Climate change costs are much higher than previously thought, new study reveals
Sure, climate change might end life on earth as we know it. But when it comes to fixing it, it’s just too expensive, right? If this bizarre logic haunts so many of our climate discussions — we become very cheap when it comes to sustaining our own existence — a new paradigm may have just entered the chat.
For years, economists’ best estimates of the cost of climate inaction were giant but not quite big enough to stimulate immediate and adequate action. The cost of inaction was, in a sense, high enough to be terrifying but too low to be galvanizing. But now a groundbreaking new study has raised the estimated cost of inaction by so much that it makes acting seem like a bargain, and even makes it makes sense for wealthy countries to act alone, regardless of what their peers are doing. It’s a rare academic paper that could change everything.
Until the new paper, the most commonly used economic models were predicting climate impacts on the world economy on the order of about $200 in losses per ton of carbon emitted, or around 2 percent of world GDP (the monetary value of everything people produce) per degree of warming. But while those are huge numbers by any measure (world GDP is around $100 trillion), they aren’t big enough to motivate most leaders to justify mitigation, which will also cost a whole lot of money.
In their new paper, economists Adrien Bilal of Harvard and Diego Känzig of Northwestern take a fresh look at the data, with results that have the potential to upend conventional wisdom. They show that the social cost of carbon is likely far bigger — six times bigger — than previously estimated: losses of more than $1,000 per ton, or around 12 percent of world GDP per degree of warming. Six times bigger than the previous consensus, those are staggering numbers — roughly equivalent to the economic drag on big economies if they were permanently at war. Suddenly, that $80 Americans are spending on reducing one ton of carbon emissions is netting them $200 or so in U.S. economic activity. You don’t need to know what anyone else is doing for this to be a good investment.
This is the ray of hope. Based on the sheer size of those new numbers, Bilal and Känzig argue that it’s very much worth it for countries of means to spend the money now to avoid much greater costs down the line. In fact, the potential losses are so vast it makes sense for these countries to go ahead and act on their own to avoid climate change losses, even if other nations do nothing. The excuse of the collective action problem falls away on this analysis.
Economists Adrien Bilal and Diego Känzig’s groundbreaking study has revealed the true costs of inaction on climate change, urging governments and policymakers to take immediate action to avoid catastrophic consequences. The findings highlight the urgent need for a global effort to combat climate change and protect the future of our planet.