Good economic decisions require good data. And to get good data, we must account for all relevant variables. But we’re not doing this when it comes to climate change — and that means we’re making decisions based on a flawed picture of future risks. While we can’t define future climate-change risks with precision, they should be included in economic policy, fiscal and business decisions because of their potential magnitude.
The scientific community is all but unanimous in its agreement that climate change is a serious threat. According to Gallup, nearly 60 percent of Americans believe that global warming is caused by human activity. Still, for many people, the effects of climate change seem like a future problem — something that falls by the wayside as we tackle what seem like more immediate crises.
But climate change is a present danger. The buildup of greenhouse gases is cumulative and irreversible; the pollutants we are now emitting will remain in the atmosphere for hundreds of years. So what we do each day will affect us and the planet for centuries. Damage resulting from climate change cuts across almost every aspect of life: public health, extreme weather, the economy and so much else.
What we already know is frightening, but what we don’t know is more frightening still. For example, we know that melting polar ice sheets will cause sea levels to rise, but we don’t know how negative feedback loops will accelerate the process. As polar ice melts, the oceans absorb more heat, which causes more ice to melt. And the polar ice sheets have already started to melt.
When it comes to the economy, much of the debate about climate change — and reducing the greenhouse gas emissions that are fueling it — is framed as a trade-off between environmental protection and economic prosperity. Many people argue that moving away from fossil fuels and reducing carbon emissions will impede economic growth, hurt business and hamper job creation.
But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: What is the cost of inaction? In my view — and in the view of a growing group of business people, economists, and other financial and market experts — the cost of inaction over the long term is far greater than the cost of action.
I recently participated in a bipartisan effort to measure the economic risks of unchecked climate change in the United States. We commissioned an independent analysis, led by a highly respected group of economists and climate scientists, and our inaugural report, “Risky Business,” was released in June. The report’s conclusions demonstrated the significant harm that climate change is causing now and that will almost certainly be far more severe in the future — to the agricultural, energy and coastal-property sectors, as well as to public health and labor productivity more generally.
By 2050, for example, between $48 billion and $68 billion worth of current property in Louisiana and Florida is likely to be at risk of flooding because it will be below sea level. And that’s just a baseline estimate; there are other scenarios that could be catastrophic.
Then, of course, there is the unpredictable damage from superstorms yet to come. Hurricane Katrina and Hurricane Sandy caused a combined $193 billion in economic losses; the congressional aid packages that followed both storms cost more than $122 billion. We can’t attribute all the damage caused by Katrina and Sandy to global warming, but we know that rising sea levels led to significantly worse surges, and that the frequency and intensity of superstorms are almost certain to increase if global warming persists. It’s highly likely that as climate change continues, the damage will not increase on a straight line. Instead, it would increase on an upward-sloping curve, that could become catastrophically steep, because of negative feedback loops and other factors.
And dramatically rising temperatures in much of the country will make it far too hot for people to work outside during parts of the day for several months each year — reducing employment and economic output, and causing as many as 62,500 additional heat-related deaths every year. That’s almost twice as many deaths as those caused by motor vehicle accidents in 2012.