Cost estimates vary widely. A recent study found that keeping warming at 2 degrees Celsius would require a total investment of between $ 4 trillion and $ 60 trillion, with a median estimate of $ 16 trillion, while keeping warming at 1.5 degree Celsius could cost between $ 10,000 and $ 100,000 billion, with a median estimate of $ 30 trillion. (For reference, the entire global economy was around $ 88 trillion in 2019.) Other studies have shown that achieving net zero will require annual investments ranging from less than 1.5% of the world’s gross domestic product to up to 4%. That’s a lot, but within the range of historic energy investments in countries like the United States
Now consider the costs of unchecked climate change, which will hit the most vulnerable the hardest. These include damage to property and infrastructure due to sea level rise and extreme weather conditions, death and disease from natural disasters, pollution and infectious diseases, declining agricultural yields and loss of labor productivity due to rising temperatures, decreasing water availability and increasing energy costs; and species extinction and habitat destruction. UC Berkeley economist Dr Hsiang describes it as “death by a thousand cuts”.
As a result, climate damage is difficult to quantify. Moody’s Analytics estimates that even 2 degrees Celsius of warming will cost the world $ 69 trillion by 2100, and economists expect the toll to continue rising with the temperature. In a recent survey, economists estimated the cost would equal 5% of global GDP at 3 degrees Celsius of warming (our trajectory under current policies) and 10% for 5 degrees Celsius. Other research indicates that if current warming trends continue, global GDP per capita will decline from 7% to 23% by the end of the century – an economic blow equivalent to several coronavirus pandemics each year. And some fear that these are vast underestimates.
Already, studies suggest that climate change has reduced incomes in the poorest countries by up to 30 percent and reduced global agricultural productivity by 21 percent since 1961. Extreme weather events have also racked up a big bill. In 2020, in the United States alone, climate-related disasters like hurricanes, droughts and wildfires caused nearly $ 100 billion in damage to businesses, property and infrastructure, compared to an average of $ 18 billion a year in the 1980s.
Given the high price of inaction, many economists argue that tackling climate change is a better deal. It’s like the old saying: an ounce of prevention is better than a cure. In this case, limiting warming will significantly reduce future damage and inequalities caused by climate change. It will also produce so-called co-benefits, like saving a million lives each year by reducing air pollution, and millions more through healthier, more climate-friendly diets. Some studies even show that achieving the goals of the Paris Agreement could create jobs and increase global GDP.
The challenge is that we need to reduce emissions now to avoid damage later, which requires large investments over the next decades. And the longer we delay, the more we will pay to achieve the Paris objectives. A recent analysis found that reaching net zero by 2050 would cost the United States almost twice as much if we waited until 2030 instead of acting now. But even if we miss the Paris target, the economy still argues for climate action, because each additional degree of warming will cost us more – in dollars and in lives.
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Veronique penney contributed reports.
Illustrative photographs of Esther Horvath, Max Whittaker, David Maurice Smith and Talia Herman for the New York Times; Esther Horvath / Alfred-Wegener-Institut