The True Cost Of Climate Change Is Coming For Those Who Caused It
Photo by Mike Newbry on Unsplash
Our economic models are wrong. The mother of all crashes is coming.
by Will Lockett
[Ed. - note COP28 is already past, having failed to yield the bold actions we desperately need]
We have all heard of the devastation climate change will ravage on our planet. From catastrophic sea level rises, extensive crop failures, persistent deadly heatwaves, calamitous droughts, regular recurring potent extreme weather and even more frequent pandemics. And that is even with our current climate legislation in place, if we slow down our progress even slightly, it could be even worse. But there is one effect of climate change that is never discussed, yet it is central to our future. Its effect on the global economy. Recent studies have looked into this, and overturned our old understandings and unearthed grim new findings. But there is one silver lining: it will directly affect those who have profiteered and caused our climate catastrophe.
COP28 starts this week, and to prepare for this momentous summit, economists are painstakingly updating their estimates of how drastically climate change will affect the world’s economy. However, for the most part, these economists are using old or unsuitable models that give far too optimistic of an outlook.
For example, several economic forecasts have found that global warming will cause less global financial harm by the end of the century than COVID-19 ever did. These aren’t fringe academics either; they are highly respected. Take Nobel-winning U.S. economist William Nordhaus, whose 2018 study found that balancing the costs and benefits of climate action would result in global warming of more than 3C by 2100. In other words, to reduce global warming by any more than this would be detrimental, as it would cost our economy more than the damage we would mitigate.
Needless to say, such studies are heavily criticised. They don’t consider the rapidly dropping costs of renewables, the economic benefits of renewables, lives lost to extreme weather and hampered livelihoods. Moreover, they routinely ignore robust climate models that include climate tipping points and predictable damages from climate change. For example, 3 degrees of climate change would cause eight of the world’s largest cities to sink beneath the waves thanks to sea level rise, which would cost the global economy trillions! London alone has a GDP valuation of over a trillion dollars, and it could be with the fishes by the end of the century.
In comparison, COVID-19 created $8.5 trillion in global economic damage. So, only the direct property and industry damage of only one aspect of climate change is enough to match the economic losses of COVID-19 (8 times a trillion dollars). So, straight away, we can see how weak these economic predictions are.
Critics have repeatedly stated that these overly optimistic economic forecasts are the product of economic models that are not fit to capture the full extent of climate damage. But, they aren’t a result of ineptitude; after all, these academics know the science and have all the resources they need to draw far more accurate conclusions. Instead, they might be the result of economists’ bias towards those profiteering from environmental destruction, such as oil companies, as they are still one of the most prominent players in our current economy. In other words, these are people who are used to protecting oil companies to bolster the economy. But, this approach is doomed to massively backfire, as these studies can provide an alibi for policy inaction, the fallout of which will be devastating.
This isn’t conjecture, as it has already happened. Trump used such broken economic models to justify his pulling out of the Paris Agreement. In a speech after pulling out, he said, “By 2040, compliance with the commitments put into place by the previous administration would cut production for the following sectors: paper down 12 percent; cement down 23 percent; iron and steel down 38 percent; coal — and I happen to love the coal miners — down 86 percent; natural gas down 31 percent. The cost to the economy at this time would be close to $3 trillion in lost GDP and 6.5 million industrial jobs, while households would have $7,000 less income and, in many cases, much worse than that. — Not only does this deal subject our citizens to harsh economic restrictions, it fails to live up to our environmental ideals. As someone who cares deeply about the environment, which I do, I cannot in good conscience support a deal that punishes the United States — which is what it does -– the world’s leader in environmental protection, while imposing no meaningful obligations on the world’s leading polluters.”
Trump failed to talk about how renewables are now more profitable than coal, how renewables bolster the economy more than fossil fuel energy, how renewables make more (and better paying) jobs than fossil fuels, how the US is one of the world’s top polluters per capita, and how climate change will cost the US, or that by 2100 climate change is predicted cost the US economy $2 trillion per year in economic damages.