EDITOR’S NOTE: This article was updated on September 11, 2019, to run in our print edition.
Recently, the Democratic National Committee (DNC) rejected calls for a presidential primary debate dedicated to climate change. DNC chair Tom Perez argued that focusing on climate change alone would be unfair to those whose campaigns are more focused on other issues—which might be a compelling argument if experts said those matters had the potential to lead to civilizational collapse.
This was a missed opportunity to demand that the candidates who have not authored or signed on to an ambitious proposal to transform our economy and energy infrastructure over a relatively short time frame, like the Green New Deal, explain how they’ll pay for their more moderate approaches.
“But how will we pay for it?” is rarely asked in discussions of the military budget or trillion-dollar corporate tax cuts. But the media consistently demands that Democratic candidates offer detailed explanations of how they would finance Medicare for All or dealing with the student loan crisis.
It’s the same with climate change. When Bernie Sanders released his climate proposal, The New York Times described it as a “$16 Trillion Climate Plan” and noted that it was the “most expensive proposal from the field of Democratic presidential candidates aimed at reining in planet-warming greenhouse gases” in the very first sentence of the story. Newsweek ran a piece headlined “Here’s How Andrew Yang’s Nearly $5 Trillion Climate Plan Stacks Up Against His Opponents.” And many outlets promulgated a scary but utterly bogus estimate, apparently just invented by Republicans, that Representative Alexandria Ocasio-Cortez’s plan for a Green New Deal would cost taxpayers $93 trillion.
If we’re to have any hope of mobilizing the effort scientists tell us is necessary, we have to turn this question around. Because the reality is that even if we set aside the human and biospheric costs of climate change—the excess deaths from extreme weather and encroaching diseases, the refugee crises, habitat loss, and mass extinctions—the economic cost of allowing temperatures to rise even a couple of degrees above that target is simply staggering.
According to the 4th National Climate Assessment, over time these costs would dwarf the price tag associated with even ambitious proposals to tackle the problem. And that’s not factoring in the new economic opportunities that transitioning away from fossil fuels would confer on countries that take the lead in that process.
Although the cost estimates vary, there is almost as much agreement on this broad point among economists who have studied the potential impacts as there is within the scientific community that human activities are warming the planet.
In 2015, the Economist Intelligence Unit compiled a peer-reviewed report warning that “the asset management industry—and thus the wider community of investors of all sizes— is facing the prospect of significant losses from the effects of climate change.” Using the Intergovernmental Panel on Climate Change (IPCC)’s warming models, they projected that investors would lose $4.2 trillion in assets by the end of the century, “roughly on a par with the total value of all the world’s listed oil and gas companies or Japan’s entire GDP.” The researchers added that “the average losses to be expected are not the only source of concern; on the contrary, the outliers, the particularly extreme scenarios, may matter most of all.” In the worst-case scenario they considered, 10 percent of the world’s assets would be wiped out.
That’s just the losses to investors. They note that “while the value of future losses from the private sector is substantial, this is dwarfed by the forecast harms when considered from a government point of view.”
Last year, two EPA scientists, working independently of their agency, published a pessimistic study in Nature Climate Change. They compared the potential economic impacts of two scenarios. In the first, humanity misses the 2 degrees Celsius target established in the Paris framework by 0.8 degrees. In the second, we would overshoot the target by 2.5 degrees Celsius. Looking at how warming would affect 22 sectors of the US economy by 2090, they estimated that we would face additional losses of $224 billion per year in the hotter scenario. But the researchers cautioned that because “only a small portion of the impacts of climate change are estimated” in their analysis, it “capture[d] just a fraction of the potential risks and damages.”
A new working paper from the National Bureau of Economic Research estimated that if we continue to emit greenhouse gases at our current pace, it would reduce global economic output by 7.2 percent by the end of the century. If we were to meet the goals set forth in the Paris Accord, output would drop by only 1.1 percent. The difference between those two figures would far outstrip the costs of transitioning to a clean economy now.
There’s broad agreement in the scientific community that the impact of climate change isn’t being distributed evenly, and the study’s authors noted that Americans would be especially hard hit. Co-author Kamiar Mohaddes, an economist at the University of Cambridge, told The Washington Post that while “climate change is costly for all countries under the business as usual scenario, (no matter whether they are hot or cold, rich or poor), the United States will be one of the countries that will suffer the most.” Mohaddes and his colleagues estimated that we could face a 10.5 percent drop in real income by the end of the century if we don’t meet the goals set in Paris.
While these studies model the impacts out to the end of this century, business’s bottom lines are already being hit, and some of the largest corporations say that’s likely to get worse soon. According to Reuters, an analysis of corporate survey data by the CDP, formerly the Carbon Disclosure Project, found that “more than 200 of the world’s largest listed companies forecast that climate change could cost them a combined total of almost $1 trillion, with much of the pain due in the next five years.” The author of that study, Nicolette Bartlett, also cautioned that it may understate the problem. “Most companies still have a long way to go in terms of properly assessing climate risk,” she told Reuters.
All of these studies offer similar warnings. The IPCC, which a number of leading climate scientists believe is overly conservative in its estimates, is working on an updated report about potential economic impacts to be released in 2021. But its 2014 report notes that while “estimates completed over the past 20 years vary…and depend on a large number of assumptions, many of which are disputable,” at the same time, “many estimates do not account for catastrophic changes, tipping points, and many other factors,” and “losses are more likely than not to be greater, rather than smaller, than” the models suggest.
On the other side of the ledger, there is a big potential payoff for saving our environment. A 2016 report by the Global Commission on the Economy and Climate estimated that $90 trillion will have to be spent on infrastructure worldwide through 2030, and while transitioning to a carbon-neutral economy would require more up-front capital, the total wouldn’t be significantly more over that time span. In their 2018 report, the researchers estimated that sustainable investments “could deliver a direct economic gain of US$26 trillion through to 2030 compared to business-as-usual.”
It is, of course, morally perverse to frame this debate in cold economic terms. The World Health Organization (WHO) estimated in 2014 that heat stress, malaria, malnutrition, and other conditions that can will occur if we don’t tackle the problem could lead to 250,000 excess deaths each year between 2030 and 2050; a study published in The New England Journal of Medicine earlier this year concluded that WHO’s estimate had been way too conservative and projected that twice as many people would perish.
We shouldn’t focus solely on the economics. But if we want to spare future generations, we should turn the “How will we pay for it?” question around on those who aren’t calling for a Green New Deal to fight climate change.