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Economic Costs of Climate Change 'Will Affect Every American'
NEW YORK - Independent economists and environmentalists are warning of dire consequences for the U.S. economy if policy makers fail to take urgent action on climate change.
"Climate change will effect every American economically in a significant and dramatic way," said Matthias Ruth, director of the University of Maryland's Center for Integrative Environmental Research.
In a new study released this week, Ruth observed that further delays in tackling climate change would not only cause greater damage to the U.S. economy, but would also raise the future cost of dealing with natural disasters.
The authors of the study, entitled "The U.S. Economic Impacts of Climate Change and the Costs of Inaction," say their efforts to analyze the economic research done in the past and pull in other relevant data make the study the first of its kind.
The costs of climate change inaction is likely to be much higher than the required spending on cuts in carbon emissions, the report's authors said, adding that the United States can expect to lose hundreds of billions of dollars in damage to its infrastructure, agriculture, and manufacturing sector if more isn't done soon to slow climate change.
"We're making billions of dollars of infrastructure investments every year and often without taking impacts of climate change into account," said Ruth, stressing there was a "strong need for action across all sectors."
The report concludes that the real economic impact of climate change is "fraught with hidden costs," which will vary regionally and will put a strain on public sector budgets.
For example, the combined impacts of storms on the United States since 1980 have surpassed $560 billion. Hurricane Katrina alone accounted for nearly $200 billion in economic losses.
According to Ruth and other researchers, more frequent and intense storms -- as many climate scientists have predicted -- will raise the price tag even higher.
But storm damage is just one factor in what is fast becoming a cascade of costs, the report said.
Estimates suggest that in the U.S. West and Northwest, the cost of fire suppression and property damages will run in the billions due to changes in precipitation patterns and snow pack.
The Great Plains can expect to experience increased frequency and severity of flooding and drought, resulting in additional billions of dollars in damages to crops and property.
The already sinking water levels will go lower in the Great Lakes-St. Lawrence River system, driving up shipping costs and severely impacting the Midwest manufacturing sector.
Sea level rise and storm surges will eat away valuable property along the Atlantic coast -- a single storm surge event can cost $2 billion to $6.5 billion.
And drought will take firmer hold of the South and Southwest, with costly impacts on agriculture, industry, and households. For the Central Valley in California alone, the economy-wide loss during the driest years is predicted to be around $6 billion.
Ruth's report does not offer any total costs to the U.S. economy because the methodology for calculating that does not yet exist. Climate science is well-established, but the economics of climate change impacts is still in its infancy.
There is a great deal of work still to be done to build robust economic models, Ruth said, urging policy makers not to wait to formulate a national policy for action to mitigate emissions and adapt to already unavoidable impacts of climate change, in an effort to minimize the overall costs.
The energy sector not only has to reduce its greenhouse gas emissions, but also needs to be decentralized to become efficient and buffer it from severe weather events, the report said.
Other recommendations included simple market mechanisms such as pricing of water or dropping the tax exemption on fertilizer to get immediate environmental benefits.
While many industrialized countries seem willing to adopt a global approach in dealing with the threat of climate change, the Bush administration has given no indication of joining the rest of the international community.
It remains outside the fold of the Kyoto treaty and has flatly rejected calls -- even from its allies -- to agree to mandatory caps on carbon emissions.
In a parallel move to a UN-sponsored summit on climate change, the Bush administration recently organized a separate meeting of those representing the most industrialized nations. But as many had expected, the meeting in Washington offered no meaningful results, according to climate activists in the United States and abroad.
© 2007 One World
12 Comments so far
Show AllYes, the rich will get richer and the poor... you know the rest.
As the US goes down economically those "captains of industry" that have helped to keep America from acknowledging the problems we will face with climate change ...they will move to other nations where they can continue to make money and take power. They have no allegiance to America. America has been a tool for them and they will move on to greener pastures.
Meanwhile the business channels (like the new Fox business channel) on tv will keep up the propaganda for American investments and the little investor will think it is wise to invest in America.
Planetary evolution is currently outstripping cultural evolution. Major green house gas emitters, including the US, are still in the primitive, planet stripping, culturally devolved way of life to which we all supposedly envy.
Global cooperation and action, with massive reductions of all major green house gas emitters, is required to stop the acceleration of climate change. Thats right, overall, right now, the mass of humanity is still killing the planet on which our livelihoods depend, as green house gases are still rising at a faster rates, to new higher levels.
Enormous are the long term economic costs and lost possibilities. The Artic changes are the most spectacular, as world climate appears to be transitioning to a "run away" state. Possibly the planet will be even able to get rid of us faster than we can rid ourselves of our bad behaviors. Too bad nearly everything else may have to go.
What no one wants to acknowledge is that a 'consumer economy' is not sustainable. But it also isn't the only choice. Riane Eisler shows in her book, "Real Wealth of Nations...creating a caring economics" how we can transition and create win-win solutions. The current 'wealth' of money, possessions, property and power won't mean much when we're out of what's real and necessary like water, agricultural production etc. www.realwealtheconomy.com www.partnershipway.org
Share? The capitalists will never.
They taught us in school socialism and communism were bad things. I have never heard the people who lived under these forms of government to complain. Lots had it better because now they are under dictatorship rule.
Maybe if this study and more like it get attention it will start to get big industries' attention since monetary cost is all they care about and consider? Maybe, hopefully.
It's interesting,
NeoCons live in a world of fantasy, much like the Germans did in 1937. They focus on the minute irrelavancies of their daily lives, drinking the Nazi Koolaid, secure in their houses and personal wealth, not realizing something is amiss.... until the dull roar of B-17's starts dropping bombs on their houses....
or in this case the harbinger of 65 degree celsius temperatures bakes their world into a non-recoverable hell.
Somethings never change....
ezeflyer's remarks are to a key point.
Estimates indicate that global warming will decrease not only world GDP but that it will decrease world wealth. Meanwhile, GATT, NAFTA, WTO (etc.) has been concentrating wealth into fewer hands. Areas most likely to be affected will disproportionally affect people with fewer resources, those with significant resources will be able to manuver around hardships and project where there resources (homes, etc) will be safer, more desirable with changing conditions.
Those benefiting from resource scarcity, including oil companies, continue to push lies and misinformation. That the American people don't know the truth about peak oil and global warming means they can't make informed decisions. Not that the corporate and politcal elite want that. That Bush and the oil people in his administration haven't been honest and open with the American people is obviously understandable.
What isn't is that Bush and Co. aren't being held accountable. By anyone.
I wonder how far down the roadwe're going to go before as a country and the world get on a sustainable path. Not meaning to be completely species-centric, but I'd prefer people, everything else and cockroaches, rather than just the latter.
Do I believe that given the right conditions, we could get on a postive, sustainable path? Yes. But I'd bet Lost Wages (Las Vegas)would give substantially long odds.
Imagine the sadness of Inuit elders who have warned about the loss of the magnificent polar bears. That they are telling stories handed down through the generations and that their listeners may likely have to tell their children or grandchildren, "There was a magnificent bear that lived here, but no longer."
Preventing and obstructing a productive response to global warming is "a crime against humanity."
Riane Eisler is neither an economist nor an environmentalist, solutions2. For my money, Amory Lovins in his book Natural Capitalism, lays out a much clearer, step-by-step, hard-headed approach both to the environmental crisis and to dealing with the excesses of American style capitalism. (Which really shouldn't be considered free-market capitalism at all; it's more like "corporatopia" to use Greg Palast's term.)
If you think socialism is a bad thing go to Sweden or even Britain where there are some socialist practicies still surviving despite Thatcher and Blair.
Socialism is only bad for the insaciably greedy, the ones who want their share and yours too, after all the planet belongs to no one nor do its resources but under capitalism they are owned by a few. This capitalism is self sustaining since it's based on money which gives power to the few who control it and everybody else are slaves.
Just do a little arithmetic and work out the amount of money devided by the population, do you think there would be a sub-prime crisis if the wealth generated was shared equally by the people creating it.
Global warming is the peoples problem, we're the ones causing it not them whoever they are. Having said that we have allowed ourselves to be used and will continue on that road because the alternative is unnatractive so we'll take the easy route and global warming will be just hot air.
I have a question: why are so many 'progressive' web sites giving coverage to global warming yet ignoring the real issue: replacing fossil fuels with renewables?
In short, the energy reporting in the 'alternative press' is pretty atrocious. Where is the coverage of the emerging renewable energy industry, for example? Why do so many articles call for "the need for action on global warming" without spelling out what is needed?
For example, all the coal-fired power plants on the planet will have to be shut down. The global international trade in petroleum and natural gas will come to an end. This will turn the global economic order upside down - but it's going to happen anyway.
These fossil fuel energy sources will need to be replaced - and the only viable long term energy solutions will be primarily based on sunlight, wind and photosynthesis.
The construction of that renewable energy infrastructure will create many, many jobs, and will stimulate economies all over the planet.
The Age of Hydrocarbons is coming to an end - but how will it end? In bloody global warfare over the last remaining oil deposits in a rapidly warming world, or in international cooperation aimed at limiting global warming and the construction of a renewable energy-based global economy?
The 'progressive press' needs to wake up and address this issue.
This academic report is somewhat interesting but does not focus on the real issue, namely the economics of empire, which overtly makes phony profits through gaming the known market failure of 'negative externalities'.
The report that really amazed me was the following one by Citi, Lehman, and UBS banks, acknowledging that negative externality costs (the largest being global warming) were going to start being recognized and assessed against corporate polluters --- and that these previously 'hidden' costs were going to start massively effecting the market valuations of such companies.
http://www.socialfunds.com/news/article.cgi/2237.html
This report by hard nosed bankers and their market analysts carries much more weight than any academic report, and it pins the full story and unsustainable economics of this Ponzi scheme on the guilty corporations --- whose market valuation declines will be the clearest indicator that polluting and causing global warming will sound the death knell of companies that previously made profits only by hiding negative externalities. The real irony is that the death blow will be dealt by the capitalist markets themselves.
The report states:
The UBS and Lehman Brothers reports concur that climate change represents a classic market failure where company valuations neglect to take into account negative externalizations--in this case, predominantly the emission of carbon dioxide CO2, the primary greenhouse gas (GHG).
"The free market fails to limit climate-damaging emissions sufficiently, because polluters do not have to pay for the damage they cause," states John Llewellyn, senior economic policy advisor at Lehman Brothers, in The Business of Climate Change: Challenges and Opportunities. "A basic role of policy in such cases is to 'internalize' such costs into emitters' cost structures--the 'polluter pays' principle."
UBS advances nearly the identical analysis, and extends it.
"Moreover, many policies, infrastructure, and institutions presently distort market outcomes to favor fossil fuel use, inefficient energy practices, and rising greenhouse gas emissions," states the UBS report. "Without the cost of climate change embedded in market prices, there is less of an incentive for the private sector to reduce greenhouse gas emissions and provide the conditions necessary to maintain a stable climate."
"Therefore, free markets underestimate the future costs to society that would arise if the climate experienced a drastic transformation: a result which many scientists now predict will happen if there is no change to influence free market outcomes," it continues.
If climate change, one of the most studied environmental phenomena, represents a market failure, one can only wonder to what degree the legion of lesser-studied environmental and social externalities are not being priced into corporate valuations.
Dr. Llewellyn of Lehman Brothers predicts that regulation will eventually correct this market failure and charge companies for the "social cost" of emissions, whether through carbon trading or carbon taxation. He also suggests that an "economically rational society" may choose to charge more than the social cost of emissions, because it cares about the environment in its own right (beyond simply balancing environmental costs and benefits), and because it wants to hedge against risk even further than this equilibrium. So companies may have to overcompensate with internalizations, essentially making up for their historical backlog of externalizations.