1 Economic Value of Climate Science Bruce Wielicki, NASA Langley Roger Cooke Resources for the Future David Young, NASA Langley Martin Mlynczak, NASA Langley NASA Innovations in Climate Education Virtual Meeting April 24, 2013 NASA Langley Research Center, Hampton, VA

2 We have traceable estimates of the economic value of weather prediction Climate: “Will impact societal decisions with trillion dollar impacts” But is this statement verified and traceable in any way, or is it just a vague qualitative statement? How could we quantify an economic value to climate science? –Climate change science value exists decades into the future –That value has to be treated as a risk/benefit economic analysis –Investment perspective vs insurance perspective –Rigorous analysis must take into account the uncertainties in both climate science, economic impacts, policy –Needs to be sufficiently rigorous to be published in both economic and scientific journals –Potential to change the dynamic of the discussion on climate change science from “threat” to “economic investment”. Economic Value of Climate Science Requires a combination of climate science and economics expertise

3 We have an internationally agreed to set of weather observations to enable accurate weather prediction. Weather accuracy required is 1K, climate requirement is 0.1K Weather is temperature, humidity, wind, precipitation. Climate adds: –ocean currents, temperature, salinity including deep ocean –ice sheets, glaciers, sea ice, snow depth/coverage –atmospheric chemistry: greenhouse gases, aerosols –ecosystems for land, ocean, snow, ice Climate is 10 times the accuracy and variables for weather We have no international climate observing system designed to improve climate prediction. Why not? This is a communication/education problem between science, agencies, congress, and the public Necessity is the mother of invention: how do we fix this? Where are Climate Observations?

CLARREO: Climate Absolute Radiance and Refractivity Observatory Mission goal: Greatly increase the absolute accuracy of most decadal climate change observations: across the entire reflected solar and infrared spectrum...

Calibration Reference Spectrometers (IR/RS) for Global Climate, Weather, Land, Ocean Satellite Instruments Provide spectral, angle, space, and time matched orbit crossing observations for all LEO and GEO orbits critical to support reference intercalibration Endorsed by WMO & GSICS (letter to Freilich) Calibrate LEO and GEO instruments: e.g. - JPSS: VIIRS, CrIS, CERES - METOP: IASI, AVHRR - Landsat, etc land imagers - Ocean color sensors - GOES imagers/sounders - TEMPO geo chemistry - SCIAMACHY/GOME CLARREO Provides "NIST in Orbit": Transfer Spectrometers to SI Standards CLARREO ISS Mission Concept 5

LaRC/GSFC Meeting Nov 16, NASA internal Use Only High accuracy is critical to more rapid understanding of climate change Infrared Accuracy and Climate Trends Length of Observed Trend IPCC next few decades temperature trends: 0.16C to 0.34C varying with climate sensitivity An uncertainty of half the magnitude of the trend is ~ 0.1C. Achieved 15 years earlier with CLARREO accuracy.

High Climate Sensitivity (5% chance) Medium Climate Sensitivity (most likely) Low Climate Sensitivity (5% chance) Business as Usual Emissions Scenarios Expected Temperature Trend L. Chambers, 2013

Business as Usual Emissions Scenarios High Climate Sensitivity (5% chance) Medium Climate Sensitivity (most likely) Low Climate Sensitivity (5% chance) What the World Might Actually Do Includes Natural Climate Variability L. Chambers, 2013

Business as Usual Emissions Scenarios High Climate Sensitivity (5% chance) Medium Climate Sensitivity (most likely) Low Climate Sensitivity (5% chance) What We can Observe – Current System Accuracy limits knowledge L. Chambers, 2013

Business as Usual Emissions Scenarios High Climate Sensitivity (5% chance) Medium Climate Sensitivity (most likely) Low Climate Sensitivity (5% chance) What We Could Observe – Climate Observing System Better accuracy improves knowledge L. Chambers, 2013

Business as Usual Emissions Scenarios High Climate Sensitivity (5% chance) Medium Climate Sensitivity (most likely) Low Climate Sensitivity (5% chance) What We Could Observe – Climate Observing System Earliest possible launch: 2020 L. Chambers, 2013

12 High accuracy is critical to more rapid understanding of climate change Accuracy and Climate Trends Climate Sensitivity Uncertainty is a factor of 4 (IPCC, 90% confidence bound) which = a factor of 16 uncertainty in climate change economic impacts Climate Sensitivity Uncertainty = Cloud Feedback Uncertainty = Low Cloud Feedback = Changes in SW CRF/decade (y-axis of figure) Higher Accuracy Observations = CLARREO reference intercal of CERES = narrowed uncertainty 15 to 20 years earlier

13 IPCC impacts chapter lead author Mathematician/Risk Analysis Theory Participated in recent workshop on socioeconomic benefits of earth science Run and modify Integrated Economic Assessment (IAM) models Expertise in “fat tails” analysis of economic impacts of statistically rare events Was attracted to CLARREO by our accuracy requirements development and science value matrix concept: and especially the previous figure. Roger Cooke Resources for the Future Climate Sensitivity and Discount Rates Dominate Economic Impacts

Phase 1 Results IAMS IMSCC IAMS IMSCC

Value of Information (VOI) Calculation Current IPCC factor of 3 uncertainty in climate sensitivity = factor of 3 2 = factor of 9 uncertainty in economic impacts

VOI Calculation Baseline

VOI Calculation Current Observing System 2055 Switch to Reduced Emissions 2205 SCC = $65 T

VOI Calculation Improved accuracy yields savings of $11.7 T in net present value 2205 SCC = $53 T Improved Accuracy Observing System (2020 launch) 2035 Switch to Reduced Emissions

Decision Context Trigger Variable∆T/decade∆CRF/decade Trigger Value0.2C or 0.3C/decade3C for 2X CO2 Confidence Level80%, 95% Launch Date2020, 2025, 2030 Trigger Policy ChangeDICE Optimal, Aggressive Discount Rate2.5%, 3%, 5% Aerosol Forcing ObsStart Date = CLARREO Value of Information Parameters Run 1000s of Monte Carlo cases with: - Full pdf of climate sensitivity uncertainty in IPCC fit to Roe and Baker (2007) - Gaussian climate natural variability as specified in the CLARREO BAMS article for global mean temperature and SW cloud radiative forcing. Results are the ensemble mean of the 1000s of Monte Carlo Simulations

How Sensitive are Results to Assumptions? Parameter Change CLARREO/Improved Climate Observations VOI (Trillion US 2015 dollars, NPV) 3% discount rate Baseline (blue values)$11.7 T BAU => AER$9.8 T 0.3C/decade trigger$14.4 T 2030 launch$9.1 T Delaying launch by 10 years reduces benefit by $2.6 T Each year of delay we lose $260B of benefits

Value of Information Summary All economic values in Net Present Value (NPV) in 2015 U.S. dollars Even with the most pessimistic discount rate, the return on investment is large: factors of 15 to 65 (20 to 32% per year return on investment) Discount Rate VOI for CLARREO/Impro ved Climate Observations Cost of 30 yrs of improved full climate observing system (4X current effort) Payback Ratio VOI / Obs Improvement Cost 2.5%$17.6 T$260B65 3%$11.7 T$245B45 5%$3.1 T$200B15

Summary An advanced climate observing system could accelerate accurate societal decisions by 15 to 20 years over current systems (and lack thereof). One of the key advances is higher absolute accuracy decadal change observations to reduce uncertainty in key areas like climate sensitivity. The Net Present Value (NPV) to the world economy of such an acceleration is ~ $10 Trillion (2015 U.S. dollars) The NPV of an advanced climate observing system is relatively robust to changing the societal decision trigger, or emissions reduction approach. As an “investment”, the payback for advanced climate observations is roughly 45 to 1. A $45 return for every $1 invested. Every year we delay advanced climate observations we lose about $260B of potential return on investment. 23

Next Steps Current study using temperature trend decisions triggers submitted to the journal "Environment, Systems, and Decisions". Current study does not include emissions mitigation costs which are notoriously uncertain: by a factor of 12 (IPCC, 2007). Will be added in the next version, and could reduce the VOI by a factor of 2 to 4. Next version will also include analysis of decision triggers for cloud feedback to provide a more direct and rigorous relationship to climate sensitivity uncertainty than temperature trends. The current study represents a framework that can be extended to other uncertainties such as sea level rise, anthropogenic aerosol forcing, or carbon cycle feedbacks. To convert VOI from world net present value to U.S. net present value, divide the VOI by a factor of 6. But U.S. would only pay for roughly ½ the climate observing system (current balance of U.S. vs international costs for space based global observations) Final payback to U.S. including mitigation costs might be ~ $5 per $1 invested at the nominal 3% discount rate. 24

Backup Slides 25

VOI for Climate Science – Next Steps 26 Phase 2 Studies IAMS IMSCC IAMS IMSCC

What is a Discount Rate? Its not inflation Instead it accounts for how people value financial resources as a function of their perceived utility both now and in the future. – A bird in the hand is worth 2 in the bush – Future generations will be richer, let them deal with the costs – Investments made today must be compared to alternative ways to invest the same resources 27