Report card

Written by The Financial Express | Updated: Jan 28 2010, 02:48am hrs
This paper* shows why climate change should be limited to lowest possible levels:

First, if the global average temperature becomes very different from the current one, it will be more difficult to know how local climates will evolve. This uncertainty would make it necessary to implement adaptation strategies that can cope with many different possible futures. Such strategies exist but they are less efficient than would-be-those strategies designed with perfect knowledge of future climate. There is a cost, therefore, associated to this uncertainty. Such costs are obviously ignored by models assuming perfect knowledge of how climate will change. Second, the adaptive capacity of economic sectors is largely unknown. We know that such capacity exists for limited warming, because natural variability has made it necessary to cope with extreme events in the past. For greater warming, however, there is greater uncertainty about how various sectors will be able to cope with climate change and, again, there is a cost associated to this uncertainty. Third, the adaptive capacity at the macroeconomic scale is also difficult to assess and we suspect that there are thresholds beyond which the total macroeconomic cost may rise rapidly, increasing the risk that the most vulnerable societies fall into poverty traps. The existence of these thresholds is supported by past experience, including economic disruptions caused by natural disasters, observed difficulties to fund needed infrastructure, and regional crises due to rapid structural economic shifts induced by new technologies or globalisation.

* Stphane Hallegatte, Patrice Dumas and Jean-Charles Hourcade; A Note on the Economic Cost of Climate Change and the Rationale to Limit it Below 2C; Policy Research WP 5,179, The World Bank