On July 29, the Council of Economic Advisers (CEA) released a report on the economic consequences of delaying action on greenhouse gas emissions (GHG). One major finding: based on the field’s leading aggregate damage estimate, a policy delay that results in global warming of 3º Celsius over pre-industrial levels, could increase economic damages by 0.9% of global output. Consider that 0.9% of the United States’ Gross Domestic Product is roughly $150 billion.
The report focuses on targets limiting greenhouse gas concentrations, which in the report are expressed as concentrations of carbon dioxide (CO2) and CO2-equivalent (CO2e) emissions (e.g. methane). In its report, the CEA asserts that the true costs of excessive CO2e emissions to society are not reflected in the market price of carbon-based energy (i.e. fossil fuels and biofuels). A “negative externality” exists – society is shouldering external costs for which producers do not take responsibility.
The report examines two types of costs to society: costs related to the impacts of ever-increasing CO2e concentrations and costs related to delaying policies that reduce emissions. Regardless of policy delays, CO2e continues to accumulate. This accumulation results in further economic losses through damage caused by extreme weather events, decreased agricultural production, climate change-related healthcare costs, etc. In the second case, policy delays mean that once a policy is implemented, the situation has already changed – the CO2e emissions have already increased, further damage has already occurred, requiring a more stringent policy. And stringent policies are more costly to implement.
The report strongly supports the timely uptake of climate policies that reduce GHG emissions. They describe such policies as a form of “climate insurance” taken out against the possible extreme consequences of climate change. For interested readers, the report also offers analysis of existing “delay” literature in support of its findings.
Local health departments often cite a lack of funding in their inability to address climate change. Has your jurisdiction experienced the economic impacts of climate change? Do you feel that funding and policies directed at climate change mitigation will result in lower costs in the long run?