Long term projections based on key drivers
The report is a description of economic projections for different scenarios of economic development. It is based on long-term projections of five key drivers of economic growth:
- physical capital;
- employment as driven by demographic trends, labour participation rates and unemployment scenarios;
- human capital, as driven by education;
- energy demand, as driven by energy efficiency;
- the patterns of extraction and processing of natural resources (oil and gas); and
- total factor productivity (TFP) as an indicator of exogenous technical progress.
The models don't allow for climate change shocks or environmental feedbacks
The report states that the projections ignore a number of important factors (as far as climate change goes). In particular, they don't allow for "major external shocks, for instance in the form of natural disasters or military conflict [which] can occur abruptly and affect projections severely for prolonged periods of time, and in some cases even affect economic growth trends permanently.
More particularly, the projections ignore terms of trade effects, changes in PPPs and feedbacks from environment to the economy.
There are five scenarios, which are represented in Figure 1 in the paper:
The worst we could choose would be SSP3, which presents the greatest challenges for both mitigation and adaptation. The best we could choose would be SSP1, which poses the least challenges for mitigation and adaptation.
The Matt Ridley Con
What Matt Ridley was trying to argue was that:
These IPCC and OECD reports are telling us clear as a bell that we cannot ruin the climate with carbon dioxide unless we get a lot more numerous and richer. And they are also telling us that if we get an awful lot richer, we are likely to have invented the technologies to adapt, and to reduce our emissions, so we are then less likely to ruin the planet. Go figure.
He's wrong. We can ruin the climate with carbon dioxide without getting a lot more numerous and richer. All we have to do is keep going the way we are going.
In regard to his Pollyanna optimism, it's not rational or consistent with his previous messages. Matt is on record arguing that governments don't take any action to mitigate and that we should simply adapt to global warming. Remember, the OECD report doesn't allow for any "feedbacks from the environment to the economy", nor does it provide for "major shocks".
Once again Matt is wanting to have his cake and eat it too. He doesn't want to take action to reduce CO2, but this time he has shifted his position slightly to magical thinking:- "the future will take care of itself". We'll get richer so that:
More trade, more innovation and more wealth make possible greater investment in low-carbon energy and smarter adaptation to climate change.
Note his "smarter adaptation" is still stuck in there. While what he writes may be true, it still relies upon a deliberate effort to shift and that action is taken quickly enough. Electricity production isn't a short term thing, it takes time to plan and replace ageing, dirty technology with new clean technology. It takes time, money (and almost certainly) government intervention to develop an infrastructure that supports electric transportation. And we're running out of time.
What happens when we get to 2030 if Matt's "do nothing but adapt" policy were adopted? Well, the earth will no doubt be in a different climate regime to now. That could well mean civil unrest and a shift to one of the other scenarios.
One big problem with Matt Ridley's approach to "adapt" and let the market take its own sweet time in shifting to clean energy is - what happens if the market doesn't shift quickly enough? Another big problem is his contradictory argument. He says that all past dire warnings (eg about acid rain, smog, the ozone hole etc) didn't eventuate. What he doesn't say is that they did eventuate but governments stepped in and took action to limit the damage.
So if we correctly apply Matt's analogies with past environmental problems then we'd be pushing harder for governments to step in and put in place measures to mitigate global warming. Especially since climate change is a much bigger problem than, say, acid rain and smog.
By the way, if you look at the OECD scenarios, by 2100 the average Chinese citizen will be wealthier than the average US citizen under the highest growth scenario (SSP5) and almost on par with the most sustainable scenario (SSP1). That in itself could raise international tensions or it could lower them. Who's to say.
From the WUWT comments
A lot of comments are making the false assumption that past problems identified didn't eventuate. Moreover most people commenting refuse to acknowledge that it was only because of the early warnings that we addressed and alleviated some of these problems.
Gene Schmick ignores the huge investment in government-funded research and foreign aid that allowed for continued improvements in agricultural productivity, in education and in family planning and says:
April 21, 2014 at 10:38 am
According to the “consensus” (in the 60′s) we are currently starving because the World’s population has exceeded both the food and water supply. Of course we’re doing it in the dark because we ran out of oil 30 years ago.
Our old friend who I haven't seen for a while, pops in to state the obvious. ferdberple says, without acknowledging the importance of government regulation in this regard (excerpt):
April 21, 2014 at 11:06 am
travel the globe. third world countries have rubbish lying everywhere because there is no money to clean it up. rats and flies are the norm. It is only as countries become richer, that surplus funds become available to clean up the environment.
If phlogiston seriously thinks that Matt, Richard, Roy and John are their "most important" assets, the fake sceptics are in a sorry old state. And Matt isn't a climate scientist:
April 21, 2014 at 9:31 am
Mat Ridley is always worth reading, he is one of the most important skeptical scientists up there with Lindzen, Spencer, Christy etc. Solidly argued common sense and sound science.