Thayer Watkins
Silicon Valley
& Tornado Alley

The Stern Review
on the Economics of Climate Change

The Stern Review was released in electronic form the last part of October, just in time to have maximum impact on the November 2006 elections in the United States. It will be argued below that although the Review purports to be economic analysis based upon scientific climate forecasting it is in actuality merely propaganda for the creation of a system of global regulation.

The first issue is whether climate change modeling is in fact scientific. Computer models generate forecasts in whatever detail the model builders and their programmers choose. That model churn out forecasts does not mean that those forecast have any validity whatsoever. Consider the case of computer models for weather forecasting. These models are based upon the physical laws of fluid mechanics and thermodynamics. There have to be approximations made because the world is large and complex. The best of these models provide useful forecasts several days in advance. However forecasts beyond a few days are so inaccurate as to be utterly useless as weather forecasts. This is because the weather is the result of a chaotic system which is extremely sensitive to initial conditions. Nevertheless these computer models can be run to give forecasts for January 1st of next year or for the year 2100. The correspondence between these forecasts and what happens on January 1st of 2007 or 2100 is likely to be zero. Weather forecasting models are useful for a few days in advance but useless, despite their apparent precision, for any times beyond that. There usefulness for short term forecasts has been established by a comparison between forecasts and what actally happens. In other words, the useful weather forecasting models have validated and the useless ones discarded.

Climate forecasting models are of a different species than weather forecasting models. There is much less provision for separating the valid models from the invalid models. The only validation procedure for climate models is to see how well they can replicate current and past climate conditions. It is not guaranteed that a model which accurately replicates such climate data will give accurate forecasts of future climate characteristics, but a model which does not past this test is not likely to be of any value for forecasts of future climates.

The Stern Review does not give us the results of the validation of the model or models which are the basis for its analysis. The Assessment Report of 2001 for the Intergovernmental Panel on Climate Change (IPCC) does gives information on this topic and it is not likely that the Stern Review would be based upon anything that was superior to what the IPCC used. Here are results of the 15 climate models which the IPCC considered the best of such models. The data is for the latitude profiles of temperature, precipitation, sea level pressure and cloudiness in the Northern Hemisphere winter (December, January and February).

The results for temperature look reasonably good but definitely not perfect. The models are not good at replicating Southern Hemisphere temperatures and polar temperatures. The results for precipitation are less impressive. The models generally overestimate precipitation and the proportional errors are quite large. Some models underestimate tropical precipitation but generall there is an overestimation. For Mean Sea Level (MSL) pressure there is considerable variation, but the proportional errors are small. The picture for cloudiness does not instill confidence in the models. None of the models replicates the observed data and there is wide variation among the models. The proportional errors are quite large.

It is also illuminating to compare the forecasts of the 15 models for a particular scenario of future pattern of CO2 levels. These forecasts from IPCC's Climate Change 2001 are shown below.

The first is for temperature change and the second for precipitation change.


If climate modeling were truly a science there would be one curve in each of the above graphs. Instead the results for the 15 best climate models look like random noise. There is some correspondence of general trends but the magnitudes for the different models are widely different.

Even the wide scatter of model forecasts shown above is not the whole story. Several of the projection models involved what are called flux adjustments to make them look better. Here is what the IPCC has to say on this topic:

Given present day greenhouse gas concentrations, most coupled models at the time of the SAR (Second Assessment Report) had difficulty in obtaining a stable climate near the present day state. Therefore "flux adjustment" terms were often added to the surface fluxes of heat, water and (sometimes) momentum which were passes from the atmosphere t the ocean model. Flux adjustments are non-physical in that they cannot be related to any physical process in the climate system and do not a priori conserve heat and water across the atmosphere-ocean interface. The flux adjustments were specifically chosen to give a stable and realistic simulation of present surface climate (especially the sea surface temperature and sea-ice cover), and were often as large as the annual mean model fluxes themselves. The need to use such adjustments was clearly a source of uncertainty: the approach inherently disguises sources of systematic error in the models, and may distort their sensitivity to changed radiative forcing. Models which did not use flux adjustments produced unrealistic simulations of fundamental aspects of the climate system such as the strength of the North Atlantic thermohaline circulation. Climate Change 2001 page 476.

The conclusion that should be drawn from the results is that there is some moderate success of the climate models to replicate the current climate but there are major failures. Intellectual integrity would demand that the IPCC and the climate modelers tell the public that the models are not yet ready for prime time; especially not for making one hundred year forecasts relevant to public policy analysis. The Stern Review on the other hand makes two hundred year forecasts and passes them off as pure, hard science.

There are so many short-comings to the Stern Review and they will be dealt with in time, but here are three comments.

Part 1: The Science of Climate Change

(To be continued.)

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