236 Weighingthe uncertainty
not rigorously accounted for the economic effects of introducing new
low-emission technologies, new revenue-raising instruments or adequate
inter-regional financial and technology transfers, all elements which con-
tribute to lower costs.^13 Further, one of the most difficult factors to take
into account is that of likely future innovation. It is not easy to peer into
the crystal ball of technical development; almost any attempt to do so is
likely to underestimate its potential. For these reasons the estimates of
mitigation cost are almost certainly on the high side.
The models that have been used to make the estimates of cost have
all addressed limited parts of the whole problem. A complete assessment
needs to address more completely the interactions between the factors
that are driving climate change and its impacts both on humans and
ecosystems, the human activities that are influencing those factors and
the response to climate change both of humans and ecosystems – in fact
all the elements illustrated in Figure 1.5. This is often called Integrated
Assessment (see box below) and is supported by Integrated Assessment
Models (IAMs) that are currently being builtto address all the relevant
elements in a more complete manner.
In considering the costs of the impacts of both global warming and
adaptation or mitigation, figures of a small percentage of GDP have been
mentioned. It is interesting to compare this with other items of expendi-
ture in national or personal budgets. In a typical developed country, for
example the United Kingdom, about five per cent of national income is
spent on the supply of primary energy (basic fuel such as coal, oil and
gas, fuel for electricity supply and fuel for transport), about nine per cent
on health and three to four per cent on defence. It is, of course, clear that
global warming is strongly linked to energy production – it is because of
the way energy is provided that the problem exists – and this subject will
be expanded in the next two chapters. But the impacts of global warming
also have implications for health – such as the possible spread of disease –
and for national security – for example, the possibility of wars fought
over water, or the impact of large numbers of environmental refugees.
Any thorough consideration of the economicsof global warming needs
therefore to assess the strength of these implications and to take them
into account in the overall economic balance.
So far, on the global warming balancesheet we have estimates of
costs and of benefits or drawbacks. What we do not have as yet is a capital
account. Valuing human-made capital is commonplace, but in the overall
accounting we are attempting, ‘natural’ capital must clearly be valued
too. By ‘natural’ capital is meant, for instance, natural resources that
may be renewable (such as a forest) or non-renewable (such as coal, oil
or minerals).^16 Their value is clearly more than the cost of exploitation
or extraction.