Definition: Non-market impacts of climate change refer to the impacts of climate change on the human and non-human activities in which there are no established markets. These include effects on environment, health, spread of infectious diseases, ecosystem change, species loss, leisure activities, human settlement, increases in extreme events, and catastrophes.
Measurement: Where there are established markets such as agriculture, animal husbandry, forest management, water supply, coastal zones, and energy consumption, measuring impacts can be based on market prices or profits. Non-market impacts, by contrast, cannot be measured by market prices or revenues, which makes it extremely difficult to obtain a reasonable measure of impacts. In such circumstances, economists resort to valuation of impact using 'stated preference'approaches such as Contingent Valuation Method or 'revealed preference'approaches such as 'hedonic pricing',and 'travel cost' methods. These methods are not sacrosanct, but they help us to be "imprecisely right" rather than "precisely be wrong".
Categories of non-market impacts
Human health: Climate affects human mortality. An increase in global mean temperature is expected to increase the number of heat-related deaths in the tropical countries. Currently cold places such as Russia and Canada will likely experience the benefits of warming as reduced human mortality. Given that there are more people dying out of cold than out of heat, it is likely that reduced mortality in high-latitude countries outweighs the increased mortality in low-latitude countries. Studies indicate that tropical diseases can spread to subtropical or temperate climate zones if warming proceeds more rapidly than the pace of health care improvements. Major tropical, vector-borne diseases that can spread world-wide are malaria, dengue, and yellow fever. Human health can be affected by water pollution and air pollution associated with higher temperatures or changes in precipitation patterns.
Time use and amenity values: A comprehensive measure of national income indicates that non-market time use has a total value close to that of all the market activities. Climate-sensitive non-market activities are such activities as recreation, sports, outdoors, and walking and hiking. With warming, sports activities like skiing and hockey are clearly to be diminished whereas golfing and swimming activities are to increase. However, most of the outdoor activities occur in warm weather, which implies outdoor recreation activities will increase with warming.
Climate has amenity value. People might feel one kind of climate more pleasurable than the other. In several hedonic wage studies in both Europe and the United States, people expressed a preference for warmer climates over colder climates.
Human settlements: Climate change can have damaging effects on human and non-human settlements. These damages arise because immobile population, cities, and cultural heritages cannot emigrate with climate change. It will impose significant social and economic costs on the low-lying cities such as Venice and low-lying countries such as Bangladesh, the Maldives, and the Netherlands.
Natural ecosystems: There are even greater concerns in regard to the impacts on natural ecosystems. Concerns arise with irreversible effects such as the loss of species, increases in extreme events such as tropical hurricanes, and the deterioration of complex natural systems. Studies indicate a wide range of vulnerability including major desertification, impacts on the cryosphere, and coastal ecosystems. It has been difficult to quantify these impacts on natural ecosystems and current estimates are highly speculative.
Catastrophes: Some modelers predict increases in extreme events and possibilities of catastrophe caused by abrupt climate change. Among them are a sharp rise in sea level, shifting monsoons, a runaway greenhouse gas effect, collapse of the West Antarctic Ice Sheet, and changing ocean currents. For example, increased surface ocean temperatures and reduced salinity could slow down the ocean thermohaline circulation. A few models have projected a complete shut down of the thermohaline circulation in the case of severe global warming. If one of these events were to occur, it would most certainly change human and non-human activities seriously. However, there are still debates among the scientists on the possibilities of such events. It is believed that the likelihood of such events occurring is low. Estimation of the impacts of such events will require major advancement in the economics of evaluation. The effect Tsunami in India, Srilanka and South East Asian countries is still green in our mind. An example of how mangroves helped to save some coastal cities from Tsunami is interesting. While conservation of Mangroves helped in virtually no impact of Tsunami on the temple town of Chidambaram in Tamilnadu, India, the destruction of Mangroves devasted the town of Nagapattinam, next to it. Thus, preservation of natural ecosystem would have saved several lives and damage to property, had the policy makers strictly understood and implemented the natural resource management plans.
Climate change will affect many non-market activities in addition to market activities. Major concerns are related with human health, time use and amenity, human settlement, ecosystem change, and catastrophic events. We need to improve the scientific understanding of the natural ecosystem changes and catastrophic events due to climate change. Further, we need to measure these impacts in monetary terms, which has been even more difficult, and we are in need of a major conceptual breakthrough in quantifying these impacts.
- McCarthy, J., O. Canziani, N. Leary, D. Dokken, and K. White (eds.) 2001, Climate Change 2001: Impacts, Adaptation, and Vulnerability. Intergovernmental Panel on Climate Change, Cambridge University Press: Cambridge. ISBN: 0521807689
- Nordhaus, W and Boyer, J., Warming the World: Economic Models of Global Warming. Cambridge, Mass: MIT Press, 2000. ISBN: 0262140713
- Chandrakanth, M.G., Bhat, Mahadev G. & Accavva, M.S. 2004, Socio-economic changes and sacred groves in South India: Protecting a community-based resource management institution. Natural Resources Forum, Vol. 28, No. 2, pp. 102-111