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Economic Value of Climate Science

Bruce Wielicki, NASA LangleyRoger Cooke Resources for the FutureDavid Young, NASA LangleyMartin Mlynczak, NASA Langley

NASA Innovations in Climate Education Virtual Meeting

April 24, 2013

NASA Langley Research Center, Hampton, VA

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• We have traceable estimates of the economic value of weather prediction

• Climate: “Will impact societal decisions with trillion dollar impacts”

• But is this statement verified and traceable in any way, or is it just a vague qualitative statement?

• How could we quantify an economic value to climate science?– Climate change science value exists decades into the future– That value has to be treated as a risk/benefit economic analysis – Investment perspective vs insurance perspective– Rigorous analysis must take into account the uncertainties in both climate

science, economic impacts, policy– Needs to be sufficiently rigorous to be published in both economic and scientific

journals– Potential to change the dynamic of the discussion on climate change science

from “threat” to “economic investment”.

Economic Value of Climate Science

Requires a combination of climate science and economics expertise

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• We have an internationally agreed to set of weather observations to enable accurate weather prediction.

• Weather accuracy required is 1K, climate requirement is 0.1K

• Weather is temperature, humidity, wind, precipitation.

• Climate adds:

– ocean currents, temperature, salinity including deep ocean

– ice sheets, glaciers, sea ice, snow depth/coverage

– atmospheric chemistry: greenhouse gases, aerosols

– ecosystems for land, ocean, snow, ice

• Climate is 10 times the accuracy and variables for weather

• We have no international climate observing system designed to improve climate prediction. Why not?

• This is a communication/education problem between science, agencies, congress, and the public

Necessity is the mother of invention: how do we fix this?

Where are Climate Observations?

CLARREO:Climate Absolute Radiance and Refractivity Observatory

Mission goal: Greatly increase the absolute accuracy of most decadal climate change observations: across the

entire reflected solar and infrared spectrum ...

Calibration Reference Spectrometers (IR/RS) for Global Climate, Weather, Land, Ocean Satellite Instruments

Provide spectral, angle,space, and time matched orbit crossing observations for all LEO and GEO orbits critical to support reference intercalibration

Endorsed by WMO &GSICS (letter to Freilich)

Calibrate LEO and GEOinstruments: e.g. - JPSS: VIIRS, CrIS, CERES- METOP: IASI, AVHRR- Landsat, etc land imagers- Ocean color sensors- GOES imagers/sounders- TEMPO geo chemistry- SCIAMACHY/GOME

CLARREO Provides "NIST in Orbit": Transfer Spectrometers to SI StandardsCLARREO ISS Mission Concept 5

LaRC/GSFC Meeting Nov 16, 2012 - 6NASA internal Use Only

High accuracy is critical to more rapid understanding of climate change

Infrared Accuracy and Climate Trends

Length of Observed Trend

IPCC next few decadestemperature trends:0.16C to 0.34C varyingwith climate sensitivity

An uncertainty of half the magnitude of the trendis ~ 0.1C. Achieved15 years earlier withCLARREO accuracy.

High Climate Sensitivity (5% chance)Medium Climate Sensitivity (most likely)Low Climate Sensitivity (5% chance)

Business as Usual Emissions Scenarios

Expected Temperature Trend

L. Chambers, 2013

Business as Usual Emissions ScenariosHigh Climate Sensitivity (5% chance)Medium Climate Sensitivity (most likely)Low Climate Sensitivity (5% chance)

What the World Might Actually Do

Includes Natural ClimateVariability

L. Chambers, 2013

Business as Usual Emissions ScenariosHigh Climate Sensitivity (5% chance)Medium Climate Sensitivity (most likely)Low Climate Sensitivity (5% chance)

What We can Observe – Current System

Accuracy limits knowledge

L. Chambers, 2013

Business as Usual Emissions ScenariosHigh Climate Sensitivity (5% chance)Medium Climate Sensitivity (most likely)Low Climate Sensitivity (5% chance)

What We Could Observe – Climate Observing System

Better accuracy improves knowledge

L. Chambers, 2013

Business as Usual Emissions ScenariosHigh Climate Sensitivity (5% chance)Medium Climate Sensitivity (most likely)Low Climate Sensitivity (5% chance)

What We Could Observe – Climate Observing System

Earliest possible launch:2020

L. Chambers, 2013

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High accuracy is critical to more rapid understanding of climate change

Accuracy and Climate TrendsClimate Sensitivity Uncertainty is a factor of 4 (IPCC, 90%confidence bound) which =a factor of 16 uncertainty in climatechange economic impacts

Climate Sensitivity Uncertainty =Cloud Feedback Uncertainty =Low Cloud Feedback = Changes in SW CRF/decade(y-axis of figure)

Higher Accuracy Observations =CLARREO reference intercal ofCERES = narrowed uncertainty15 to 20 years earlier

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• IPCC impacts chapter lead author

• Mathematician/Risk Analysis Theory

• Participated in recent workshop on socioeconomic benefits of earth science

• Run and modify Integrated Economic Assessment (IAM) models

• Expertise in “fat tails” analysis of economic impacts of statistically rare events

• Was attracted to CLARREO by our accuracy requirements development and science value matrix concept: and especially the previous figure.

Roger Cooke Resources for the Future

Climate Sensitivity and Discount Rates Dominate Economic Impacts

Phase 1 Results

IAMS IMSCC

IAMS IMSCC

Value of Information (VOI) Calculation

• Current IPCC factor of 3 uncertainty in climate sensitivity = factor of 32 = factor of 9 uncertainty in economic impacts

VOI Calculation

Baseline

VOI Calculation

Current Observing System

2055Switch to Reduced

Emissions 2205

SCC = $65 T

VOI Calculation

Improved accuracy yields savings of $11.7 T in net present value

2205SCC = $53 T

Improved Accuracy Observing System (2020 launch)

2035Switch to Reduced

Emissions

Decision ContextTrigger Variable ∆T/decade ∆CRF/decade

Trigger Value 0.2C or 0.3C/decade 3C for 2X CO2

Confidence Level 80%, 95% 80%, 95%

Launch Date 2020, 2025, 2030 2020, 2025, 2030

Trigger Policy Change DICE Optimal, Aggressive DICE Optimal, Aggressive

Discount Rate 2.5%, 3%, 5% 2.5%, 3%, 5%

Aerosol Forcing Obs Start Date = CLARREO Start Date = CLARREO

Value of Information Parameters

Run 1000s of Monte Carlo cases with: - Full pdf of climate sensitivity uncertainty in IPCC fit to Roe and Baker (2007) - Gaussian climate natural variability as specified in the CLARREO BAMS article for global mean temperature and SW cloud radiative forcing.Results are the ensemble mean of the 1000s of Monte Carlo Simulations

How Sensitive are Results to Assumptions?

Parameter Change

CLARREO/Improved Climate ObservationsVOI (Trillion US 2015

dollars, NPV)3% discount rate

Baseline (blue values) $11.7 T

BAU => AER $9.8 T

0.3C/decade trigger $14.4 T

2030 launch $9.1 T

• Delaying launch by 10 years reduces benefit by $2.6 T• Each year of delay we lose $260B of benefits

Value of Information Summary

• All economic values in Net Present Value (NPV) in 2015 U.S. dollars

• Even with the most pessimistic discount rate, the return on investment is large: factors of 15 to 65 (20 to 32% per year return on investment)

Discount Rate

VOI for CLARREO/Impro

ved Climate Observations

Cost of 30 yrs of improved full climate observing system (4X

current effort)

Payback RatioVOI / Obs

Improvement Cost

2.5% $17.6 T $260B 65

3% $11.7 T $245B 45

5% $3.1 T $200B 15

Summary

• An advanced climate observing system could accelerate accurate societal decisions by 15 to 20 years over current systems (and lack thereof).

• One of the key advances is higher absolute accuracy decadal change observations to reduce uncertainty in key areas like climate sensitivity.

• The Net Present Value (NPV) to the world economy of such an acceleration is ~ $10 Trillion (2015 U.S. dollars)

• The NPV of an advanced climate observing system is relatively robust to changing the societal decision trigger, or emissions reduction approach.

• As an “investment” , the payback for advanced climate observations is roughly 45 to 1. A $45 return for every $1 invested.

• Every year we delay advanced climate observations we lose about $260B of potential return on investment.

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Next Steps

• Current study using temperature trend decisions triggers submitted to the journal "Environment, Systems, and Decisions".

• Current study does not include emissions mitigation costs which are notoriously uncertain: by a factor of 12 (IPCC, 2007). Will be added in the next version, and could reduce the VOI by a factor of 2 to 4.

• Next version will also include analysis of decision triggers for cloud feedback to provide a more direct and rigorous relationship to climate sensitivity uncertainty than temperature trends.

• The current study represents a framework that can be extended to other uncertainties such as sea level rise, anthropogenic aerosol forcing, or carbon cycle feedbacks.

• To convert VOI from world net present value to U.S. net present value, divide the VOI by a factor of 6. But U.S. would only pay for roughly ½ the climate observing system (current balance of U.S. vs international costs for space based global observations)

• Final payback to U.S. including mitigation costs might be ~ $5 per $1 invested at the nominal 3% discount rate.

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Backup Slides

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VOI for Climate Science – Next Steps

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Phase 2 Studies

IAMS IMSCC

IAMS IMSCC

What is a Discount Rate?

• Its not inflation

• Instead it accounts for how people value financial resources as a function of their perceived utility both now and in the future.

– A bird in the hand is worth 2 in the bush

– Future generations will be richer, let them deal with the costs

– Investments made today must be compared to alternative ways to invest the same resources

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