A new analysis by university economists suggests that we need to start fighting climate change now, while we can still afford it. But if we take the cautious approach advocated by some well-known academics, mitigating climate change will put us in the poor house.
The Economics of 350, a detailed study put forth by Economics for Equity and the Environment (E3), weighed the cost of keeping global CO2 concentrations at 350 parts per million — an ambitious target that’s already in the rearview mirror. And that cost would cut between one and three percent off GDP. That might seem steep, but it’s nothing compared to what’s coming down the turnpike if we fail to act.
The study strongly suggests that economists such as William Nordhaus of Yale University have it backwards when they suggest we should start tackling climate change with modest measures, and ramp up our efforts when advances in technology make it affordable and economies have grown to absorb the costs.
“It’s the cost of doing nothing that’s going up,” says Frank Ackerman, an economist at the Stockholm Environment Institute (SEI) at Tufts University and lead author of The Economics of 350 with the SEI’s Elizabeth Stanton, and six highly-regarded academics. “There are costs [associated with tackling climate change], but nobody is going to be living in a tent without electricity.” And that’s what will happen in many regions if we pursue business-as-usual policies.
Ackerman argues that the science is merciless, and recent studies indicate that it’s getting warmer much faster than expected just a few years ago. As a result, most academics and researchers have been low-balling the costs of mitigation. By tweaking the economic assumptions made by Nordhaus in his models to account for the latest science, Ackerman and his colleagues discovered that it makes more economic sense to act soon and with serious intent. Their work strongly agrees with financial arguments advanced by Nicholas Stern in 2006 in The Stern Report.
“The most important conclusion involves what we did not find,” the report states. “There are no reasonable studies that say that a 350 ppm stabilization target will destroy the economy; there are no studies that claim that it is desirable to wait before taking action on climate protection. On the contrary, there is strong, widespread endorsement for policies to promote energy conservation, development of new energy technologies, and price incentives and other economic measures that will redirect the world economy onto a low-carbon path to sustainability [...] Is a potential cost of 1 to 3% of world GDP a large or a small number? The answer depends on how seriously you take the risks of climate change.”
Judging by the scientific studies publicized in advanced of the Copenhagen climate conference, and reports by highly-regarded humanitarian groups like Oxfam, we think that’s a very small number indeed.