Climate change costs and benefits

Meant to do a post on this a few weeks ago, but climate change and how we deal with it is not going anywhere, so…

Anyway, really interesting piece from Carolyn Kormann in the New Yorker that asks us to re-think how we look at climate change mitigation policies in terms of costs and benefits:

A modest carbon tax of the sort Nordhaus proposed decades ago—one that was then palatable to conservatives—will therefore no longer bring us anywhere near the Paris Agreement targets. But it’s one of many weapons in the arsenal that policymakers need to employ. “The real challenge is finding ways to reduce emissions and maintain economic growth on the timeline demanded by the nature of climate change,” Kenneth Gillingham, an associate professor of economics at Yale University, told me. But, as much as the costs of climate mitigation will undoubtedly increase, the question is whether the benefits of mitigation exceed those costs. “It’s a straw man—and terrible economics—to just point out the costs while ignoring the benefits,” Burke said. He and two co-authors published a paper in Nature last May that shows that the economic benefits of mitigation are going to be much larger than previously believed. Cooler temperatures would help maintain and grow productivity, and reducing carbon emissions means reducing air pollution—specifically particulate matter, or soot—which brings immediate health benefits. They found that keeping global warming to one and a half degrees Celsius (which is nearly impossible at this point), as opposed to two degrees Celsius, would potentially save more than twenty trillion dollars around the world by the end of the century, and significantly reduce global inequality. Beyond two degrees, they wrote, “we find considerably greater reductions in global economic output.” [emphases mine] If nations met their commitments under the Paris Agreement, the world would still see the average global temperature rise by two and a half to three degrees Celsius, which, according to Burke’s paper, would result in a fifteen-to-twenty-five-per-cent reduction in per capita output by 2100. “To just complain about the costs of this transition and ignore the benefits, as is common in the discussion from this Administration,” Burke said, “is some pretty poor cost-benefit analysis from an Administration that prides itself on economic savvy.”

Of course, there’s lots of uncertainty in all this and this is just one set of estimates.  That said, I do think it makes a fundamental point to be emphasized whenever skeptics argue that it is just too expensive to really do anything about climate change and that is that is almost surely far more expensive to do nothing and cost/benefit-wise we’ll likely come out way ahead by trying to tackle this problem.

About Steve Greene
Professor of Political Science at NC State

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