21 Sept 2015 New economic analysis of the effects of melting permafrost in the Arctic points to $43 trillion in extra economic damage by the end of the next century, on top of the more than the $300 trillion economic damage already predicted.
18 August Citibank Mitigating global climate change is a huge economic benefit- not acting is a $44 Trillion cost
2014 was the year of truth about the economics of global climate change.Climate change is not a cost (as has been generally assumed) - but a great big economic benefit (of course).
June 2014 World Bank Climate-smart development : adding up the benefits of actions that help build prosperity, end poverty and combat climate changeIf climate change is assessed by a modern full cost full benefit economic accounting MITIGATION IS A BIG ECONOMIC BENEFIT- either a clear or a net economic benefit, and best possible investment. The global economy is badly distorted by enormous fossil fuel subsidies, estimated by IMF at US$5.3 trillion in 2015.
It is no surprise then that fossil fuel investments dwarf investment in renewable energy. The IEA reports over US$1.6 trillion was invested in 2013 in energy supply, more than double since 2000.
Renewables annual investment increased from $60 billion in 2000 to a high of $300 billion in 2011, falling since to $250 billion. The largest share of current investment, more than $1 trillion per year, is related to the extraction and transport of fossil fuels, oil refining and the construction of fossil fuel-fired power plants
Decision making on how much governments invest in measures to mitigate global climate change is made according to the economic cost benefit assessments of mitigating compared to not mitigating. At the end of the day environmental health policy measures are made by economic assessment, sadly not by an environmental health assessment. Historically it has taken decades of public pressure for governments to regulate an environmental pollutant to prevent hazardous affects to the public health. The standard economic cost benefit model does not include many large costs (full cost) calling socio-environmental costs 'non market' costs or 'externalities', by which they are not accounted for. Costs are 'future discounted', meaning we defer an amount of our costs to future generations. Economic benefits are derived from the scale of manufacturing and consumption. This economic model encourages the maximum extraction and combustion of fossil fuels.
So long as climate change assessment and policy rely on today's irrational perverse economics a UN agreement to mitigate is highly unlikely.
2015 Guardian economic benefit of mitigation
A 2014 paper Counting carbon: historic emissions from fossil fuels, long-run measures of sustainable development and carbon debt by Jan Kunnas offers a rational and just economic approach.
A Feb 2015 paper Richard A. Rosen The economics of mitigating climate change: What can we know?
He quite sensibly says that because of all kinds of uncertainties that economic models are never going to deal with 'policy makers should not base climate change mitigation policy on the estimated net economic impacts computed by integrated assessment models. Rather, mitigation policies must be forcefully implemented anyway given the actual physical climate change crisis, in spite of the many uncertainties involved in trying to predict the net economics of doing so'.
A Jan 2015 study by Temperature impacts on economic growth warrant stringent mitigation policy. found the Estimated social cost of climate change are way inaccurate. "We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton."
Climate damages will increase until climate is stabilized, which will take centuries to millennia.
Some economic research has started to address this e.g Richard L. Revesz 2014 Global warming: Improve economic models of climate change (see Climate models underestimate costs to future generations)
The IPCC assessments include the economics of climate change and mitigation, but the economic method is highly biased to fossil fuels. The IPCC calculation is for 'cost effective' mitigation (ie. the cheapest measures) The AR5 says the most cost effective mitigation is by carbon capture storage (CCS), despite the fact that it is still unproven on any large scale due to its high cost.
The IPCC 2014 AR5
Incredibly the IPCC AR5 (Synthesis for policy makers does not account for the enormous economic of benefit of reduced climate change impacts, which totally invalidates the economic assessment.
AR5 assumes that mitigating climate change will cause less consumption, which it calls an economic loss. There is no reason why switching from GHG polluting energy, goods and services to the non polluting alternatives will reduce consumption. In fact because zero carbon emissions means the world must be redeveloped- world economic growth will get boost like never before. We will have to progress to a steady state world economy, but thinking we can do this now to solve global climate change is out of the question. A steady state economy has to wait for rapid zero carbon global redevelopment, that will take decades.
'... mitigation scenarios that are likely to limit warming to below 2°C through the 21st century relative to pre-industrial levels entail losses in global consumption — not including benefits of reduced climate change as well as co-benefits — of 1% to 4% (median: 1.7%) in 2030 and 2% to 6% (median: 3.4%) in 2050, and 3% to 11% (median: 4.8%) in 2100 relative to consumption in baseline scenarios that grows anywhere from 300% to more than 900% over the century). These numbers correspond to an annualized reduction of consumption growth by 0.04 to 0.14 (median: 0.06) percentage points over the century relative to annualized consumption growth in the baseline that is between 1.6% and 3% per year.'
AR5 does 'not consider the benefits of reduced climate change! as well as co-benefits'. The AR5 result is a cost of 4.8% by 2100, which is an average 0.05% reduction in economic growth per year. By this fossil fuel biased economic calculation the higher the atmospheric GHG stabilization the lower is the mitigation cost. In AR5 the higher a carbon price is- the higher are the calculated costs of mitigation. This makes the most 'cost effective' mitigation - higher atmospheric GHG stabilization and lower carbon pricing.
To assess the true economics of global climate change, in the first case fossil fuel energy extraction is still subsidized and to a very great extent calculated by the IMF in 2015 to be at least $1.9Triilion a year world wide (called an under-estimate by the IMF). The AR5 SPM does not include a cost range for pricing carbon. This all shows that governments of heavily industrialized countries are extremely biased to fossil fuel energy. There are no global climate assessments that include the full socio-environmental costs of fossil fuel energy and global climate change, and the full economic benefits of converting all fossil fuel energy to clean non combustion energy sources. The closest report to full costs and benefits comes from the Word Bank and shows that energy transformation world wide would be an enormous economic benefit amounting to $USTrillions which would increase over time. In June 2014 the World Bank issued a report in two volumes Climate-smart development : adding up the benefits of actions that help build prosperity, end poverty and combat climate change in . A World Bank summary of the report is here. The IISD sums up the The World Bank, report (in partnership with the ClimateWorks Foundation) , finding mitigation to be a large economic benefit and that the report finds that such policies could save over one million lives, reduce crop losses by 1-1.5 million tons, and avoid 355 to 520 million metric tons of CO2 equivalent emissions. The report examines the potential benefits of ambitious mitigation action in the EU, the US, China, India, Brazil and Mexico. The effects are considered in a number of sectors: transportation, industry, buildings, waste and cooking fuels. The modeling results show that policies focused on clean transport and energy efficiency in factories, buildings and appliances could contribute an estimated US$1.8 to 2.6 trillion to global output annually by 2030. The report uses a new modelling framework to examine the significant benefits that ambitious climate mitigation policies can generate across the transportation, industry, and building sectors, as well as in waste and cooking fuels.
In 2014 the Global Commission on the Economy and Climate published on line The New Climate Economy finding that 'Countries at all income levels have the opportunity to build lasting economic growth and at the same time reduce the immense risk of climate change. But action is needed now'. A new June 2014 paper by N Stern and S Dietz Endogenous growth, convexity of damages and climate risk, calculated that the costs of global climate change have been incredibly underestimated. The paper also found that that living standards could begin to decline this century without effective mitigation.
One of the most respected economist pioneers in full socio-environmental cost accounting is Lester Brow of Earth Policy Institute who for many decades has been explaining the perversity of our economic model because it does not tell the economic truth. He has written about the development of an eco-economics that does tell the full economic truth.
His last book on climate change and economics is his 2010 Plan B 4.0 Mobilizing to Save Civilization- excerpts:
o Lowering Income Taxes While Raising Pollution Taxes Reaps Great Returns
o Chapter 10. Can We Mobilize Fast Enough?: Stabilizing ClimateFor many years it has been assumed that the United States economy would not be hurt by global climate- only the Global South would suffer crippling economic losses. This was expressed by the slogan often repeated by US President Bush that there would be winners and losers from global climate change. June 2014 saw the publication by the Rhodium Group of Risky Business The Economics Risks of Climate Change in the United States. The report found that the American economy is already beginning to feel the effects of climate change. These impacts will likely grow materially over the next 5 to 25 years and affect the future performance of today’s business and investment decisions in coastal property and infrastructure, agriculture and energy. The full report is here.The dangerous climate change denial campaign continues to claim we cannot afford to mitigate climate change, and amazingly almost everyone has bought into the big economics lie of climate change mitigation being a cost. The 2006 UK government commissioned Stern Commission Review on the Economics of Climate Change is still one of the best complete appraisal of global climate change economics.
The review broke new ground on climate change assessment in a number of ways. It made headlines by concluding that avoiding global climate change catastrophe was almost beyond our grasp.
It also found that the costs of ignoring global climate change could be as great as the Great Depression and the two World Wars combined.
The review was (still is) in fact a very good assessment of global climate change, which inferred in 2006 that the situation was a global emergency.The Review estimated that the global climate change costs could be equivalent to 20 per cent of GDP or more.In contrast, the costs of actions to reduce greenhouse gas emissions to avoid the worst impacts of climate change could be limited to around 1 per cent of global GDP each year. Each tonne of CO2 that is being emitted was found to be causing damage worth at least $85 - but these costs are not included when investors and consumers make decisions about how to spend their money. In economics these unaccounted costs are called an externalities. The Stern report called this the greatest and most far reaching market failure ever because it would cause massive societal damage and by calling costs externalities the polluting industries were avoiding the costs of their pollution. The other socio-environmental economic perversity with respect to the future impacts of continued atmospheric greenhouse gas pollution that the commission addressed worse future deferral costs. The economic review explained that economics and recognize that in this current situation an ethical element of economic correction was appropriate, and the Stern commission in its economic cost benefit calculation apply a very low future discounting. Some economists pointed out that the global climate change there should be no future discounting i.e zero.The Commission advised three strands to policy: all are required. "First, we must establish a carbon price via tax, trade and regulation – without this price there is no incentive to de- carbonize. Second, we must promote technology: through research and development. Further, private sector investors need confidence that there will be markets for their products: that is why deployment policy also makes sense. And third we must deal with market failure; for example problems in property and capital markets inhibit investments for energy-efficiency. Further, the sticks and carrots of incentives, rightly emphasized by we economists, need to be supported by information. And still further, greater understanding of the issues can itself change the behavior of individuals and firms."The Stern report also recommended stopping deforestation and a comprehensive public education and persuasion program. "Governments can be a catalyst for dialogue through evidence, education, persuasion and discussion. Educating those currently at school about climate change will help to shape and sustain future policy-making, and a broad public and international debate will support today’s policy-makers in taking strong action now.
Establishing a carbon price, through tax, trading or regulation, is an essential foundation for climate-change policy. Stern like most economists said the best pricing method is carbon tax.
Policies are required to support the development of a range of low-carbon and high-efficiency technologies on an urgent timescale.
The removal of barriers to behavioral change is a third essential element, one that is particularly important in encouraging the take-up of opportunities for energy efficiency.
Adaptation policy is crucial for dealing with the unavoidable impacts of climate change, but it has been under-emphazised in many countries.
An effective response to climate change will depend on creating the conditions for international collective action.
Creating a broadly similar carbon price signal around the world, and using
Carbon finance to accelerate action in developing countries, are urgent priorities for international co-operation.
Scaling up flows of carbon finance to developing countries to support effective policies and programs for reducing emissions would accelerate the transition to a low-carbon economy.
Curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions.
Adaptation efforts in developing countries must be accelerated and supported, including through international development assistance."
Since the report was published in 2006 Nicholas Stern has said that new evidence showed the costs of global climate change were underestimated probably by half, and that the mitigation required is far more stringent than recommended in 2006. The report recommended atmospheric the greenhouse gas stabilization target of 550 ppm CO2e, world today in science shows the target has to be below 450 ppm CO2e (350 ppm CO2).
CLIMATE EMERGENCY INSTITUTE
The Health and Human Rights Approach to Climate Change
Mitigating climate change by switching to clean renewable energy is a
huge economic and employment benefit
3 June 2018 Economic models significantly underestimate climate change risks