Economics
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What about the alternative? If the world decided to do nothing to address
climate change, including the contributions from greenhouse gas emissions
and air pollution, this would progressively exceed the costs of taking action.
When exactly these costs would exceed immediate benefits is debated, but
there is no debate that it will happen eventually. Overall, the negative economic impact on production of a changing climate has been estimated to be
about a 23% reduction in economic productivity by 2100 (Burke et al., 2015).
11.2 Costs and Benefits Related to Reducing
Greenhouse Gas Emissions
One of the economic challenges is to estimate the costs and benefits
associated with potential changes that can be made to reduce greenhouse gas emissions and improve air quality. An important early study
on the costs and benefits of taking action to reduce carbon emissions was
conducted by Stern (2007), which made a strong case that the benefits of
reducing emissions far exceed the costs.
First, let’s look at the costs. The social cost of carbon, which is the cost to society
associated with a unit of greenhouse gas emissions, is considered in the report
and related to the cost to reduce emissions. This value is about $46/ ton of carbon
dioxide (Gillingham and Stock, 2018). There is value in bringing the social cost of
carbon into economic analysis. Some of the impacts of carbon emissions include
melting glaciers, flooding, declining agricultural yields, heat stress, rising sea
levels, displaced populations, more wildfires, and ecosystem impacts (Stern,
2007). When the quality of life in developing countries is reduced because of
climate change, there may be significant migration, which has effects in other
locations. The Stern report indicates that there may be a reduction of 5– 20% in
global economic activity because of greenhouse gas emissions if no actions are
taken to reduce emissions. This compares with the 23% reported more recently
(Burke et al., 2015). On these facts alone, one might conclude that taking action to
reduce greenhouse gas emissions is both feasible and highly desirable.
There are also significant social and economic challenges associated
with reducing emissions globally. To achieve reductions in greenhouse
gas emissions, the Stern report recommends systemic revisions to carbon
emissions prices, technology policies, and better opportunities for behavioral change. If carbon emissions prices can be global, this would make such
recommendations practical and feasible. Using the $46/ ton mentioned previously, and the global emissions of 33.1 billion tons of carbon dioxide in
2018, a carbon tax would generate $1.52 trillion/ year, which could be used
in positive ways to advance efforts to transition to renewable energy and
electric vehicles, improve quality of life, and adapt to climate change impacts
(IEA, 2019). Public education related to technology developments and positive behavioral changes that are beneficial may also be included.
103
1 0 3
What about the alternative? If the world decided to do nothing to address
climate change, including the contributions from greenhouse gas emissions
and air pollution, this would progressively exceed the costs of taking action.
When exactly these costs would exceed immediate benefits is debated, but
there is no debate that it will happen eventually. Overall, the negative economic impact on production of a changing climate has been estimated to be
about a 23% reduction in economic productivity by 2100 (Burke et al., 2015).
11.2 Costs and Benefits Related to Reducing
Greenhouse Gas Emissions
One of the economic challenges is to estimate the costs and benefits
associated with potential changes that can be made to reduce greenhouse gas emissions and improve air quality. An important early study
on the costs and benefits of taking action to reduce carbon emissions was
conducted by Stern (2007), which made a strong case that the benefits of
reducing emissions far exceed the costs.
First, let’s look at the costs. The social cost of carbon, which is the cost to society
associated with a unit of greenhouse gas emissions, is considered in the report
and related to the cost to reduce emissions. This value is about $46/ ton of carbon
dioxide (Gillingham and Stock, 2018). There is value in bringing the social cost of
carbon into economic analysis. Some of the impacts of carbon emissions include
melting glaciers, flooding, declining agricultural yields, heat stress, rising sea
levels, displaced populations, more wildfires, and ecosystem impacts (Stern,
2007). When the quality of life in developing countries is reduced because of
climate change, there may be significant migration, which has effects in other
locations. The Stern report indicates that there may be a reduction of 5– 20% in
global economic activity because of greenhouse gas emissions if no actions are
taken to reduce emissions. This compares with the 23% reported more recently
(Burke et al., 2015). On these facts alone, one might conclude that taking action to
reduce greenhouse gas emissions is both feasible and highly desirable.
There are also significant social and economic challenges associated
with reducing emissions globally. To achieve reductions in greenhouse
gas emissions, the Stern report recommends systemic revisions to carbon
emissions prices, technology policies, and better opportunities for behavioral change. If carbon emissions prices can be global, this would make such
recommendations practical and feasible. Using the $46/ ton mentioned previously, and the global emissions of 33.1 billion tons of carbon dioxide in
2018, a carbon tax would generate $1.52 trillion/ year, which could be used
in positive ways to advance efforts to transition to renewable energy and
electric vehicles, improve quality of life, and adapt to climate change impacts
(IEA, 2019). Public education related to technology developments and positive behavioral changes that are beneficial may also be included.