Treasury economic scenarios released

The Minister of Finance Grant Robertson has released Treasury scenarios that look at the economic impact of the Covid-19 virus. Not surprisingly Treasury supports the ‘go hard, go early’ approach of the Government.

The scenarios show:

  • That unemployment can be kept below 10%, and return to 5% in 2021 with additional Government support. Work is already well advanced on further fiscal support.
  • Without additional support, unemployment could have hit 13.5% under scenario 1 (four weeks in Level 4), while scenarios requiring more time in Level 4 showed a peak of 17.5%-26%.
  • New Zealand’s underlying strength means the economy can bounce back to be $70 billion larger by 2024 than in 2019.

There must be a lot of unknowns at this stage, and the information given is very sparse.

From the Beehive:


COVID economic scenarios back ‘go hard, go early’

Economic scenarios released today back the Government’s decision to go hard and early in the fight against COVID-19 while putting significant measures in place to protect jobs and support businesses through the lockdown, Finance Minister Grant Robertson says.

The Treasury has released a range of scenarios for the economy, based on assumptions of different amounts of time under the Alert Levels. The report shows how extra Government spending will cushion the blow by protecting jobs and supporting businesses.

“This global pandemic is dramatically affecting countries and their economies around the world. We are seeing dire forecasts for global growth and unemployment levels rising rapidly in many countries. As an open export-led economy, New Zealand will feel these global effects for some time to come,” Grant Robertson said.

“New Zealand is in a good position to fight COVID-19 due to our strong public health system, low debt and growing economy heading into this situation. The best way to protect the economy is to fight this virus, which is why we’ve acted swiftly and decisively to stamp out COVID-19. This will give our businesses and the economy the best chance to get going again on the other side.”

The scenarios released today were guided by a range of previously released public health modelling. The Treasury has purposefully included scenarios that show what might happen if the lockdown has to be extended, or if the country has to return to Alert Level 4 in the future.

“These should not be taken as any guide as to the Government’s thinking or decision on changing alert levels. That decision will be taken on April 20 as the Prime Minister has foreshadowed. What they do show is how important it is that we continue to unite against COVID-19 and follow the public health guidelines; stay home and save lives – we know it’s working,” Grant Robertson said.

The scenarios show:

  • That unemployment can be kept below 10%, and return to 5% in 2021 with additional Government support. Work is already well advanced on further fiscal support.
  • Without additional support, unemployment could have hit 13.5% under scenario 1 (four weeks in Level 4), while scenarios requiring more time in Level 4 showed a peak of 17.5%-26%.
  • New Zealand’s underlying strength means the economy can bounce back to be $70 billion larger by 2024 than in 2019.

Work on further significant Government investment to protect jobs, support cashflow, and prepare the economy for recovery is well advanced. The next steps in the Government’s plan to support businesses will be released later this week.

“The Budget is also another important part of the response, and it will include significant support to respond to and recover from COVID-19. As is usual with the Budget, there may well be pre-announcements, especially where they relate to urgent COVID-19 response activities,” Grant Robertson said.

The Government has already provided support to businesses including:

  • $9.6 billion through the wage subsidy to protect the jobs of over a million working New Zealanders and keep them connected to their employers during the lockdown.
  • Changes to the business tax system worth $2.8 billion to boost cashflow, encourage investment, and support working from home, including:
  1. Allowing businesses to immediately claim tax deductions for low value assets like computers, mobile phones, cameras, microphones, headphones and other equipment required to work from home
  2. Raising the threshold for provisional tax to support cashflow
  3. Writing off penalties for late tax payments to take pressure off business owners
  4. Restoring the ability to depreciate some buildings to support cashflow and investment
  • Working with the banks to deliver a six-month mortgage deferral scheme so Kiwis don’t lose their homes as a result of COVID-19, and a $6.25 billion Business Finance Guarantee to encourage bank lending to small and medium-sized businesses.

“We can do this because we entered this situation with strong Government books and a growing economy. Net debt at 19.2% of GDP is well below the OECD average around 70%, giving us greater ability than many to protect jobs and incomes with the Government’s strong balance sheet,” Grant Robertson said.

Notes:

1. The scenarios do not foreshadow Government decisions on the lockdown. Cabinet will make the decision on whether to exit Alert Level 4 on April 20.

2. Fiscal forecasts, including for measures like the Government’s operating balance and net debt, will be released as normal in the Budget on 14 May.

 

Global and Regional Sea Level Rise Scenarios

The National Oceanic and Atmospheric Administration has released a report on Global and Regional Sea Level Rise Scenarios for the United States.

This includes a revised extreme level of rise of 2.5 meters by 2100, 0.5 more than used at Paris in 2012.


EXECUTIVE SUMMARY

The Sea Level Rise and Coastal Flood Hazard Scenarios and Tools Interagency Task Force, jointly convened by the U.S. Global Change Research Program (USGCRP) and the National Ocean Council (NOC), began its work in August 2015. The Task Force has focused its efforts on three primary tasks:

1) updating scenarios of global mean sea level (GMSL) rise,

2) integrating the global scenarios with regional factors contributing to sea level change for the entire U.S. coastline, and

3) incorporating these regionally appropriate scenarios within coastal risk management tools and capabilities deployed by individual agencies in support of the needs of specific stakeholder groups and user communities.

This technical report focuses on the first two of these tasks and reports on the production of gridded relative sea level (RSL, which includes both ocean-level change and vertical land motion) projections for the United States associated with an updated set of GMSL scenarios.

In addition to supporting the longer-term Task Force effort, this new product will be an important input into the USGCRP Sustained Assessment process and upcoming Fourth National Climate Assessment (NCA4) due in 2018.

This report also serves as a key technical input into the in-progress USGCRP Climate Science Special Report (CSSR). In order to bound the set of GMSL rise scenarios for year 2100, we assessed the most up-to-date scientific literature on scientifically supported upper-end GMSL projections, including recent observational and modeling literature related to the potential for rapid ice melt in Greenland and Antarctica.

The projections and results presented in several peer-reviewed publications provide evidence to support a physically plausible GMSL rise in the range of 2.0 meters (m) to 2.7 m, and recent results regarding Antarctic icesheet instability indicate that such outcomes may be more likely than previously thought.

To ensure consistency with these recent updates to the peer-reviewed scientific literature, we recommend a revised ‘extreme’ upper-bound scenario for GMSL rise of 2.5 m by the year 2100, which is 0.5 m higher than the upper bound scenario from Parris et al. (2012) employed by the Third NCA (NCA3).

In addition, after consideration of tide gauge and altimeter-based estimates of the rates of GMSL change over the past quarter-century and of recent modeling of future low-end projections of GMSL rise, we revise Parris et al. (2012)’s estimate of the lower bound upward by 0.1 m to 0.3 m by the year 2100.

This report articulates the linkages between scenario-based and probabilistic projections of future sea levels for coastal-risk planning, management of long-lived critical infrastructure, mission readiness, and other purposes. The probabilistic projections discussed in this report recognize the inherent dependency (conditionality) of future GMSL rise on future greenhouse-gas emissions and associated ocean-atmosphere warming.

In recognition of the different time horizons of relevance to different decision contexts, as well as the long-term GMSL rise commitment (lagged GMSL response) from on-going increases in oceanatmosphere warming, GMSL rise and associated RSL change are quantified from the year 2000 through the year 2200 (on a decadal basis to 2100 and with lower temporal frequency between 2100 and 2200).

The 0.3 m-2.5 m GMSL range for 2100 is discretized by 0.5-m increments and aligned with emissionsbased, conditional probabilistic storylines and global model projections into six GMSL rise scenarios: a Low, Intermediate-Low, Intermediate, Intermediate-High, High and Extreme, which correspond to GMSL rise of 0.3 m, 0.5 m, 1.0 m, 1.5 m, 2.0 m and 2.5 m, respectively.

These GMSL rise scenarios are used to derive regional RSL responses on a 1-degree grid covering the coastlines of the U.S. mainland, Alaska, Hawaii, the Caribbean, and the Pacific island territories, as well as at the precise locations of tide gauges along these coastlines.

These scenario-based RSL values fill a major gap in climate information needed to vii support a wide range of assessment, planning, and decision-making processes.

GMSL was adjusted to account for key factors important at regional scales, including:

1) shifts in oceanographic factors such as circulation patterns;

2) changes in the Earth’s gravitational field and rotation, and the flexure of the crust and upper mantle, due to melting of land-based ice; and

3) vertical land movement (VLM; subsidence or uplift) due to glacial isostatic adjustment (GIA, which also changes Earth’s gravitational field and rotation, as well as the overall shape of the ocean basin), sediment compaction, groundwater and fossil fuel withdrawals, and other nonclimatic factors.

Key findings include:

● Along regions of the Northeast Atlantic (Virginia coast and northward) and the western Gulf of Mexico coasts, RSL rise is projected to be greater than the global average for almost all future GMSL rise scenarios (e.g., 0.3-0.5 m or more RSL rise by the year 2100 than GMSL rise under the Intermediate scenario).

● Along much of the Pacific Northwest and Alaska coasts, RSL is projected to be less than the global average under the Low-to-Intermediate scenarios (e.g., 0.1-1 m or less RSL rise by the year 2100 than GMSL rise under the Intermediate scenario).

● Along almost all U.S. coasts outside Alaska, RSL is projected to be higher than the global average under the Intermediate-High, High and Extreme scenarios (e.g., 0.3-1 m or more RSL rise by the year 2100 than GMSL rise under the High scenario).

Finally, the consequences of rising RSL are presented in terms of how the frequency of moderate-level flooding associated with a NOAA coastal/lakeshore flood warning of a serious risk to life and property may change in the future under the sea level scenarios.

The elevation threshold used to classify such events by NOAA on their tide gauges varies along the U.S. coastline, but in general it is about 0.8 m (2.6 feet) above the highest average tide and locally has a 20% annual chance of occurrence.

For example, using the flood-frequency definition, we find at most locations examined (90 cities along the U.S. coastline outside of Alaska) that with only about 0.35 m (<14 inches) of local RSL rise, annual frequencies of such disruptive/damaging flooding will increase 25-fold by or about (±5 years) 2080, 2060, 2040 and 2030 under the Low, Intermediate-Low, Intermediate and Intermediate High subset of scenarios, respectively.

Click to access techrpt83_Global_and_Regional_SLR_Scenarios_for_the_US_final.pdf