Guest essay by Eric Worrall
Two separate studies have appeared recently claiming that climate will increase income inequality. In my opinion, both studies contradict readily observable evidence.
The first press release;
Study: Climate change damages US economy, increases inequality
Unmitigated climate change will make the United States poorer and more unequal, according to a new study published in the journal Science. The poorest third of counties could sustain economic damages costing as much as 20 percent of their income if warming proceeds unabated.
States in the South and lower Midwest, which tend to be poor and hot already, will lose the most, with economic opportunity traveling northward and westward. Colder and richer counties along the northern border and in the Rockies could benefit the most as health, agriculture and energy costs are projected to improve.
Overall, the study—led by Solomon Hsiang of the University of California, Berkeley, Robert Kopp of Rutgers University-New Brunswick, Amir Jina of the University of Chicago, and James Rising, also of UC Berkeley—projects losses, economic restructuring and widening inequality.
“Unmitigated climate change will be very expensive for huge regions of the United States,” said Hsiang, Chancellor’s Associate Professor of Public Policy at UC Berkeley. “If we continue on the current path, our analysis indicates it may result in the largest transfer of wealth from the poor to the rich in the country’s history.”
The second press release;
As the rich move away from disaster zones, the poor are left behind
By Leah Platt Boustan, Maria Lucia Yanguas, Matthew Kahn, and Paul W. Rhode
on Jul 1, 2017 6:00 am
Cross-posted from the Conversation
Every year, major earthquakes, floods, and hurricanes occur. These natural disasters disrupt daily life and, in the worst cases, cause devastation. Events such as Hurricanes Katrina and Sandy killed thousands of people and generated billions of dollars in losses.
Our research team wanted to know how disasters affect people’s decisions to move in or out of particular areas. We created a new database that covers disasters in the United States from 1920 to 2010 at the county level, combining data from the American Red Cross as well as the Federal Emergency Management Agency (FEMA) and its predecessors.
Our work shows that people move away from areas hit by the largest natural disasters, but smaller disasters have little effect on migration. The data also showed that these trends may worsen inequality in the U.S., as the rich move away from disaster-prone areas, while the poor are left behind.
The abstract of the first study;
Estimating economic damage from climate change in the United States
Solomon Hsiang, Robert Kopp, Amir Jina, James Rising, Michael Delgado, Shashank Mohan, D. J. Rasmussen, Robert Muir-Wood, Paul Wilson, Michael Oppenheimer, Kate Larsen, Trevor Houser
Estimates of climate change damage are central to the design of climate policies. Here, we develop a flexible architecture for computing damages that integrates climate science, econometric analyses, and process models. We use this approach to construct spatially explicit, probabilistic, and empirically derived estimates of economic damage in the United States from climate change. The combined value of market and nonmarket damage across analyzed sectors—agriculture, crime, coastal storms, energy, human mortality, and labor—increases quadratically in global mean temperature, costing roughly 1.2% of gross domestic product per +1°C on average. Importantly, risk is distributed unequally across locations, generating a large transfer of value northward and westward that increases economic inequality. By the late 21st century, the poorest third of counties are projected to experience damages between 2 and 20% of county income (90% chance) under business-as-usual emissions (Representative Concentration Pathway 8.5).
The abstract of the second study;
The Effect of Natural Disasters on Economic Activity in US Counties: A Century of Data
Leah Platt Boustan, Matthew E. Kahn, Paul W. Rhode, Maria Lucia Yanguas
NBER Working Paper No. 23410
Issued in May 2017
NBER Program(s): DAE EEE
Major natural disasters such as Hurricanes Katrina and Sandy cause numerous fatalities, and destroy property and infrastructure. In any year, the U.S experiences dozens of smaller natural disasters as well. We construct a 90 year panel data set that includes the universe of natural disasters in the United States from 1920 to 2010. By exploiting spatial and temporal variation, we study how these shocks affected migration rates, home prices and local poverty rates. The most severe disasters increase out migration rates and lower housing prices, especially in areas at particular risk of disaster activity, but milder disasters have little effect.
Read more (paywalled): http://www.nber.org/papers/w23410
What do I mean when I suggest both studies contradict observable evidence?
Ask one question – how do cities cope with hot weather, sudden deluges and extreme storms, in places where such phenomena are already a regular part of life? Places like the tropical coastal cities of my native Queensland?
The answer of course is the civic infrastructure of tropical cities is built to cope with the scale of events which are expected. The storm drains are built with much larger pipes, to easily cope with deluges on a scale which would severely flood most US cities. This is simply a matter of digging up the old pipes, and replacing them with larger pipes, next time the drains are repaired. The frames, walls and roofs of houses are built to resist cyclones, hail and extreme downpours – most of the roofs of working class houses in my area, including my house, are made of inexpensive heavy duty sheet steel. Such protection can be inexpensively retrofitted to houses at risk from storm damage – steel bracing to strengthen inadequate house frames, cheap steel roofs to increase protection from storm damage. Rich people sometimes choose tile roofs for aesthetic reasons – but they have more money to pay for roof repairs.
In severe cases, people in low lying areas are evacuated if a cyclone or other extreme event threatens, with well rehearsed evacuation plans. The government steps in to help repair usually very localised extreme storm damage. Even a near miss turns a tropical cyclone into an inconvenience rather than a disaster, if your local infrastructure is built to cope with extreme weather.
I am not suggesting that tropical cities get it right every time. 35 people died in the 2011 Queensland floods, a weather event so extreme it is believed to have caused global sea level to temporarily drop by 7mm. But this is far fewer deaths than the 1245 people who died due to Hurricane Katrina – a disaster which was reportedly exacerbated by poor planning and incompetence.
Incompetence which costs lives only prevails while it remains hidden. Queensland authorities are not inherently more competent than Louisiana authorities. We have our share of public scandals and crooked land planning decisions. But severe weather in Queensland is a regular occurrence. If severe deluges or other weather events were to become more common in the USA, the people would demand solutions – and those solutions are not difficult to implement. If all else failed, the USA would simply hire top civic engineers from tropical cities to help upgrade US infrastructure, to provide US citizens with the same kind of storm resilience as people who live in tropical cities already enjoy today.