The Economics of Emergency (i.e., 350)

This utterly fantastic new report — The Economics of 350: The Benets and Costs of Climate Stabilization — is quite impossible to praise too highly.

The only criticism we have is that it is a mitigation-side only analysis that doesn’t take the costs of adaptation (insofar as adaptation is even possible) into account. Oh, and that it has little to say about the all-important questions that rotate around the costs that are here so nicely analyzed — e.g., who pays them, and how But this isn’t a real criticism, just a note about the tight focus of this report.

The two lead authors — Frank Ackerman and Elizabeth A. Stanton — are affiliated with the “E3” network, Economics for Equity and the Environment, and are among the best environmental economists in the business. Their co-authors are similarly illustrious, and their ambitions are high. An impressive team all around, and three of them wrote their own introduction to the report on Grist. Read it here.

The goal of the report is to turn an clear eye to the core economic problem of the climate crisis, and it does so in a manner that is both illuminating and incisive. Two 350 scenarios are discussed, one of which, James Hansen’s, seeks a return to 350 ppm CO2 by 2100, and requires “negative emissions” to pull off the feat. The other, the reference trajectory used by the Ackerman group, is less ambitious, and takes until 2200 to do the deed. Like so:

350trajectories

Here’s the executive summary:

Stopping global warming and protecting the earths climate is a daunting challenge. To prevent a climate crisis we have to move quickly to transform the ways in which we create and use energy, develop petroleum-free transportation, and much more. These changes will not be free; there is already resistance to paying for the first steps along this road. Some think that reaching for more ambitious mitigation targets, and quicker reductions in emissions, would mean economic disaster. Some economists have become known for advocating only slow and modest responses to climate change, lest the costs of mitigation become too large.

This report demonstrates that the ‘go slow’ recommendations are unjustified. A number of economic analyses, informed by recent scientific findings and using reasonable assumptions, suggest that more ambitious targets and quicker action make good economic sense. The warnings about climate change are growing steadily more ominous but it has not, as a consequence, become impossibly expensive to save the planet. We can still afford a sustainable future.

The bad news about climate change relates mostly to the costs of inaction. As greenhouse gas emissions grow, it is the cost of doing nothing that is becoming unbearable, not the cost of taking action. If there is reason for optimism amidst the dire warnings it is this: the costs of insuring the planet against climate disaster are not prohibitive. The best estimates of the costs of a vigorous, immediate effort to rebuild the world economy around carbon-free technologies are still in the range of one to three percent of world output (GDP) per year, even with the more stringent emissions reduction goals we are supporting. Scientific research continues to yield evidence that climate change is occurring faster, and its consequences could be more severe, than previously expected: the costs of climate inaction, or even of delay in mounting a large-scale response to the climate crisis, are getting worse and worse.

We cannot afford a little climate policy, half-measures that would leave us all vulnerable to the immense risks of an increasingly destructive climate. We need a big initiative, a comprehensive global deal on protecting the earth’s climate by rapidly reducing emissions of greenhouse gases. Because the status quo is not sustainable, the most economical choice is to change, as quickly, cost-effectively, and comprehensively as possible. This study looks at both sides of the equation, beginning with the worsening news about climate risks (i.e., the costs of inaction), then turning to the costs of an adequate response.

This report has gotten quite a bit of press. See its homepage at the US Center of the Stockholm Environment Institute for a nice set of links.