The US federal government has dramatically underestimated the costs of failing to act against climate change, according to a newly released peer-reviewed economic report. The report authors, Elizabeth A. Stanton from the Stockholm Environmental Institute and Frank Ackerman at Tufts, say failure to account for the full costs of climate change has meant the US government isn’t giving the issue the urgent attention it deserves.
“It is unequivocally less expensive to reduce greenhouse gas emissions than to suffer climate change damages,” say Stanton and Ackerman in the executive summary to their report, which is titled “Climate Risks and Carbon Prices: Revising the Social Cost of Carbon.” The “social cost of carbon” refers to the damage to the economy which results from a ton of carbon being released into the atmosphere.
Carbon’s social costs may include health bills paid by people struck with climate-related illnesses, damages paid by insurance companies whose clients are affected by increasingly severe weather events, and ecosystem services lost to global warming. Many of these costs are difficult to measure precisely, but Stanton and Ackerman say the US government is using calculations based on faulty assumptions.
A working group of the US federal government has put the social cost of carbon at only $21 per ton. “This is not a large number,” say Stanton and Ackerman. “It seems to suggest that we don’t need to do much about climate change.”
In looking at the government’s report, the economists concluded it was wildly over-optimistic about what the effects of continued climate change will be. For one thing the government assumed climate change will be a relatively slow process, using a best-case scenario for their calculations while ignoring warnings from scientists that the effects of global warming could materialize much more quickly.
Similarly, the government analysis used low-ball estimates of the economic costs of near-term climate change and assumed the full costs would take a very long time to materialize. It also assigned relatively small importance to the effects of global warming on future generations.
When Stanton and Ackerman adjusted the variables and performed their own calculations of the social cost of carbon, they found it could be as high as $900 per ton or more. “If the damages…are that high, then almost anything that reduces emissions is worth doing,” they conclude.
All this isn’t to say the government’s optimistic estimate of the cost of carbon couldn’t be right. Rather, the government working group is using data that assumes a best case scenario on several counts, implying that any response to climate change should likewise assume costs will be minimal. It’s like planning your family’s economic future based on the assumption that times will always be good, and that there will never be emergencies.
Just as it’s impossible to predict when an expensive family emergency might strike, there is no way to tell for sure what the true economic effects of climate change will be—especially in the long term. The reason is there simply are too many variables impacting the Earth’s climate to ever predict with absolute certainty how fast climate change will happen or exactly when the impacts will be felt. The only way we’ll know for sure is if we wait and see. By that time, of course, it will be too late to prevent the damage.
Stanton and Ackerman’s report shows the costs of climate change are likely to outweigh even the most expensive proposed mitigation strategies. According to the executive summary, “Cost-benefit analysis under such conditions coincides with a precautionary approach that calls for taking immediate, large-scale action to phase out carbon emissions and protect the Earth’s climate.”
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