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have different answers from very small to perhaps doubling or tripling
the damage estimates. All that can be said with confi dence is that we
should not ignore the risks in the Climate Casino.
CAUTIONARY RESERVATIONS ABOUT THE ESTIMATES
The estimates of the impacts of climate change presented here rep-
resent the state of the art, and they are a necessary ingredient for cal-
culating economically effi cient climate-change policies. However, they
should be used with great caution.
Some of my reservations are related to the discussion of individual
sectors in earlier chapters. To begin with, these estimates include only
the quantifi able impacts and largely concentrate on market or near-
market sectors such as agriculture, real estate, land, forestry, and hu-
man health. Since we have found that much of the economy is relatively
invulnerable to climate change, it is not surprising that the market
damages are relatively modest, particularly in high-income countries.
It is also important to understand what these studies omit. They
exclude several small negative and positive items: the impact on energy
expenditures (less space heating, more space cooling), lower expendi-
tures on winter coats, the costs of cooling plants for electricity genera-
tion, increased accessibility of Arctic harbors, greater cost of snowmaking
for skiing, decreased amenities from winter recreation and greater ame-
nities from warm-weather recreation, loss of income from fi sheries,
and so on. It is possible that many small impacts could add up to a large
total—in effect, economic death by 1,000 climatic cuts. While this seems
to me unlikely, it must be emphasized that, with all the sectors in all the
regions for all the possible scenarios, the aggregate impact of these nu-
merous minor injuries is hard to assess reliably.
A more important reservation concerns impacts that are either too
uncertain or too diffi cult to estimate reliably. For instance, I discussed
the diffi culties of calculating the economic impacts of species losses and
ecosystem damages. Estimating impacts here is doubly diffi cult because
the physical impacts are generally too complex to determine and be-
cause economists have not yet produced reliable estimates of the costs
of biodiversity losses.
