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Annual Public Lectures Series > John Reilly

Scientists and Journalists:
Getting the Point Across
June 8-12, 2009

Friday, June 12, 11:00 a.m.
Predicting the Costs of Climate Change
John Reilly, Joint Program on the Science and Policy of Global Change, M.I.T. Sloan School of Management


John Reilly Lecture
June 12, 2006
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Summary

How much is mitigating climate change going to cost? How much will it cost me? How much will it cost you? Our country? The world?

These are big questions that invite many methods for calculating solutions ... but no answers, John Reilly said. Reilly, Associate Director of the Joint Program on the Science and Policy of Global Change at MIT, was the final speaker at the Metcalf Institute's 2009 Annual Public Lecture Series.

He covered possible mitigation scenarios, possible costs, and possible benefits. In the end, there is no magic bullet.

"But if we can't get the absolute best policy," he said "we shouldn't throw in the towel and give up."

Reilly identified a long list of complicating factors that make it difficult to make economic projections of climate change mitigation plans.

A cost benefit analysis becomes increasingly difficult when the entire world has to be taken into consideration. "We're not just comparing a few people down the street," Reilly said. Cost benefit analysis of climate change policies need to take international considerations into account.

While some economic effects will link directly to financial markets - energy policy, for instance - many effects of new policies will manifest in non-market spheres, such as uninhabited rainforests. We don't have a good idea how the market and "non-market" services are related, and what financial gains or costs are associated with the non-market services provided by ecosystems.

"Fundamentally," Reilly said, "we don't know how integral some of those things are to the economy."

Another complication arises from the long staying power of greenhouse gasses in the atmosphere. Modeling the future becomes difficult when, even if we stopped emitting today, there is an inertia in the global climate system that cannot currently be predicted. "We're trying to understand a world that's obviously very difficult to understand. That uncertainty runs deep," he said. Trying to formulate policies where virtually all of the variables and risks are unknown is, realistically, a nearly impossible task.

Despite the challenges, Reilly and the MIT Joint Program on the Science and Policy of Global Change have created some models to start to figure out what the costs of climate change mitigation will be.

Using colorful pie charts that look like roulette wheels - which were developed when the Wall Street Journal asked for a simple visual that readers could understand - Reilly demonstrated that the model results are stark. With no mitigation policies, the median global temperature increase we can expect is 5.2 degrees Centigrade by 2050, with a chance of reaching a 7-degree rise.

With different policy implementations, we can possibly reach safer levels, within the 2-3 degree C range, but we wouldn't be out of the woods.

The costs will be significant, but manageable, depending especially on how the burden is distributed. Many developing countries, such as China and India, have been calling for the developed world to make the first move, and possibly to subsidize their mitigation programs.

A 70/30 percent burden share of the mitigation costs - with the developing countries paying 30 percent and the developed countries contributing 70 percent - would put a much greater proportional burden on the developing countries in terms of the losses in their GDPs.

Another option would be for the developed nations to share the entire bill equally, allowing the developing nations to avoid paying the costs of mitigating climate change. In this case, the developed nations would lose about 2 percent of their GDPs initially, reaching about 10 percent by 2050.

"It's not going to wreck the economy, [but] it's going to cost something," Reilly said. Reilly was adamant that the public should be fully aware of the costs of mitigating climate change, despite concerns that people have resisted paying more for domestic programs, much less subsidizing other countries.

If policymakers insist that a mitigation program won't cost much, "and people find out it does, then it's going to cause backlash."

Ultimately, Reilly said, these models and forecasts are not going to tell us what to do or how much it will cost. And in the end, the optimal policy will not come from one single model. "It's kind of a dream idea that we can even calculate the optimal model," he said.

But his work can add relevant information to the public debate about climate change, mitigation and costs. "Really," he said, "what we do has to be a negotiated discussion where the public participates."

Reilly ended on an optimistic note. He added that even a limited climate mitigation policy is better than nothing. "If we can't get the absolute best policy, we shouldn't turn in the towel and give up."

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July 28, 2009