” … with adaptation, total costs will be much smaller than the headline-grabbing numbers that climate economists and our government agencies choose to highlight, and with future growth our society will be far better equipped to handle them.”

“[If] 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.”

– Oren Cass (Manhattan Institute), Testimony, June 11, 2019.

Last summer, Oren Cass of the Manhattan Institute testified before the U.S. House Committee on the Budget on adaptation as a proactive strategy to address climate change. His testimony was primarily directed at the alarmist, one-sided Fourth National National Climate Assessment (NCA), Volume II: Impacts, Risks, and Adaptation in the United States. This was the Obama Climate Report, not a scientific document reflecting both sides of the debate. [1]

Some highlights from Cass’s testimony for the hearing “The Costs of Climate Change: Risks to the U.S. Economy and the Federal Budget” follow:

Climate change will have real costs. Importantly, adaptation itself comes with costs that must be accounted for. But with adaptation, total costs will be much smaller than the headline-grabbing numbers that climate economists and our government agencies choose to highlight, and with future growth our society will be far better equipped to handle them.

Even in its proper context, the NCA’s cost estimates are still implausibly high, because they fail to account for adaptation. In other words, the economic models that produce the cost estimates work from an assumption that Americans will make no adjustments in their lives to account for changes in their climate. Bizarre though this may seem, the assumption is well understood and accepted within the world of climate economics. In the fine print beneath the NCA’s colorful graphic depicting climate costs, it notes that “results assume limited or no adaptation.”

Yet some of the key studies that drive the NCA’s cost estimates do provide estimates that account for adaptation, and in doing so illustrate why it must always be considered. For instance, the NCA offers an estimate of $141 billion in annual economic damage from extreme temperature mortality in 2090. But according to the EPA study that the NCA relies on, adaptation could reduce the damage by more than half NCA offers an estimate of $118 billion for coastal property damage, but EPA says adaptation could reduce the damage by more than three-quarters.[

More generally, while extreme temperature mortality—that is, an increase in the number of hot days leading to an increase in death rates—is usually among the largest drivers of cost estimates, recent studies accounting for adaptation find almost no effect from climate change or even a reverse effect—that is, a reduction in mortality due to fewer cold days.[

Climate change will have real costs. Importantly, adaptation itself comes with costs that must be accounted for. But with adaptation, total costs will be much smaller than the headline-grabbing numbers that climate economists and our government agencies choose to highlight, and with future growth our society will be far better equipped to handle them….

Encouraging Adaptation

Weakness in climate economics is not a reason to abandon efforts at estimating the future costs of climate change. Researchers should continue to study the concrete, human effects likely to emerge from changes in the physical climate and the nature of associated adaptation, as these findings help to identify which climate-related threats are the most severe and which adaptations may require changes in public policy. For example, continued research on sea-level changes and their implications for coastal development will be invaluable to responsible public policy in the decades to come. Policymakers should continue to seek out and consider legitimate cost estimates.

Estimating adaptation costs is important too. While failing to account for adaptation in their top-line cost estimates, many economic analyses do consider adaptation pathways and provide estimates of likely cost—for instance, the effects of extreme temperatures on energy consumption if society adapts through greater use of air conditioning.[ Just because adaptation is desirable and likely to occur does not make it free.

Policymakers should work to ensure that society has the best possible information about likely effects of climate change and the right incentives to take that information into account. Specifically:

• Continue to invest in climate science. If decision-makers from urban planners to farmers to coastal property owners are to make intelligent investments that build resilience and adapt to changes in climate, they will need the best possible forecasts of what those changes are likely to be.
• Focus research directly on adaptation. Rather than accept the convenience of modeling a future without adaptation, emphasize the need for better understanding of adaptation pathways: Where will it occur naturally? Where will it occur but at a cost or only with better policy? In what situations might adaptation be insufficient and what contingency planning is required? Understanding the answers to those questions will highlight the costs that are most concerning and point toward the policy responses that might be most effective. Government agencies should withdraw reports that have failed to account for adaptation and they should require an assumption of adaptation as the default in future cost estimates.
• Ensure that decision-makers have the right incentives to account for climate change and its costs. If government insulates people from the costs of climate change, they will not have sufficient incentive to prepare for the costs or avoid them. Insurance products must accurately reflect risk; the price of water must reflect its supply and demand; urban planners must understand their own cities will be responsible for upgrading infrastructure that they build unwisely.

Conclusion

The 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.

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[1] These assessment stems from the 1990 Global Change Research Act, which requires quadrennial “Assessments” of the effects of global climate change on the U.S. The first was published in 2000; the second 2009; the third 2014; and the fourth in 2018 (without intervention from the Trump Administration).

The 4th assessment ignored the pleas of its critics to get realistic–or at least present both sides. Climatologist Pat Michaels noted how its alarmist results were:

based upon a family of climate models that are predicting far more warming than has been occurring in the all‐​important tropical atmosphere. It should have used the one model (out of the 102 available runs) that actually gets things right, the Russian INM-CM4, but it relied upon the average warming produced by all 102. INM-CM4 has the least warming of all of them, but doing the right thing—using the one that works—would have pretty much gutted climate change as a serious issue.