Climate Change and the U. S. Economy: The Costs of Inaction Frank Ackerman and Elizabeth A. Stanton
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U.S. damages in the Stern ReviewThe PAGE model reports estimates of damages for eight regions of the world, of which the United States is one. The model projects damages caused by climate change through 2200, expressing them as a percentage of U.S. GDP. In the terminology used in earlier chapters, PAGE estimates business-as-usual damages, but does not directly calculate the cost of inaction. Three categories of climate impacts are included in PAGE: economic impacts on sectors such as agriculture and energy use, which have market prices and are directly included in GDP; non-economic impacts, such as changes in human health, effects on wilderness areas and endangered species, etc., which are not directly included in GDP; and discontinuity impacts, which are increased risks of catastrophic events such as the melting of the Greenland and West Antarctic ice sheets. Our case study estimates, in Chapters 2 and 3 of this report, are a subset of the first category; they are economic damages with market prices. The PAGE model’s underlying demographic, economic, and emissions data are taken from the A2 scenario of the IPCC’s Third Assessment Report (2001). The global results of the PAGE model, as reported in the Stern Review, range from a 5 percent loss of GDP for economic impacts alone, up to a 20 percent loss of GDP for all three categories, economic, non-economic, and discontinuity impacts combined, using high (more damaging) assumptions about some remaining controversies in climate science. Impacts as a fraction of GDP are, not surprisingly, much smaller for the United States than for the world. The worst impacts of climate change will be felt first in the hottest and poorest regions of the world, not in North America. Many parts of the United States enjoy a relatively cool climate, and the country has ample resources for adaptation to the early stages of climate change – although not always the foresight to use those resources wisely. Even compared to other rich countries, the United States is less vulnerable; for example, a much greater proportion of Europe’s population and economic activity is concentrated along the coasts where it is vulnerable to sea-level rise and storm surges. The Stern Review assumes that low-cost adaptation eliminates 100 percent of U.S. and other developed country economic impacts up to 3.6°F of warming, and 90 percent of impacts at larger temperature increases. Adaptation is assumed to do much less for the other categories of impacts, reducing the non-economic impacts by only 25 percent, and catastrophic damages not at all. Figure 3: Mean U.S. Impacts in the Stern Review’s Baseline Scenario 
Source: Hope and Alberth (2007) Figure 3 shows the Stern Review’s mean estimate of the three categories of impacts on the United States. (In the graph, the vertical distance between the lines represents the size of the impacts.) Stern’s strong assumption about adaptation makes the economic impacts unimportant. The other impacts grow rapidly in the later years, with the combined total of all three categories amounting to only 0.1 percent of GDP in 2050, but rising to 0.4 percent by 2100 and 1.8 percent by 2200. The Stern Review reports PAGE model results through 2200; as the graph illustrates, the expected impacts become much larger in the next century. Global impacts are about five times that large, roughly 10 percent of output in 2200. The United States emits about 20 percent of global emissions from now to 2200, but only suffers about 5 percent of global impacts. The PAGE model also includes results for a high climate scenario described in detail in the accompanying technical paper.39 The altered climate assumptions increase impacts by about 40 percent, for the United States and the world: by 2200, mean U.S. impacts reach about 2.8 percent of U.S. GDP, and mean global impacts reach about 14 percent of gross world product. The results shown in Figure 3 are for mostly likely impact or 50th percentile result. The results that would be most comparable to the business-as-usual case presenting in this report, however, are the high end of the likely range, or the 83rd percentile. Table 17 shows the Stern Review’s 83rd percentile for business-as-usual results for the United States: 1 percent of the U.S. GDP in 2100 for economic, non-economic and catastrophic damages combined. (The remainder of this chapter is based on 83rd percentile results from the PAGE model.) Table 17: Business-As-Usual Case: U.S. Impacts in the Stern Review 
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