Science, Economics and Climate Futures

Despite the differing worldviews of climate science and economics, considerable work over the past decade has sought to integrate the science with the economics of climate change. The development of Representative Concentration Pathways (RCPs) describes four alternative pathways with different levels of greenhouse gas emissions and radiative forcing that may occur in the future. Radiative forcing refers to the difference between incoming solar radiation and outgoing infrared radiation. These pathways project a broad range of forcing in the year 2100 of 2.6, 4.5, 6.0, and 8.5 watts per metre squared.

Another framework is the Shared Socio-Economic Pathways (SSPs), developed in 2016 by climate and energy scientists in collaboration with economists. Five such SSPs were developed, namely:

• SSP1or sustainable development, which foresees few mitigation and adaptation challenges with low emission levels and low consumption. This is the ideal world.
• SSP2 or middle-of-the-road development, where the mitigation and adaptation challenges are limited and socio-economic and technological practices don’t deviate too much from the past trends.
• SSP3 or regional rivalry, where national or regional nationalism takes centre stage, with rising barriers to international cooperation. Economic development is low, and inequalities worsen.
• SSP4 or inequality, where there are low mitigation challenges but high adaptation challenges. Rising inequalities within and across countries are foreseen, with the co-existence of a well-connected hi-tech section and a lower-income, poorly educated section working in a labour-intensive, low-tech economy.
• SSP5 involves fossil-fueled development, where there is all-around economic growth as well as investments in education and health and the ability to manage socio-economic as well as climate challenges.

The RCP and SSP were intended to be complementary and were included in the Coupled Model Intercomparison Project (CMIP) versions 5 and 6, respectively. The CMIP6 (CMIP is the comparison of outputs of hundreds of climate models from across the world) was included in the preparation for the IPCC’s sixth assessment report.

The socio-economic conditions in the five SSPs were, in turn, used as inputs into six Integrated Assessment models, which gave us different scenarios of how greenhouse gas emissions may vary in future and what steps need to be taken across sectors such as manufacturing, energy, urban and transport to meet mitigation targets. These emissions scenarios are then used in various General Climate Models (GCMs) and Earth System Models (ESMs), which give us different climate projections.

It is important to underline here that climate science can be an important input into climate economics and vice versa. While the climate science models tend to be more robust and adhere to physical laws, and take into account all possibilities of the uncertainties of climate, they are useful only to the extent that their findings can be used in policies of abatement, mitigation and adaptation. This can only happen in a multilateral negotiation setting such as the UNFCCC, where such decisions have to be taken by all countries collectively. On the other hand, climate economics must also learn from the projections offered by climate science models, which are based on fundamental laws of science: and take into account the outlier events or ‘fat tails’ and factor them into their calculations. Indeed, such ‘fat tails’ events only seem to be rising in frequency across the world in the form of extreme weather events: be they furious floods in the Himalayas in India or the devastating forest fires in California or the rising frequency of high velocity winds and storms. Giving heed to these can only lead to greater attention to adaptation measures in developing countries and benefit them.

Conclusion

While the science of climate change has progressed well, its integration with socio-economic scenarios is a work in progress. Even so, there are enough pointers to the need for urgent action in mitigation and adaptation to climate change. As climate models become more sophisticated, more specific inputs for policy action may be forthcoming. At the end of the day, both climate science and climate economics have to get into a dialogue for designing policies that can best guide abatement and adaptation measures.