A Climate Cure Worse than the Disease
The climate policies lauded in Paris at the One Planet Summit this month are essentially high-cost, low-effect gestures. While the EU will devote 20% of its budget this year to climate-related action, even fully achieving the accord's emissions targets throughout this century would prevent just 0.053°C of global warming by 2100.
JAIPUR – Two years after the Paris climate agreement was signed, the French capital this month again attracted the world’s good and great, who gathered for President Emmanuel Macron’s One Planet Summit. In turns blasting US President Donald Trump for withdrawing from the Paris accord and telling each other that it remains on track, politicians formed a self-congratulatory huddle with celebrity campaigners and business leaders.
We should treat such smug bonhomie with caution. Goodwill isn’t enough to stop climate change, and history is littered with well-meaning policies that turned out to be unhelpful, or even worse than the problems they were meant to address.
One particularly harrowing example was Mao Zedong’s attempt to improve crop yields and health by eradicating sparrows. The population of locusts ballooned, contributing to a famine that claimed around 30 million lives.
But no government is immune. US President Bill Clinton admits that his landmark “three strikes” crime law in 1994 backfired by jailing so many people “there wasn’t enough money left to educate them, train them for new jobs, and increase [their] chances when they came out.” In the following decade, it seemed prudent for the United States to keep its worst Iraqi prisoners in one camp – but this is now blamed for helping future Islamic State leaders learn how to plot.
Often, policy flaws become apparent only in retrospect. To identify them in real time, we need to be able to undertake a calm analysis of costs and impacts. No topic requires this more than climate change. Consider this month’s summit in Paris, where attention focused either on the Trump administration’s absence, or on other world leaders’ defiance of him. Nowhere have we heard about the Paris agreement’s actual costs and effects.
Economic science helps us establish the scale of the problem. The Intergovernmental Panel on Climate Change (IPCC), the UN’s climate panel, estimates that in about 60 years, global warming will cost the planet between 0.2% and 2% of GDP. That’s a problem, but it’s not the end of the world.
Secure your copy of PS Quarterly: The Year Ahead 2023
PS Quarterly: The Year Ahead 2023 is almost here, and available only to Digital Plus or Premium subscribers.
Subscribe now to secure a print copy of the magazine, as well as digital access to all its content, including exclusive insights from German Minister of Foreign Affairs Annalena Baerbock, US Treasury Secretary Janet Yellen, Nobel laureate economist Joseph E. Stiglitz, and more.
Right now, the net cost of global warming is actually close to zero. This seems untrue, because we hear an onslaught of terrible climate-related news. But we don’t get the full picture.
A drought in Syria understandably makes news. But global warming overall means more precipitation. Globally, an overview by the journal Nature finds that droughts have been decreasing since 1982. Thus, while global warming might have contributed to some droughts, overall it has reduced more drought; but an absence of droughts hardly generates headlines.
Similarly, we hear concern that tropical forests are being stripped. But while this deserves attention, the bigger story is that, because more carbon dioxide fertilizes vegetation, climate change has actually increased the world’s green matter (plants of all sorts) since 1982 by the equivalent of an entire continent.
The best estimates thus show that global warming right now has about a zero net cost. (The most pessimistic study finds a cost of 0.3% of GDP, the most optimistic a net benefit of 2.3%.)
That will rise to 2% in a half-century, and to 3-4% early in the twenty-second century, if we don’t act.
But the climate policies lauded in Paris are essentially high-cost, low-effect gestures. The European Union will devote 20% of its budget this year to climate-related action. Taking into account the total cost to the economy, the EU’s bill will likely be around €209 billion ($240 billion).
The benefit will be vanishingly small. Accounting for the EU’s commitments to reduce CO2 emissions under the Paris accord up to 2030, my peer-reviewed analysis shows that in the most optimistic scenario, emissions targets, fully achieved and adhered to throughout this century, would prevent just 0.096°F (0.053°C) of global warming by 2100.
That small impact is not a sufficient reason to dump the EU’s emissions-reduction policy. But it should force us to consider whether the cure is costlier than the disease – and ask what other approaches might be better.
Another peer-reviewed study shows that each dollar spent on EU climate policies will generate a total long-term climate benefit of just three cents. And, despite the cheer coming from France, the Paris accord is just as off-balance: at a $1-2 trillion annual cost, the United Nations itself estimates that it is on track to achieve 1% of what would be needed to keep temperature rises under 2°C.
We need smarter, cheaper options. My think tank, the Copenhagen Consensus, asked 27 of the world’s top climate economists to explore all the feasible policy responses, and we concluded that the best long-term investment is in green energy research and development. For every dollar spent, $11 of climate damage would be avoided. That makes much more sense than spending a fortune on CO2 cuts that do next to nothing.
Countries should ease up on their current, inefficient climate policies and instead increase spending on green R&D. Only innovation can shift the price of future green energy below fossil fuels, thereby impelling everyone to switch. We also need cheap, effective adaptation, to avoid the worst climate damage. And the main source of vulnerability to future climate damage is poverty: the poor will be hit the hardest, as they are by every other global challenge. So, lifting people out of poverty will help more than anything else.
Despite lofty rhetoric from Paris, all the best intentions on the planet will count for little if it turns out that our climate “solution” was just another policy that cost the planet far more than it gained.