Economic Effects of Climate Change in Alaska Item Type Report Authors Berman, Matthew; Schmidt, Jennifer Publisher American Meteorological Society (AMS) Download date 26/09/2021 22:11:51 Link to Item https://doi.org/10.1175/WCAS-D-18-0056.1 VOLUME 11 WEATHER, CLIMATE, AND SOCIETY APRIL 2019 REVIEW Economic Effects of Climate Change in Alaska MATTHEW BERMAN AND JENNIFER I. SCHMIDT Institute of Social and Economic Research, University of Alaska Anchorage, Anchorage, Alaska Downloaded from http://journals.ametsoc.org/wcas/article-pdf/11/2/245/4879505/wcas-d-18-0056_1.pdf by guest on 09 June 2020 (Manuscript received 6 June 2018, in final form 19 November 2018) ABSTRACT We summarize the potential nature and scope of economic effects of climate change in Alaska that have already occurred and are likely to become manifest over the next 30–50 years. We classified potential effects discussed in the literature into categories according to climate driver, type of environmental service affected, certainty and timing of the effects, and potential magnitude of economic consequences. We then described the nature of important eco- nomic effects and provided estimates of larger, more certain effects for which data were available. Largest economic effects were associated with costs to prevent damage, relocate, and replace infrastructure threatened by permafrost thaw, sea level rise, and coastal erosion. The costs to infrastructure were offset by a large projected reduction in space heating costs attributable to milder winters. Overall, we estimated that five relatively certain, large effects that could be readily quantified would impose an annual net cost of $340–$700 million, or 0.6%–1.3% of Alaska’s GDP. This significant, but relatively modest, net economic effect forAlaskaasawholeobscureslarge regional disparities, as rural communities face large projected costs while more southerly urban residents experience net gains. 1. Background change that have already occurred and are likely to be- come manifest in Alaska over the next 30–50 years. We a. Economic effects of climate change in Alaska compiled effects arising through a broad spectrum of High northern latitudes are warming much faster than drivers and mechanisms using a common framework and more temperate zones. Alaska has warmed more than divided potential economic effects into categories ac- twice as rapidly as the rest of the United States (Taylor cording to a number of criteria. We begin by briefly re- et al. 2017), with statewide average annual air temperature viewing the mechanisms by which global climate change increasing by 1.58C and average winter temperature by generates local and regional economic effects and how more than 38C since the 1950s (Walsh et al. 2014) A series much regional warming is anticipated. We then discuss our of synthesis reports have documented and summarized a approach to classify economic consequences of climate wide range of effects of recent and projected warming change impacts discussed in the literature. Next, we pres- on the physical environment, ecosystems, and human ac- ent the results of the classification and provide preliminary tivities (ACIA 2004; Larsen and Fondahl 2014; Chapin impact estimates, along with data sources and assump- et al. 2014; Hovelsrud et al. 2011; Larsen et al. 2014). tions, of the subset of economic effects identified as Although these effects of a warming climate are bound to relatively large and certain. A discussion section places have consequences for the economy, considerably less is the economic effects in the context of Alaska’s economy, known specifically about the economic effects. noting important regional disparities, primary uncertainties, We addressed this information gap by describing the and known data gaps. The conclusion discusses implications potential nature and scope of economic effects of climate of the regional disparities for adaptation policy. b. How global climate change generates local Supplemental information related to this paper is available at the economic effects Journals Online website: https://doi.org/10.1175/WCAS-D-18-0056.s1. Alaska’s economy is primarily based on natural Corresponding author: Matthew Berman, matthew.berman@ resource extraction; federal, civilian, and military alaska.edu spending; and tourism (BEA 2018; Goldsmith 2010; DOI: 10.1175/WCAS-D-18-0056.1 Ó 2019 American Meteorological Society. For information regarding reuse of this content and general copyright information, consult the AMS Copyright Policy (www.ametsoc.org/PUBSReuseLicenses). 245 246 WEATHER, CLIMATE, AND SOCIETY VOLUME 11 Downloaded from http://journals.ametsoc.org/wcas/article-pdf/11/2/245/4879505/wcas-d-18-0056_1.pdf by guest on 09 June 2020 FIG. 1. Schematic for how global climate change generates local economic effects. McDowell 2016). Oil production, commercial fishing, to increased insect damage to forests (Berg et al. 2006; and nature-based tourism are particularly important and Gordon et al. 2013; Wolken et al. 2011) and more fre- potentially affected by climate change. Many residents quent and intense wildfires (Calef et al. 2015). In turn, of rural Alaska engage in a local mixed economy, bal- the changes in fire and insect regimes may accelerate the ancing wage employment with subsistence hunting and spread of invasive species (Cortés-Burns et al. 2008; fishing activities (Goldsmith 2007) that are also vulner- Lapina and Carlson 2004), spread brush and trees to able to environmental change (IPCC 2007; Markon et al. formerly treeless landscapes (Jia et al. 2003; Sturm et al. 2012). However, as we note below, many of the most 2001), and cause dominant forest vegetation to shift important economic consequences of climate change from spruce to broadleaf trees (Barrett et al. 2011; affect infrastructure and living conditions for the resi- Johnstone et al. 2011). dent population and are not tied to any particular These profound and diverse changes in the physical economic sector. environment and ecosystems generate economic Rising global temperatures and changes in pre- effects through their effects on environmental ser- cipitation have been linked to a variety of effects on vices (ES; United Nations 1997). We use ES instead Alaska’s regional physical environments (Fig. 1), in- of the more widely used term ‘‘ecosystem services’’— cluding warmer, longer summers; shorter, milder win- the products of ecosystems that people value (Reid ters (Stewart et al. 2013; Wendler and Shulski 2009; et al. 2005)—because ES include benefits people Wendler et al. 2012); increased precipitation (Stewart derive directly from the physical environment as et al. 2013); melting cryosphere and glaciers (Berthier well as from ecosystems. As Fig. 1 illustrates, some et al. 2010; Jacob et al. 2012); thawing of the cryosphere changes in ES result directly from changes in the and permafrost (ACIA 2004; Avis et al. 2011; Jafarov physical environment (e.g., temperature moderation, et al. 2012; Romanovsky et al. 2008); rising sea levels stable ground supporting infrastructure, smooth sur- (Nicholls et al. 2007); and more varied and stormy face for transportation), while others arise indirectly weather (Pisaric et al. 2011; Terenzi et al. 2014; Vermaire from effects on ecosystems of changes in the physical et al. 2013). The shrinking of the cryosphere due to environment. warming temperatures is already causing a variety of We ignore potentially large global effects of Arctic changes to Alaska’s marine and terrestrial ecosystems warming (Hope and Schaefer 2016) and focus instead (ACIA 2004). Glacial melt affects availability of phos- on local and regional effects. Economic effects of phorus, iron, and organic carbon to marine organisms changes in ES include use and nonuse values. Nonuse (Hood and Scott 2008; Hood et al. 2009; Schroth et al. values, such as existence value, are difficult to define 2011). Warmer ocean temperatures and circulation re- precisely and even more difficult to estimate. We locate suitable habitats for marine species (Barbeaux therefore focus this study on use values. Acknowledg- et al. 2017; Cheung et al. 2009; Stabeno et al. 2005). ing the critical importance of cultural services to many Changes in timing of the onset of seasonally warm Alaskans, we exclude cultural effects from our defini- and cold temperatures change bird migration patterns tion of economic effects, except for market-based (Hezel et al. 2012). Warmer and drier conditions lead economic activity related to recreation and tourism. APRIL 2019 R E V I E W 247 c. Assumptions for warming the climate and socioeconomic scenario assumptions they used. This makes it difficult to adjust the projected The 30–50-yr time horizon for the analysis corresponds effects and perform comparisons with effects drawn to the longest time frame generally used for planning from other studies. The ability to generate a total figure long-term investment decisions, such as to construct for the cost of climate change in Alaska is limited to new housing and commercial buildings, develop resource what is feasible, given what is known about effects deposits, and build public infrastructure. We use the that can be quantified with some level of precision. We scenarios for warming included in the third U.S. National proceed toward the goal of assessing overall significance Climate Assessment (NCA), which projects that average in several steps. First, we organize and evaluate poten- annual temperatures in Alaska will rise by an additional tial economic effects by classifying impacts described 18–28C by 2050, regardless of greenhouse emission tra- in the literature along eight criteria, or dimensions: jectories (Walsh et al. 2014). More recent projections for the fourth NCA (Hayhoe et al. 2017; Taylor et al. 2017) 1) Physical and ecological drivers. Downloaded from http://journals.ametsoc.org/wcas/article-pdf/11/2/245/4879505/wcas-d-18-0056_1.pdf by guest on 09 June 2020 appear quite similar to those of the third NCA, but in- 2) Effects on ES. clude less detail for Alaska. As a rough guide, the pro- 3) Level of certainty of ES effects.