Human response to climate change - The Global Climate System: Patterns, Processes, and Teleconnections - page 282

Assessment of the recent major climate extremes revealed several short-
term national-scale economic impacts. The 1987-9 drought led to a GDP
downturn in 1988 of 0.4 percent, and the Consumer Price Index (CPI) rose 0.3
percent. The 1993 flood led the GDP to be increased by 0.01 percent in 1994,
and corporate profits were down 0.01 percent in 1993, but up by 0.8 percent in
1994. The odd winter weather of El Ni˜o 1997-8 caused the price of food to
increase 0.4 percent in February 1998; inflation held at zero for the first time
in 10 years; and the first quarter GDP in 1998 was up 4.2 percent, rather than
the 3.4 percent predicted. All of these values are notably small. Agricultural
weather losses during 1950-2000 varied between 9 and 14 percent of the
annual net cash income for US agriculture in the 1990s.
Climate-related economic impacts are more significant regionally where
many losses are often concentrated. The $6 billion in flood-related losses in
Illinois in 1993 was 2 percent of the Gross State Product (GSP) for 1993.
Losses of $21.9 billion in Florida due to Hurricane Andrew in 1992 rated as
10.2 percent of Florida's GSP. The SNDR ( 1999 ) indicated that the largest
state losses from natural hazards were typically 5 percent or less of the states'
domestic products. Although these state-scale impacts are relatively larger
than the national impacts, they are not exceptionally large.
Estimates of future economic impacts from climate change
During recent years, a few economists have generated estimates of financial
impacts resulting from future climate change. Economic modeling has been
used to derive estimates of future economic impacts. In the early 1990s,
economists assessed the national economic impacts of global warming.
Annual losses generated, in 1988 dollars, were on the order of $55 billion
(Cline 1992 ). The assumed global warming in each case was from 2.5 8Cto
3.0 8C, and all three predictions assumed 1988 levels of outputs and composi-
tion of goods and services produced. The major finding of these studies was
that the estimated impact values were small in comparison with the total US
economy. A critical issue for estimation of future financial impacts is eco-
nomic models. Burroughs ( 1997 ) evaluated economic models and their use in
assessing climate change impacts, pointing to modeling weaknesses and the
complexities of integrating the outputs of global climate models with those of
macroeconomic models. He further pointed to many other unpredictable
factors, such as technology developments over the next 50 to 100 years and
their unknown influence on economic impacts of future weather.
A recent economic assessment using three climate scenarios and their
estimated impacts on the US economy in 2060 revealed a range of outcomes
(Mendelsohn and Smith, 2002 ). The net national annual economic impact
was $36 billion (1998 dollars) in benefits with a climate having a 1.5 8C
temperature increase and a 15 percent precipitation increase. A scenario with