Climate Policy Costs Far Outweigh Their Negligible Benefits
Across the world, public finances are stretched dangerously thin. Per-person growth continues dropping while costs are climbing for pensions, education, health care, and defense
These urgent priorities could easily require an additional three to six percent of GDP.
Yet ‘green’ campaigners are loudly calling for governments to spend up to 25 percent of our GDP, choking growth in the name of ‘climate change’.
If climate Armageddon were imminent, they would have a point. The truth is far more prosaic.
Two major scientific estimates of the total global cost of ‘climate change’ have been published recently. These are not individual studies, which can vary (with the costliest studies getting copious press coverage).
Instead, they are meta-studies based on the entirety of the peer-reviewed literature. One is authored by one of the most cited climate economists, Richard Tol; the other by the only climate economist to have won the Nobel Prize, William Nordhaus.
The studies suggest that a temperature increase of 3°C by the end of the century will have a global cost equivalent to between 1.9 and 3.1 percent of global GDP.
To put this into context, the United Nations estimates that by the end of the century, the average person will be 450 percent as rich as he or she is today. But because of ‘climate change’, he or she will feel “only” 435-440 percent as rich as today.
Why is this so different from the impression we have been given in the media? Alarmist campaigners and credulous journalists fail to account for the simple fact that people are remarkably adaptable and tackle most climate problems at a low cost.
Take food: climate campaigners claim we’ll starve, but research shows that instead of a 51 percent increase in food availability by 2100 if there were no ‘climate change’, we are on track for “only” a 49-per cent increase.
Or weather disasters: they killed half a million people annually in the 1920s, whereas the past decade saw fewer than 9,000 fatalities a year.
The 97.5 percent reduction in mortality is because people are more resilient when they’re richer and can access better technology.
Extremist climate campaigners and far-left politicians reveal their true colors when they push for “degrowth” to cut emissions.
Making people worse off and reversing gains against extreme poverty would be a tragic mistake, making it harder to address all our other problems.
More responsible politicians “only” want to achieve ‘net-zero’ ‘carbon’ emissions by 2050. But this approach still means slowing growth (or eliminating it altogether – Ed) in the name of ‘climate change’, by forcing businesses and individuals to use less-efficient ‘green’ energy instead of ‘fossil fuels’.
The total costs would be enormous — US$15-US$37 trillion every year for the rest of the century, equivalent to 15-37 percent of global GDP today.
Given that wealthier Organization for Economic Co-operation and Development (OECD) countries will foot most of this bill, the price tag will be the equivalent of each person in the rich world paying over US$10,000 every year.
Not only will this be politically impossible, but the benefit will be a far smaller one percent of GDP across the century.
The real cost of inefficient climate policy is that it distracts resources and attention from other priorities. Europe offers an object lesson.
Twenty-five years ago, the European Union proclaimed that with massive investments in R&D throughout the economy, it would become “the most competitive and the most dynamic knowledge-based economy in the world.”
It failed abjectly: innovation spending hardly budged and the EU is now far behind the United States, South Korea, and even China.
Instead, the EU switched focus and in its myopic climate obsession opted for a ‘sustainable’ economy over a sound one. The EU’s decision to increase its 2030 emission reduction targets was pure virtue-signaling, and the cost is likely to top several trillion Euros.
Not focusing on innovation has stunted Europe. The Euro area has seen anemic annual growth over the past decade of just over one percent per person.
For the two trillion euros it has spent on symbolic climate policy, the EU could have lived up to its innovation spending targets over the last two decades.
See more here climatechangedispatch
Header image: Finance Alliance
About the author: Bjorn Lomborg is president of the Copenhagen Consensus and a visiting fellow at Stanford University’s Hoover Institution Centre. He is the former director of the Danish government’s Environmental Assessment Institute.
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