Ask a random sample of journalists whether our top scientists agree on the basics of climate science, and they’ll surely say yes: Greenhouse gases are warming the Earth, man is the cause and we have to reduce emissions, or else. But ask the same journalists whether our top economists agree on the basics of climate economics – the costs and benefits of addressing the problem – and they’ll almost certainly say no: There’s no comparable consensus among economists.
But that simply isn’t true, and it’s time for the press and public to recognize it. There is an emerging economic consensus about the cost of climate action, but most journalists have failed to notice it, so the public doesn’t know it exists. That’s a problem, since the opponents of climate action use the cost issue – based on skewed assumptions – to block cap-and-trade legislation. Gullible press reports treat these junk forecasts as if they are credible and give them equal weight alongside respected academic studies.
If you look closely at what climate economists are saying, you can discern two areas of basic agreement. First, there is a broad consensus that the cost of climate inaction would greatly exceed the cost of climate action; it’s cheaper to act than not to act. Reducing greenhouse gas emissions by moving to alternative energy sources will cost less in the long run than dealing with the effect of rising sea levels, drought, famine, wildfire, pestilence and millions of climate refugees.
Obviously, transitioning to a cleaner energy system isn’t free, and there are some respected economists, like William Nordhaus, who argue that future, richer generations will be able to more easily shoulder the cost burden than we can. But influential mainstream economists from Paul Volcker to Robert Stavins to Lord Nicholas Stern to Larry Summers all agree that action is cheaper than inaction, even if they disagree on much else (Stavins can’t stand Stern’s methodology, and Summers prefers a carbon tax to cap-and-trade).
Stavins, director of Harvard University’s Environmental Economics Program, phrased it this way in a recent paper: “There is general consensus among economists and policy analysts that a market-based policy instrument targeting CO2 emissions … should be a central element of any domestic climate policy.”
The second area of consensus concerns the short-term cost of climate action – the question of how expensive it will be to preserve a climate that is hospitable to humans. The Environmental Defense Fund pointed to this consensus last year when it published a study of five nonpartisan academic and governmental economic forecasts and concluded that “the median projected impact of climate policy on U.S. GDP is less than one-half of one percent for the period 2010-2030, and under three-quarters of one percent through the middle of the century.” That’s a lot of money – U.S. GDP in 2007 was $13.8 trillion – but Stavins has estimated the cumulative cost of all U.S. environmental regulation to date at 1 percent of GDP, and it has not been an insupportable burden.
Stavins’ climate-cost calculations come in a bit higher than those in the EDF study, ranging from less than 0.5 percent to 1 percent of U.S. GDP; he describes these as “signi?cant but affordable impacts” that are “consistent with ?ndings from other studies.”
The Stern Review on the Economics of Climate Change, an influential but controversial 2006 report for the British government, concluded that climate action would cost 1 percent of global GDP (though Stern now warns that our failure to act is raising the price tag) and that inaction could reduce global GDP by up to 20 percent.
You can’t take any of these forecasts for their exact numbers, but by aggregating them, as EDF did, you can get a general idea of the impact of climate action. It won’t be free. And it won’t be anywhere near as bad as the economic contraction we’re living through right now, in which U.S. GDP fell by 3.8 percent in the fourth quarter of 2008 alone. If a cap-and-trade program were enacted by Congress this year or next, by the way, it wouldn’t start phasing in until 2012, by which time either the economy will be on the mend or a second Great Depression will have reduced our emissions the hard way.
Many economists conclude that slacking off is the expensive choice. If economists are agreeing on so much, why aren’t more journalists reporting the good news? Many reporters have missed it because they can’t tell the difference between good and bad economic forecasts. Lame “he said, she said” reporting gives hired-gun naysayers equal weight alongside the academics, and that’s a big problem.
Here’s another problem. Journalists have missed the economic consensus partly because economists are such a querulous bunch; they argue bitterly among themselves even when they agree. When Stavins was asked about the Stern Review, for example, he criticized Stern’s methodology and didn’t mention that he concurs with most of Stern’s broad conclusions.
That sort of quarrelling masks the underlying consensus and communicates a greater degree of discord and uncertainty than actually exists.
“One of the strangest things about the Stern Review was that some of the most vociferous comments came from those who drew the most similar conclusions to us,” says economist Dimitri Zenghelis. “In fact, most economists are surprisingly consistent in arguing for early and coordinated action, including cap-and trade-mechanisms.”
Top economists are gradually converging on a parallel consensus that over the long term, it’s much, much cheaper to fight climate change than it is to let global warming continue unchecked.
“Just as a few lonely economists warned us we were living beyond our financial means and overdrawing our financial assets, scientists are warning us that we’re living beyond our ecological means and overdrawing our natural assets,” argues Glenn Prickett, senior vice president at Conservation International. But, he cautioned, “Mother Nature doesn’t do bailouts.”
Ben Eckold is a business senior, the president of the Empower Poly Coalition and a Mustang Daily columnist.