Cameron Hepburn

2 April 2014

‘Incomplete climate models lead to complacency’ – Financial Times

Cameron Hepburn

Letter to the FT – “Incomplete climate models lead to complacency“, April 2.

Sir, Richard Tol makes the valid point that action on climate change should be coolly compared with other investments (“Bogus prophecies of doom will not fix the climate”, April 1). But his conclusions rest upon dangerously incomplete economic models that ignore critical risks and the failure to recognise that business as usual is taking us towards global warming of 4C, not 2C.


He cites figures, based on his own work, from the new report of the Intergovernmental Panel on Climate Change which suggests that further global warming of 2C could cause losses equivalent to between 0.2 and 2.0 per cent of global income. But the IPCC itself has warned that these numbers omit many of the impacts of climate change, including potentially catastrophic risks such as the irreversible melting of the Greenland ice sheet and resultant sea level rise. These are risks that would undermine economic growth and development across the world.
Prof Tol is on firm ground with his conclusion that “we had better start now”. Climate scientists have shown current trends in annual global emissions of greenhouse gases to be more consistent with warming of 4C than 2C, which would create much higher risks of catastrophic impacts. Although a 4C increase is not yet unavoidable, there are massive lags created by the lock-in of high-carbon energy infrastructure and the relatively slow response of the Earth’s climatic system to rapidly rising levels of greenhouse gases in the atmosphere. Accelerated cuts in emissions are required to avoid the biggest risks. The economically rational prescriptions are a strong carbon price, support for R&D to reduce costs of cleaner technologies, and measures to address related market failures.Prof Tol’s article unfortunately demonstrates that economic analysis based on incomplete models can lead to pronouncements about the risks of climate change that are at best complacent, and at worst reckless.
Cameron Hepburn, Professor of Environmental Economics, University of Oxford, UK

Financial Times