The Cost of Climate Change

Much to the delight of Republicans, the Democrats’ Build Back Better agenda appears to be foundering. The $1.7 trillion bill was to include $555 billion to combat climate change. This framework would set the United States on course to meet its climate targets, achieving a 50-52% reduction in greenhouse gas emissions below 2005 levels by 2030. Although there were efforts to pay for the majority of the bill’s costs through various means, dissenters cite high cost as their primary reason for their opposition.

A half-trillion dollars to fight climate change? It sounds like a lot, doesn’t it? Compared with the entire annual U.S. budget of $6.8 trillion, it is. But BBB was to be spread over ten years, so it averages out to closer to $55 billion annually. And remember, most of that would be paid for, so relatively little would be added to the annual deficit. Even so, it’s all still a pretty good chunk of change.

When we regard such costs, however, we need to also consider the price of the alternative: to do nothing. What will climate change cost the U.S. and the global economy if all the warnings and concerns are ignored? These costs include more frequent and expensive weather disasters such as droughts, wildfires. Floods, hurricanes, and off-season tornadoes. Add to this the cost of increased disease, migration, and famine, and decreased crop yields. Most of these things are happening already, but the continuing disruption and impact to our economy are only at their earliest stages.

What would it add up to? According to an analysis by global insurance company Swiss Re, if countries succeed at holding average global temperature increases to less than two degrees Celsius above preindustrial levels as set by the 2015 Paris accord, the planet’s economic losses by 2050 would be no more than 5 percent smaller than would otherwise be the case. In today’s dollars, 5% of the current  U.S. GDP of $22 trillion is about $1.1 trillion.

What if we are not able to hold the average global temperature to less than two degrees? Most countries are well behind their Paris emissions targets, so this is a real possibility. Current projections are for the actual increase to be more like 2.6 degrees by 2050. Swiss Re considered this (and an even worse) scenario as well. The impact to the United States (and the world) would be closer to 7 percent of GDP, or $1.54 trillion. Comparing this figure and the 2-degree one, we can estimate that a half-trillion-dollar investment now could save us that much every single year by mid-century.

Like any long-term investment, the best time to begin was years ago. Stating that the United States has been substantially under-invested in climate action for decades, Rutgers University’s Robert Kopp says, “The longer we wait, the more damages we'll have to deal with, and the more costly it will be to lower our emissions in a way that avoids future damages.” Also like any long-term investment, it’s still better to begin late (like now) than never.

The current and future cost of climate change is more than just a monetary hit to the economy. Now we get to the most tragic aspect of a climate disaster. The cost of human lives and livelihoods lost and disrupted will be incalculable. It’s the same for the loss of global biodiversity; we’re creating a planet that none of us will recognize in our near future.

What will it take to mitigate the worst aspects of the coming climate disaster? The will to do what is right. And for that, we can start with investing in our planet’s future through Build Back Better.