#Economics of the #disintegration of the #Greenland #ice sheet (Proc Natl Acad Sci USA, abstract)

[Source: Proceedings of the National Academy of Sciences of the United States of America, full page: (LINK). Abstract, edited.]

Economics of the disintegration of the Greenland ice sheet

William Nordhaus

PNAS first published June 4, 2019 / DOI: https://doi.org/10.1073/pnas.1814990116

Edited by William C. Clark, Harvard University, Cambridge, MA, and approved April 5, 2019 (received for review August 30, 2018)

 

Significance

This study integrates an economic model of climate change with a small structural model of the Greenland ice sheet (GIS). As such, it provides a methodology for incorporating large earth system changes into standard economic cost–benefit or damage-limiting analyses. It finds that adding the GIS has only a small effect on the social cost of carbon (SCC) because melting is slow and damages are far in the future.

 

Abstract

Concerns about the impact on large-scale earth systems have taken center stage in the scientific and economic analysis of climate change. The present study analyzes the economic impact of a potential disintegration of the Greenland ice sheet (GIS). The study introduces an approach that combines long-run economic growth models, climate models, and reduced-form GIS models. The study demonstrates that social cost–benefit analysis and damage-limiting strategies can be usefully extended to illuminate issues with major long-term consequences, as well as concerns such as potential tipping points, irreversibility, and hysteresis. A key finding is that, under a wide range of assumptions, the risk of GIS disintegration makes a small contribution to the optimal stringency of current policy or to the overall social cost of climate change. It finds that the cost of GIS disintegration adds less than 5% to the social cost of carbon (SCC) under alternative discount rates and estimates of the GIS dynamics.

climate change – Greenland ice sheet – economics – DICE model – optimization

Keywords: Climate change; Global warming; Greenland; Economics.

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The #challenge of #antimicrobial #resistance: What #economics can contribute (Science, abstract)

[Source: Science, full page: (LINK). Abstract, edited.]

The challenge of antimicrobial resistance: What economics can contribute

Laurence S. J. Roope1,2,3, Richard D. Smith4,*, Koen B. Pouwels5,6, James Buchanan1,2, Lucy Abel3,7, Peter Eibich8, Christopher C. Butler2,7, Pui San Tan7,9, A. Sarah Walker2,3,10, Julie V. Robotham2,5, Sarah Wordsworth1,2,3

1 Health Economics Research Centre, Nuffield Department of Population Health, University of Oxford, UK. 2 The National Institute for Health Research (NIHR) Health Protection Research Unit in Healthcare Associated Infections and Antimicrobial Resistance at the University of Oxford, Oxford, UK. 3 NIHR Oxford Biomedical Research Centre, John Radcliffe Hospital, University of Oxford, Oxford, UK. 4 University of Exeter Medical School, St Luke’s Campus, Exeter, UK. 5 Modelling and Economics Unit, National Infection Service, Public Health England, London, UK. 6 Department of Health Sciences, Global Health, University Medical Centre Groningen, University of Groningen, Groningen, Netherlands. 7 Nuffield Department of Primary Care Health Sciences, University of Oxford, Oxford, UK. 8 Max Planck Institute for Demographic Research, Rostock, Germany. 9 Department of Medical Epidemiology and Biostatistics, Karolinska Institutet, Stockholm, Sweden. 10 Nuffield Department of Medicine, University of Oxford, John Radcliffe Hospital, Oxford, UK.

*Corresponding author. Email: rich.smith@exeter.ac.uk

Science  05 Apr 2019: Vol. 364, Issue 6435, eaau4679 / DOI: 10.1126/science.aau4679

 

Incentivizing restraint in drug use

The accelerating tide of antimicrobial resistance (AMR) is a major worldwide policy concern. Like climate change, the incentives for individual decision-makers do not take into account the costs to society at large. AMR represents an impending “tragedy of the commons,” and there is an immediate need for collective action to prevent future harm. Roope et al. review the issues associated with AMR from an economics perspective and draw parallels with climate change. A major stumbling block for both challenges is to build consensus about the best way forward when faced with many uncertainties and inequities.

Science, this issue p. eaau4679

 

Structured Abstract

BACKGROUND

Antimicrobial resistance (AMR) is increasing, driven by widespread antibiotic use. The wide availability of effective antibiotics is under threat, jeopardizing modern health care. Forecasts of the economic costs are similar to those of a 2°C rise in global average surface temperature, above preindustrial levels. AMR is becoming an urgent priority for policy-makers, and pressure is mounting to secure international commitments to tackle the problem.

ADVANCES

Estimating the value of interventions to reduce antibiotic use requires predictions of future levels of antibiotic resistance. However, modeling the trajectory of antibiotic resistance, and how marginal changes in antibiotic consumption contribute to resistance, is complex. The challenge of estimating the resulting impact on health and the economy is similarly daunting. As with the cost of climate change, estimates of total AMR costs are fraught with uncertainty and may be far too low. Much of the uncertainty arises from the complexity of estimating the cost of changes in overall resistance levels. This cost depends on various factors: which drug and pathogen are involved, the mechanism of antibiotic resistance, the prevalence of that pathogen, the types of infections it causes and their level of transmissibility, the health burden of those infections, and whether alternative treatments are available.

Effective new antibiotics are urgently needed. However, without government intervention, R&D for antibiotics is rarely profitable, and most major pharmaceutical companies have left the field. New ways are needed to make antibiotic development profitable, decoupling profits from volumes sold.

OUTLOOK

Analogies can be drawn between climate change and AMR, both of which have been described as a global “tragedy of the commons.” There is some consensus that we should treat carbon emissions reduction as an insurance policy against the possibility of a catastrophic climate outcome—and avoid waiting for a definitive optimum-abatement policy. A similar paradigm shift is needed to incentivize both the introduction and valuation of interventions to reduce antibiotic use and R&D of new antibiotics.

Rather than taxing the price and letting the market dictate the quantity of antibiotics supplied, an alternative may be to establish a regulatory body that issues prescribers tradable permits and to allow the market to determine the price. Such an approach could create a predictable revenue stream through more-foreseeable licensing fees for important antibiotics by decoupling the return on investment from the volume used. Approaches such as this could incentivize industry to develop new antibiotics for which there would otherwise be too small a market to provide a sufficient return on investment.

Reducing inappropriate antibiotic use while expanding essential access is a difficult challenge, especially in low- and middle-income countries. However, policy-makers and philanthropists are alert to the importance of AMR and increasingly are making substantial research funds available, with much of these funds devoted to the social sciences. We need economists, across many different fields, to engage with this pressing global problem.

 

Abstract

As antibiotic consumption grows, bacteria are becoming increasingly resistant to treatment. Antibiotic resistance undermines much of modern health care, which relies on access to effective antibiotics to prevent and treat infections associated with routine medical procedures. The resulting challenges have much in common with those posed by climate change, which economists have responded to with research that has informed and shaped public policy. Drawing on economic concepts such as externalities and the principal–agent relationship, we suggest how economics can help to solve the challenges arising from increasing resistance to antibiotics. We discuss solutions to the key economic issues, from incentivizing the development of effective new antibiotics to improving antibiotic stewardship through financial mechanisms and regulation.

This is an article distributed under the terms of the Science Journals Default License.

Keywords: Antibotics; Drugs; Resistance; Global Health; Economics.

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