• Home
  • |
  • Blog
  • |
  • Assessing the Economics of Climate Change

September 28, 2023

Assessing the Economics of Climate Change

Mark Trexler

When is "taking the next step" in assessing the economics of climate change equivalent to "taking a step backwards" when it comes to actually making climate progress?

It's a question that can be raised regarding David Wallace Wells' most recent opinion piece for the NY Times, which reports on a recent paper from the National Bureau of Economic Research, "Quantifying Climate Change Loss and Damage Consistent with a Social Cost of Greenhouse Gases.

Several paragraphs from the NYT article explain the paper.

First: "Among their innovations is incorporating the distortions of time to model the way the impact of a single unit of carbon accumulates over decades. One ton emitted in 1990, they estimate, produced only $4 of global damages through 2020. But damages from that same 1990 ton, they suggest, could grow by the end of the century more than 80 times over — because even if global temperatures stabilize, impacts from that level of warming will continue to pile up, year after year."

Second, one of the interesting ways the new methodology is used is this way: "Taking one long-haul flight every year for the last decade — for instance, a round trip from San Francisco to New York — would produce, they calculate, $5,500 in climate damages through 2100. Over the same time period, switching to a vegetarian diet, installing a heat pump or reducing driving by 10 percent would generate climate benefits of just $1,000 or $2,000 through 2100."

But the primary discussion in the paper is about corporate and national accountability: "When it comes to corporations, and particularly major oil and gas companies, they tabulate a few eye-popping totals. For Saudi Aramco, they estimate that damages from production between 1988 and 2015 have totaled $240 billion, through 2020, and that damages from those same historical emissions could grow more than 50-fold by 2100, to $13 trillion. ExxonMobil’s share of such damages, by 2100, is estimated to be $5.9 trillion."

Finally: "The authors’ treatment of national emissions is, if anything, even more striking. Just through 2020, the authors suggest, the United States has accrued a climate debt of nearly $2 trillion . . . By 2100, the cost of damages associated only with past U.S. emissions could rocket past $100 trillion, with future emissions only adding to the total."

But what's really notable about this methodology is that it also calculates who suffers the damage being done, and who caused it. The report concludes that the U.S. has caused $300 billion of damage to India to date, a number that will climb into the trillions of dollars going forward.

Such numbers will encourage the reparations debate, but are they likely to contribute to climate change progress? Do we want countries focusing on solving a collective action problem, or do we want them suing each other for damages? The latter could very plausibly complicate global negotiations and commitments, inflame and polarize national climate conversations, and generally make genuine climate progress more difficult and slow.

Feature image courtesy of Gerd Altmann from Pixabay.

See original post on LinkedIn.

Related Posts

Do Carbon Offset Investments Offer Robust Returns?

Do Carbon Offset Investments Offer Robust Returns?

How Will the Brave New Post-Paris World Work?

How Will the Brave New Post-Paris World Work?
{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}