White House Warns that Climate Change Could Reduce U.S. GDP in 2100 from $140.3 Trillion to Just $139 Trillion

The White House Council of Economic Advisors has
just issued its study,
The Cost of Delaying of Action to Stem Cimate Change.
The study argues (for illustrative purposes only) that failing to
keep the future average global temperature increase below 2 degrees
Celsius would result in an annual loss of 0.9 percent of GDP due to
climate damage. Sounds serious, no? The study warns:

Based on a leading aggregate damage estimate in the climate
economics literature, a delay that results in warming of 3° Celsius
above preindustrial levels, instead of 2°, could increase economic
damages by approximately 0.9 percent of global output. To put this
percentage in perspective, 0.9 percent of estimated 2014 U.S. Gross
Domestic Product (GDP) is approximately $150 billion. The
incremental cost of an additional degree of warming beyond 3°
Celsius would be even greater. Moreover, these costs are not
one-time, but are rather incurred year after year because of the
permanent damage caused by increased climate change resulting from
the delay.

Most global temperature projections due to man-made warming do
not expect average temperature to exceed 3 degrees Celsius until
around 2100. So using that as a baseline (for illustrative purposes
only), let’s run some rough numbers to see just how bad the
permanent loss of 0.9 percent per year would be in 2100.

Right now the U.S. GDP is about $17.2
trillion. Assuming a growth rate of 2.5 percent per year for
the next 85 years yields a projected U.S. GDP of $140.3 trillion by
2100. So, a 0.9 percent loss per year in 2100 would mean that
future GDP would instead be about $139 trillion. In other words,
the GDP of the denizens of the 22nd century America would be about
$1.3 trillion lower than it otherwise would have been had global
average temperature been held to 2 degrees Celsius.

So how much economic growth should we be willing to sacrifice
now to prevent this future loss? Put it this way, lowering the
average economic growth rate from 2.5 percent to 2.489 percent over
the next 85 years would result in a similar permanent annual loss
of GDP by 2100.

Assuming a U.S. population of 500 milion by 2100, the
intergenerational equity question is: How much should people now
making an average per capita GDP of $54,000 sacrifice for people 85
years hence whose per capita GDP of around $278,000 would be a
couple of thousand bucks higher if temperatures were a degree
lower?

Of course, all of these calculations projecting outcomes nearly
a century hence need to be taken with vats of salt.

For the record, I do think that man-made climate change is a
problem, but I also think that these sorts of attempts at ginning
up scary scenarios are not very persuasive.