However, the background article is very clear in saying that this simplistic extrapolation is simply not correct:
The relationships in our model are theoretical and potential and may not reflect actual labor productivity losses as there will most likely be some adaptation measures in place, such as the space cooling of offices and factories. ... There is a strong incentive to adapt.
Moreover, the article points out that "working hours and work practices may change" to accommodate warmer temperatures. Of course, changing work hours (e.g. so that work occurs during cooler parts of the day) would be marginally more inconvenient. Yet as losses are already assumed to be more than $300 billion, a simple change in working hours could essentially eliminate this huge, hypothetical drag on developing economies, instantly conferring them with a benefit of 3 percent of their GDP. The fact that working hours have not changed in this way seems to indicate that the costs are not real.
Other forms of adaptive measures would reduce temperatures for outdoor workers. Perhaps the cheapest and most obvious, which many economists and I have argued for, is to make cooler cities, since the most people and the highest temperatures are found in urban areas. Most cities are much warmer than their surrounding countryside because of the lack of greenery and water features (they cool through evaporation) and because of extensive black surfaces (asphalt and black roofs suck in heat). Tokyo in August is about 22.5 degrees F hotter than its surrounding countryside for this reason.
Installing more trees, water features, and lighter colored surfaces would cost about $12 billion annually for the entire world, and it would dramatically cool the areas where 90 percent of all people will live. This is a much smarter way to tackle the DARA study's hypothetical loss of $300 billion per year now and some $2.4 trillion by 2030.
So, again, the study makes unwarranted assumptions of costs both related to an untested and likely incorrect labor hypothesis and to air pollution costs, meaning that they exaggerate the damage costs by at least three times from $300 billion to $1.2 trillion. Compared with the general scientific consensus from peer-reviewed literature, they not only exaggerate massively, but even change the sign of the impact of current global warming from a small benefit to a massive cost.
"Unless We Act"
The DARA study emphasizes that the costs it discusses are costs of inaction -- when we don't do anything about global warming -- whereas it alluringly suggests that if we "take action," much of the damage will be avoided:
Continuing today's patterns of carbon-intensive energy use is estimated, together with climate change, to cause 6 million deaths per year by 2030, close to 700,000 of which would be due to climate change. This implies that a combined climate-carbon crisis is estimated to claim 100 million lives between now and the end of the next decade. A significant share of the global population would be directly affected by inaction on climate change. [Emphasis added.]
However, this is claim is never explicitly made, and for good reason, because it is entirely incorrect. No realistic change in emissions will make any measurable impact by 2030.
We would only tell the difference after 2030, according to the very same article from which the DARA study derived its enormous labor costs (although this point is not mentioned in the DARA study itself):
The difference between impacts under the high- and low- emission scenarios is only apparent after the 2020s.
By constantly talking about action and inaction throughout the report, DARA managed to get almost all newspapers to emphasize that all of the bad outcomes described by 2030 would only happen if we didn't take climate action. The truth is, that nothing we realistically could do about climate emissions would make any change by 2030.
Does It Matter That the Study Was Deeply Flawed?
So, we have a study that inflated deaths by at least 12 times. We have a study that has inflated the costs by at least three times -- and probably much, much more. And we have a study that then suggests that to avoid this situation in 2030, we should employ policies that we know will have no measurable impact by 2030.
One could call such a study many things, but clearly not well done, truthful, or good policy advice.
Does it matter? Yes.
If we want to leave the world a better place, we need to carefully focus on the places and policies where we can do the most good. To tackle the biggest impact the DARA study identifies -- to avoid 3 million people dying from indoor air pollution -- people in the Third World need to have access to modern, less-polluting fuels to cook and keep warm. They need kerosene, pressurized gas, and other forms of modern energy. It is about getting more fossil fuels, not fewer.
This solution feels wrong for many comfortable Westerners, but it's what we need to do if we want to save three million lives. Imagine what you would do if your kids were dying because your living room was chock full of dangerous pollutants from burning dung and biomass? The transition to clean gas and distributed electricity only seems wrong because it was so long ago that our grandparents changed over to heat and light at the flick of a switch.
Does it matter that the report exaggerates, when it is all for the good cause? Yes, because scaring people don't make for good policy but encourages feel-good, do-little bad policies.
We should fix the climate, but we need to realize that it has to be through innovation, which will drive the price of green energy down below fossil fuels. (I've written extensively about it, e.g. here.)
The DARA study uses a worst-case scenario, is full of sloppy errors, and promotes solutions that are hugely costly, haven't worked, and probably won't. And it's based on scare tactics without foundation in reality.
The climate debate deserves better.
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