CLIMATE CHANGE AND MAINE ECONOMIC ACTIVITY The Effects of Climate Climate change can have significant ramifications for Maine’s economy. If short-term projections for the next Change on century are accurate, at minimum sea level rise will become Economic increasingly noticeable in association with more severe and destructive coastal storms. Charles Colgan and Samuel Activity Merrill evaluate risk estimates by presenting a case study in Maine: of the projected consequences of sea level rise and coastal Coastal York County storm damage on the economy of the state’s most vulnerable Case Study area, York County’s coastal communities. by Charles S. Colgan Samuel B. Merrill 66 · MAINE POLICY REVIEW · Fall/Winter 2008 View current & previous issues of MPR at: mcspolicycenter.umaine.edu/?q=MPR CLIMATE CHANGE AND MAINE ECONOMIC ACTIVITY All discussions of INTRODUCTION sea level rise, in one area of Maine’s coast, York County, climate change iscussions of the economic effects of climate to illustrate how the potential Dchange are necessary, difficult, and controversial. effects on costs, risks, and time must start with the They are necessary because economic effects are the need to be better understood. way in which most people will most fully experience All discussions of climate acknowledgment the realities of climate change. Thus, developing and change must start with acknowl- sharing an understanding of these effects will moti- edgment of the uncertainty of the uncertainty vate people to act. They are difficult because to all of surrounding the pace and degree the uncertainties surrounding the extent and speed of of climate change itself. This surrounding the climate change must be added the uncertainties of the uncertainty exists because many economist trying to translate unprecedented environ- of the fundamental processes of pace and degree of mental change to the complex interactions of supply climate change are still imper- and demand. They are controversial because the econo- fectly measured and because a climate change itself. mist is constrained to point out that there are likely to critical factor is the extent to be positive aspects of climate change along with nega- which mitigation efforts are in tive aspects, thus appearing to undercut the case for fact undertaken and how effec- actions to limit climate change. tive they are. These uncertainties To begin to understand the dimensions of poten- are reflected in the work of the organization that tial economic changes in Maine from climate change, it has become the reference point for many discussions is necessary to examine the interaction of four different of climate change, the Intergovernmental Panel on effects: changed outputs; changed opportunities; Climate Change (IPCC). changed costs; and changed perceptions of time and The IPCC suggests global surface temperatures risk. “Changed outputs” refers to changes in what is could rise between 0.5 and four degrees Celsius (one produced in Maine, particularly the goods and services to seven degrees Fahrenheit [F]) depending on which currently produced based on natural resource inputs. level of continued emissions occurs (IPCC 2007). “Changed opportunities” reflects the fact that the But this will not be even across the world. In the U.S. efforts to adapt to and mitigate climate change will Northeast, the Union of Concerned Scientists (UCS) create new opportunities for economic activities in estimates warming already underway will push temper- Maine. There is already much discussion in the litera- atures up by 2.5 to 4 degrees (F) in winter and 1.5 to ture on climate change in Maine that covers these two .5 (F) degrees in summer through about 2050. If aspects of the economics of climate change, so this by that time greenhouse gas emissions are not under paper will offer only a brief synopsis of what may significant control, the Northeast will see temperatures happen under these headings. rise between 8 and 12 degrees (F) in the winter and “Changed costs” is a more subtle effect of climate six and 14 degrees (F) in the summer under the high change that will sometimes be difficult to discern and IPCC scenario (Frumhoff et al. 2007). sometimes all too obvious. “Changed perceptions of For Maine, this means that average winter temper- time and risk” refers to the fundamental economic atures are already set to increase over the next 40 years problem of how to assess the costs and benefits of from 24.7 degrees at the Portland Jetport to 26.5 to different actions to mitigate climate change and to 28 degrees and could increase to an average of 2.7 adapt to it. These two aspects of climate change repre- to 6.7 degrees. Average summer temperatures at sent the more difficult and complex economic effects Portland are likely to go up from an average of 66.1 and ones that have been little discussed in the larger degrees to 67.6 to 69.6 degrees and could climb to conversations about climate change. This paper will an average between 72 and 80 degrees. In northern examine these aspects in greater detail, using the Maine, Caribou will likely see average winter tempera- analysis of one specific effect of climate change, tures climb from 1 to 15.5 degrees to 17 degrees, View current & previous issues of MPR at: mcspolicycenter.umaine.edu/?q=MPR Volume 17, Number 2 · MAINE POLICY REVIEW · 67 CLIMATE CHANGE AND MAINE ECONOMIC ACTIVITY eventually rising to 21 to 25 degrees. Average summer lumber industries, will gradually decline, to be replaced temperatures in Caribou will rise from 6. to between by a much more hardwood-dominated forest of the 69 and 77 degrees. type found in Pennsylvania. These changes represent something close to the These changes in the availability of commercially levels of change that are used in most climate change important resources will alter the size and scope of planning scenarios today. However, there are concerns Maine’s natural resource industries. Maine without a that carbon dioxide (CO2) emissions are occurring at a lobster industry would surely be a different place. much greater rate than the IPCC projected (McKibben Many, perhaps most of the pulp and paper mills would 2007), or that people have greatly underestimated the close or significantly downsize, and there would be a ecological consequences of the upper range of the much smaller lumber industry. But the changes will be IPCC scenarios (Zenghelis 2008). There is also concern gradual and offset by other changes in natural resource that some of the effects of climate change may occur industries. Winter recreation will be more limited than more rapidly than is commonly expected. Recent it is today, but Maine will be one of the only places in analysis of ice data from Greenland suggests sea level the Northeast with any winter recreation. Skiing and rise could occur very quickly (Stefensen et al. 2008). snowmobiling will disappear entirely from southern New England and the Mid-Atlantic states. Northern and western Maine along with the northern parts of Maine already has significant economic New Hampshire and Vermont will be the only places with sustained snow cover in many years. Warmer activity in its energy and environment temperatures may extend seasons for such recreational activities as cruise ships and boating, and the Maine clusters, including a significant environ- coast will still be an attractive place to come in summer. Average temperatures may rise into the upper 70s, but mental engineering industry. this will still be preferable to the average temperatures in the 90s that will come to characterize most of the neighboring regions to the south. These scenarios have to be considered real possi- Longer growing seasons will permit farmers to bilities, but they are difficult to interpret in terms of expand the range of crops and animals in Maine agri- their probabilities of actually occurring. The discussion culture. Lobster will likely disappear as a commercial of climate change in this paper will thus be guided by species, but other marine species will gradually popu- the IPCC-UCS scenarios of gradual climate change late the Gulf of Maine and keep at least a small fishing over this century, with the major differences between industry in Maine. Even with warmer temperatures, it is low and high outcomes being the level of human likely that Maine will continue to be characterized by actions to reduce greenhouse gas emissions. forest products, fishing, tourism, and agriculture well into the future, but each of these industries will likely CHANGING OUTPUTS be much different from today. Smaller forest products and fishing industries may be offset in part by the ustained warmer temperatures will significantly possibility of more robust agriculture and tourism. Saffect terrestrial, aquatic, and marine environments, The need to mitigate and adapt to climate change leading to a number of changes in commercially also presents Maine with opportunities to expand important living resources. The result will be warmer output of a large variety of goods and services. The ocean waters in which such critically important species most immediately apparent of these is the significant as cod and lobster will no longer be found. Cold-water investment already underway and planned in alternative sport fisheries such as trout and salmon will also be energy generation, particularly wind power. Significant lost. In the forest, the spruce and fir resource, which industrial-scale wind power projects are operating or has been the bedrock of the pulp and paper and are under construction in western and northern Maine 68 · MAINE POLICY REVIEW · Fall/Winter 2008 View current & previous issues of MPR at: mcspolicycenter.umaine.edu/?q=MPR CLIMATE CHANGE AND MAINE ECONOMIC ACTIVITY (see Parker, this issue). Even larger projects are contem- dent of events elsewhere, the key to determining plated for Aroostook County and offshore, which will the extent of the cost effects will be how change in need to be accompanied by large upgrades in electric Maine takes place relative to changes elsewhere.