A U.N. report about ways to fix global warming due on Sunday is likely to disappoint investors seeking clear-cut economic calculations about the benefits and costs of curbing rising greenhouse gas emissions.
Authors say the report stops short of an economic bottom line since it is hard to put a value, for instance, on human lives lost to extreme weather or on risks of a faster melt of Greenland’s ice sheet that would push up sea levels.
The United States and other governments, at talks in Berlin, were pushing for clearer economic arguments from the Intergovernmental Panel on Climate Change (IPCC), which is meant to guide trillion-dollar curbs on greenhouse gas emissions.
Washington said a draft is “too narrow” in judging costs of shifting to cleaner energies, partly as it omits benefits of improved public health from less pollution from fossil fuels, according to documents seen by Reuters.
Switzerland said the “central question” for policymakers was to compare costs and benefits of different levels of action to rein in greenhouse gases, something which does not appear in the draft.
“We provide much more economic analysis this time, but we are not putting that forward as the only impact,” Rajendra Pachauri, chair or the IPCC, told Reuters. The Berlin report will be published on Sunday.
“Monetary value is only a small part. What about the loss of lives, the loss of ecosystem services?” he said in Beijing last month when asked about the lack of a benefit-cost analysis.
IPCC reports are meant to guide almost 200 governments, which have promised to work out a deal by the end of 2015 to limit global warming.
The IPCC says the reports make a compelling case for fast action by governments and companies to avert rising damage to water and food supplies, human society and nature from heatwaves, floods, storms and rising seas.
The lack of a clear economic bottom line “is a worry … the elements are all there but it takes too much work to lift them out,” said Nicholas Stern, chair of the Grantham Research Institute at the London School of Economics.
Stern, a former World Bank chief economist, led a 2006 review about climate change. It estimated it would cost about 1 percent of world GDP a year to limit climate change and that, with no action, damage could range from 5 to 20 percent of GDP.
Stern said IPCC reports highlight that problems caused by rising temperatures are worse than he thought in 2006.
In assessing costs of action, the Berlin IPCC draft says tough curbs on greenhouse emissions would lead to a loss of between 1 and 4 percent of consumption by 2030, 2-6 percent by 2050 and 2-12 percent by 2100, compared to no action.
It does not define “consumption.” And delegates said revised texts indicated that the projected losses in consumption were cumulative, meaning they amounted to only a fraction of a percent a year.
In assessing risks of inaction, a separate IPCC report last month said future warming of 2 degrees Celsius (3.6 Fahrenheit)—a very different scenario from the Berlin draft—would cut global economic output by between 0.2 and 2.0 percent a year.
Stern said the 0.2-2.0 percent range “badly underestimates” the risks, partly because it excludes possible catastrophic changes such as the collapse of tropical reef systems, or a sudden drying of the Amazon rainforest.
Investors are also concerned about difficulties in comparing IPCC estimates of costs and benefits.
“It’s a hard read,” Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change that groups pension funds and asset managers that control 7.5 trillion euros ($10.35 trillion), said of the reports.
Clearer economic conclusions would help persuade companies and investors to act, she said. The IPCC says it is at least 95 percent probable that climate change is man-made but many voters are sceptical and doubt tough action is needed.
Several nations said the three IPCC groups—looking at the science of climate change in September, the impacts in March and the solutions in April—should coordinate better. The IPCC will also issue a summary of its findings in October.
(Reporting By Alister Doyle in Berlin, with additional reporting by Stian Reklev in Beijing; editing by Ralph Boulton)