Monday, March 31, 2014

Scientists Discover Secret To Accurate Economic Forcasts

From today's WSJ:

The report said climate change may affect the reliability of pipelines and electricity grids, as well as tourism resorts, especially ski and beach resorts.

It also said climate change had the largest impact on people who are socially and economically marginalized.

"Climate change will exacerbate poverty in low and lower-middle income countries, including high mountain states, countries at risk from sea-level rise, and countries with indigenous peoples, and create new poverty pockets in upper-middle to high-income countries in which inequality is increasing," it said.

...

Economically, the report said a global-temperature rise of 2.5 degrees Celsius above preindustrial levels could lead to global economic losses between 0.2% and 2.0% of income. By the end of the century, it said climate change could reduce labor productivity by 11% to 27% in humid, tropical areas.



Please. As most sentient beings know, economists and other prognosticators are incapable of accurately forecasting economic trends next quarter. Yet those masters of the universe, climate scientists, are able to determine the economic consequences of climate change (which they can also predict) decades into the future. This is nonsense, and those of us who make a living as investors (and who's fortunes depend on how successful we are) know that the more complicated the model, the more variables involved, the less likely the model will be even remotely accurate.  But simple models don't work either because, well, life is complicated. The biggest problem: second, third, and fourth order effects are impossible to predict.  If the oceans begin to rise in South Asia, human beings will not simply stand and stay put as the waters rise above their heads. They will move. Does this mean that climate change is not happening? No. Does this mean that we shouldn't be worried about climate change? No. It simply means that forecasts are PRECISELY meaningless.

Climate Change Impact Is Wide, U.N. Says - WSJ.com


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