase the potential for rainfall-triggered volcanic phenomena worldwide.