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Ocean Acidification and Warming: The Economic Toll

In a new study authored by Dr. John Talberth and Ernie Niemi of Natural Resource Economics, CSE reviewed the economic consequences of ocean acidification and warming – the two most prominent effects of climate change on our oceans – and estimated what increment to the existing social cost of carbon (SCC) needs to be made to account for these damages. Preliminary results suggest that proper accounting of an economic risk that could approach $20 trillion per year by 2100 would raise SCC 1.5 to 4.7 times higher than the current federal rate, to $60–$200 per metric ton CO2-e. The study has been published online by Elsevier as part of their Reference Module in Earth Systems and Environmental Sciences.

Climate change has the potential to disrupt ocean and coastal ecosystems on a scale that is difficult to grasp. There are two interrelated processes at work: ocean acidification and ocean warming (OAW). Oceans have absorbed roughly half of all anthropogenic emissions of carbon dioxide. Acidification occurs as the absorption of CO2 triggers a series of chemical reactions that increase the acidity and decrease the concentration of carbonate ions in the water. So far, absorption of CO2 has increased acidity of surface waters by about 30% and, if current trends in atmospheric CO2 continue, by 2100 these waters could be nearly 150 percent more acidic, resulting in a pH that the oceans haven’t experienced for more than 20 million years. Among the dire predictions associated with acidification include dramatic reductions in populations of some calcifying species, including oysters, clams, sea urchins, shallow water corals, deep sea corals, and calcareous plankton – the latter effect putting the entire marine food chain at risk. Some models suggest that ocean carbonate saturation levels could drop below those required to sustain coral reef accretion by 2050.

The second process is ocean warming. The mechanisms of ocean warming are complex, and include heat transfer from the atmosphere, downwelling infrared radiation, stratification, reductions in mixing, changes in ocean currents, and changes in cloud cover patterns. Already, the global average sea surface temperature (SST) has risen by over 2.0 °F since the post-industrial revolution low point in 1909. Sea level rise is one of the most conspicuous effects with potentially catastrophic consequences. Models that account for collapse of Antarctic ice sheets from processes driven by both atmospheric and ocean warming indicate sea level rise may top one meter by 2100 and put vast areas of coastal infrastructure at risk.

Obviously, all these physical effects have enormous economic consequences, yet relatively little research has been completed to date on their expected magnitude, timing, and distribution. Indeed, as late as 2012, several prominent climate researchers concluded that economic assessments of the effects of ocean acidification “are currently almost absent.” To help fill in this information gap, we combed through all published research on OAW economic consequences, updated figures where needed, and made some original calculations of our own to estimate some plausible worst-case scenarios. These scenarios appear in Table 4, below. Alarmingly, they suggest that OAW costs could near $20 trillion per year by 2100 in association with a variety of dramatic impacts, such as loss of all charismatic marine species.

Table 4: Plausible worst-case scenarios and values at risk from OAW

Resource or service at risk Scenario Values at risk

($2016 billions/yr)

Net primary productivity Ocean net primary productivity reduced by 16% $9,232.00
Coral reefs Loss of at least 50% of current coral reef area $5,661.70
Coastal infrastructure Additional SLR of 3 meters via WAIS collapse $3,561.69
Charismatic species 25% of charismatic marine species go extinct $1,104.08
Carbon sequestration 50% loss of ocean CO2 uptake $641.16
Mangroves Loss of at least 15% of current mangrove area $287.42
Fisheries 400 million at significantly increased risk of hunger $245.74
Coastal ecosystems Marine dead zones expand in area by 50% $126.82

The relative lack of understanding about economic consequences has, in turn, translated into a lack of policy mechanisms and research focused on OAW. One of the policy mechanisms where OAW costs are notably absent is the social cost of carbon (SCC) – an increasingly popular regulatory tool for assessing both the costs of greenhouse gas emissions and the benefits of actions to limit emissions. Ostensibly, the SCC includes all known market and non-market costs, yet there are many categories missing or incomplete. One of the bigger holes is OAW and one of the justifications for its absence is the relative dearth of methods or data to quantify economic consequences and the assumption that such impacts are minor enough that society will be able to adapt. In the paper, we argue that such barriers need not restrain the government agencies participating in the SCC’s development and application from incorporating estimates for OAW based on the best available information and inclusive of high-impact but low probability scenarios – two factors that are baked into the regulatory framework for the SCC.

We do so by demonstrating three basic approaches rooted in standard microeconomic models of externalities, capital investment, and risk aversion. The first is based on federal agencies’ current approach for quantifying externalities from GHG emissions using the Dynamic Integrated Climate-Economy (DICE) integrated assessment model and economic damage functions suggested by existing literature. The second is a replacement or adaptation cost approach, which views SCC as a current capital investment liability that can be amortized over the adaptation time horizon. The third is an averted-risk approach based on willingness to pay to eliminate the risk of catastrophic changes, an approach that seems most compatible with worst-case scenario requirements under existing law.

In the next phase of this work, the study will be presented to the Interagency Working Group on the Social Cost of Carbon and the National Academy of Sciences, who is conducting a review of SCC methods and accepting recommendations for changes in approaches and sources of information. If the SCC is to be an effective regulatory tool and send the right market signal to polluters it must be as complete as possible. By engaging with the IWG on how to best incorporate the enormous toll associated with ocean acidification and warming, we hope to help fill one of SCC’s most serious omissions.

Further reading:

 

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    Forest Carbon Tax and Reward: Creating more jobs and carbon in the woods.

    Deforestation, forest degradation, and unsustainable forest practices are major drivers of climate change. Deforestation and other land-use changes have released approximately 150 gigatons of carbon to the atmosphere since 1850, roughly one-fifth of the current atmospheric total. The contributions from forest degradation (i.e. converting real forests into tree plantations) and unsustainable practices (i.e. those that cause irreversible damage to soils) are on the rise. Globally, emissions from forest degradation have increased from 0.4 to 1.0 gigatons CO2 per year between 1990 and 2015. In Oregon, emissions from deforestation and industrial forest practices are not monitored by any state or federal agency but are likely the scond largest source of greenhouse gas pollution each year.

    A swift transformation to sustainable forest practices that halt and reverse deforestation and forest degradation has the potential to capture and store much of the excess carbon that is now fueling climate change. For example, climate scientist James E. Hansen has calculated that we can pull 100 billion tons of carbon from the air through large scale restoration of areas denuded by logging and agricultural expansion. This has the potential to reduce CO2 concentrations by 30 parts per million by 2100, which can make all the difference as to whether humanity achieves the 2° C warming cap established by international agreements or blows past that critical threshold.

    As it has done in the past on so many other issues, Oregon can lead the way. It can do so by passing globally replicable legislation implementing a forest carbon tax and reward program to penalize clearcutting, chemical sprays, short rotations and construction of logging roads and dramatically scale up climate smart forest practices that enhance carbon sequestration and storage capacity of its state and privately managed forestlands.

    Here’s how it would work: Forestland owners who release more carbon through logging than is sequestered by natural forests on their properties would be levied a tax equivalent to the social cost of carbon – roughly $42 per ton of carbon dioxide emitted – on these net emissions. However, forestland owners would receive credits against the levy for a wide range of beneficial practices that bolster carbon storage including long rotations, selective harvesting and set-asides for streams, wildlife, non-timber forest products, recreation, and other beneficial uses. In addition, forestland owners that embrace these practices would be eligible for generous payments from a Forest Carbon Incentive Fund (FCIF) capitalized by the tax and managed by the Department of Forestry in consultation with the Oregon Global Warming Commission. Many forestland owners would make money on this deal – in particular, good actors who know how to produce timber while leaving a real forest behind.

    The revenue impacts of the proposed legislation have yet to be calculated. But a reasonable estimate is that the net (after credits and deductions) tax would generate $50 per thousand board foot harvested – equivalent to $120 million per year at current rates of harvest on industrial forestlands. Oregon’s Department of Forestry and the Oregon Global Warming Commission would keep what they need to fill in their budget holes and administer the tax and reward program. The rest (about $100 million) gets dispersed to forestland owners who agree to implement climate smart, labor intensive practices needed to boost carbon storage and transform Oregon’s private forest landscape from a veritable wasteland of clearcuts and logging roads into a green carpet of healthy, functioning, and naturally evolving forests. If managed well, Pacific Northwest forests have the potential to capture and store more carbon per acre than any other forest type on the planet. A forest carbon tax and reward program would help fulfill this potential and by doing so, create thousands of new jobs.

    A typical multiplier for money spent in the woods paying workers to restore timber plantations back to real forests and implement other climate smart practices is about 60 direct and induced jobs per million dollars invested. That’s 6,000 jobs per year associated with FCIF payments of about $100 million per year. Not a bad deal for skilled forest workers. And a welcome shot in the arm for distressed rural communities searching for ways to decouple from the booms and busts of industrial, high emissions logging cycles.

    Time is running out on the climate time bomb. One of the great contributions Oregon can make on the global stage is to recruit its state and privately held forestlands into its climate agenda, help restore the world’s most effective carbon sink, and create thousands of jobs in doing so. The Oregon Legislature and Governor Brown would do well to provide such leadership by enacting forest carbon tax and reward legislation this year.

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      Portland, OR Mayor, Activists Celebrate Trailblazing Fossil Fuel Infrastructure Ban

      For Immediate Release:            

      Contact: Mia Reback at 310-717-7966 or mia@350pdx.org; Daphne Wysham at 202-510-3541 or daphne@sustainable-economy.org; or Nicky Vogt at 202-331-2389 or vogt@newpartners.com

      December 14, 2016

      Portland, Oregon – Today, Portland Mayor Charlie Hales joined community leaders and activists to celebrate the unanimous passage of a new city ordinance banning new bulk fossil fuel terminals that renews Portland’s commitment to strong climate action, lower carbon emissions, effective seismic resilience, a safer Columbia River Gorge, and a safer environment for those in and around Portland.

      This first of its kind ordinance prohibits the construction of new fossil fuel infrastructure that has the capability to transload fossil fuels or is larger than two million gallons in capacity and forbids existing terminals from expanding in size, preventing any further potential damage to their local environment.nffi-victory_cities-lead-copy

      (L to R): Portland Mayor Charlie Hales, Walla Walla Tribal Elder Cathy Sampson-Kruse and City Councilor Amanda Fritz. Photo: Rick Rappaport

      The Portland City Council passed two other climate policies on Wednesday morning: home energy scoring which will require energy audits before residential home sales and an update to the city’s electric vehicle strategy. ‘

      Portland Mayor Charlie Hales said, “Portland has been a world leader in ‪climate action. We were the first U.S. city to adopt a climate action plan. We were the first to bring back the modern streetcar. Now we’ll be the first to deliberately transition from dirty, dangerous fuels to ‪clean, ‪renewable ‪energy with the passage of Portland’s policy that prohibits bulk fossil fuel facilities,” said Mayor Hales. “This work would not be possible without our strong grassroots organizations that have led our city’s efforts forward. Now more than ever, these local community voices are needed, because the risks of not acting on climate change are just too severe.”

      Mia Reback, Lead Organizer for 350 PDX,  stated, “Portland is taking bold steps to protect our city from the immediate risks of fossil fuels while sending a powerful message to other cities across the nation and the world that the grassroots movement will not let national politics deter cities from taking the lead on climate action. City by city we can, and will, ensure the steps are taken to rapidly transition away from fossil fuels, protecting the very essence of life on planet earth.”

      Micah Meskel, Conservation Field Coordinator at Audubon Society of Portland said,“Today we saw the power of the grassroots prevail. This vote solidifies a historic climate action by the City, one that can be replicated in cities throughout the Northwest, and will spark additional community led initiatives here in Portland to severe our City’s reliance to dangerous fossil fuel infrastructure.”

      Regna Merritt, Healthy Climate Program Director of Oregon Physicians for Social Responsibility stated, “Low-income populations and communities of color experience the worst impacts of fossil fuels and climate disruption. As we celebrate a huge victory for the health and safety of our community, we urge other communities to take similarly bold actions.”

      Jasmine Zimmer-Stucky, Senior Organizer at Columbia Riverkeeper said, “At a time when people around the world are grappling with how to protect clean water and accelerate a transition away from fossil fuels, Portland is setting a globally significant example and using this geographic and economic opportunity to make a bold statement. “

      Steve McCoy, Staff Attorney for the Friends of the Columbia Gorge said, “The explosive train wreck in the Columbia River Gorge last June is direct evidence of the dangers of shipping fossil fuels by rail. Portland’s action not only safeguards our children from the immediate dangers of more explosive oil trains passing through our communities, but also makes a strong stand for our children’s children by blocking an avenue for increasing the use of greenhouse gas intensive fossil fuels abroad.”

      Daphne Wysham, climate program director at the Center for Sustainable Economy, and a member of the Climate Action Coalition said: “With this grassroots-led victory, Portland is showing where the future lies: Not in the boom and bust fossil fuel economy, but in a more equitable low- to zero-carbon economy. Portland’s low-carbon economy now provides about 47,000 middle-wage jobs, representing over $10 billion in goods and services annually, with an average 5 percent annual growth rate–a far more sustainable economy than fossil fuel exports would provide.”

      This victory is the result of over two years of organizing from local activists and community members committed to the betterment of Portland’s environment and the protection of our neighbors’ health and safety. The ordinance is an important step forward for Portland and should serve as a model for other municipalities and states.  

      This policy was worked on by 350PDX, Audubon Society of Portland, Columbia Riverkeeper, Climate Action Coalition, Friends of the Columbia Gorge, Oregon Physicians for Social Responsibility, Center for Sustainable Economy, the Oregon Chapter Sierra Club, and more.

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        Feds Deny LNG Export Project Permit, Again, in Oregon


        For Immediate Release

        December 12, 2016

        For more information, contact Ted Gleichman, political advisor, Center for Sustainable Economy: 503-781-2498tedgleichman@mac.com

        (Portland, OR) A massive natural gas export project aimed at the Oregon coast is on life support after the federal government ruled against it late Friday afternoon, December 9, 2016.  The Jordan Cove Energy Project, a $7.6 billion terminal and pipeline plan to export liquefied natural gas (LNG) to Asia from Canada and the Rockies, was refused by the Federal Energy Regulatory Commission (FERC).  The first-ever rejection of federal permits for an LNG export project came in the wake of an 11-year coordinated grassroots campaign against this LNG terminal and pipeline in southern Oregon.

        “We’ve been fighting this project for more than a decade,” said Ted Gleichman, a political advisor to the Center for Sustainable Economy. “Thousands of people working together are defeating billions of dirty, dangerous fossil fuel dollars. This is the first victory where FERC ruled in our favor.”

        nolng-salem_dsl-rally-11-14_12-copy

        Photo credit: Rick Rappaport

        FERC rejected the Canadian developer, Veresen Inc., because of its inability to get guaranteed contracts to sell the fracked gas overseas, though FERC had warned the company for years that this would be critical for their permission to move ahead. That market failure was compounded by Veresen’s dismal record in negotiating easements from hundreds of landowners along the 234-mile pipeline route to Coos Bay, Oregon.  FERC objected to unprecedented levels of eminent domain requirements that would hit landowners and local communities if the pipeline and terminal were approved. Ranchers, farmers, and other landholders had pledged to resist the claims of eminent domain on the 234-mile route of Oregon land the pipeline would need to cross. The company can still go to court against FERC, or reapply, but for now the only LNG export plan for the U.S. West Coast has no clear path to completion. “We are going to defeat their Oregon state permits too, then we will work for genuine good jobs in clean energy and rebuilding the clean infrastructure we all need,” said Gleichman.

         

         

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