Cost of Inaction on Climate Change

Robert Rubin: How ignoring climate change could sink the U.S. economy

By Robert E. Rubin - Council on Foreign Relations co-chair, Treasury secretary from 1995 to 1999.

When it comes to the economy, much of the debate about climate change — and reducing the greenhouse gas emissions that are fueling it — is framed as a trade-off between environmental protection and economic prosperity. Many people argue that moving away from fossil fuels and reducing carbon emissions will impede economic growth, hurt business and hamper job creation.

But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: What is the cost of inaction? In my view — and in the view of a growing group of business people, economists, and other financial and market experts — the cost of inaction over the long term is far greater than the cost of action.

Read more at The Washington Post.

The Coming Climate Crash

Lessons for Climate Change in the 2008 Recession

By HENRY M. PAULSON Jr. - Chairman of the Paulson Institute at the University of Chicago and served as secretary of the Treasury from July 2006 to January 2009.

There is a time for weighing evidence and a time for acting. And if there’s one thing I’ve learned throughout my work in finance, government and conservation, it is to act before problems become too big to manage.

For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.

This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course.

We need to act now, even though there is much disagreement, including from members of my own Republican Party, on how to address this issue while remaining economically competitive. They’re right to consider the economic implications. But we must not lose sight of the profound economic risks of doing nothing.

The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response. We can do this by putting a price on emissions of carbon dioxide — a carbon tax. Few in the United States now pay to emit this potent greenhouse gas into the atmosphere we all share. Putting a price on emissions will create incentives to develop new, cleaner energy technologies.

Read more at The New York Times.

Money men tally cost of climate change

NEW YORK (AP) — Climate change is likely to exact enormous costs on U.S. regional economies in the form of lost property, reduced industrial output and more deaths, according to a report backed by a trio of men with vast business experience.

The report, released Tuesday, is designed to convince businesses to factor in the cost of climate change in their long-term decisions and to push for reductions in emissions blamed for heating the planet.

It was commissioned by the Risky Business Project, which describes itself as nonpartisan and is chaired by former New York City Mayor Michael R. Bloomberg, former Treasury Secretary Henry M. Paulson Jr. and Thomas F. Steyer, a former hedge fund manager.

"If we act immediately, we can still avoid most of the worst impacts of climate change and significantly reduce the odds of catastrophic outcomes," Paulson said.

Among the predictions: Between $66 billion and $106 billion in coastal property will likely be below sea level by 2050, labor productivity of outdoor workers could be reduced by 3 percent because extremely hot days will be far more frequent, and demand for electricity to power air conditioners will require the construction of more power plants that will cost electricity customers up to $12 billion per year.

"Every year that goes by without a comprehensive public and private sector response to climate change is a year that locks in future climate events that will have a far more devastating effect on our local, regional, and national economies," warn the report's authors.

The analysis and calculations in the report were performed by the Rhodium Group, an economic research firm, and Risk Management Solutions, a catastrophe-modeling company that works for insurance companies and other businesses. It was paid for by the philanthropic foundations of Bloomberg, Paulson and Steyer, among others.

The report analyzes the impacts of climate change by region to better show how climate change affects the businesses and industries that drive each region's economy.

— The Northeast will likely be most affected by sea level rise, which will cost an additional $6 billion to $9 billion in property loss each year.

— The Southeast will likely be affected both by sea-level rise and extreme temperatures. The region, which has averaged eight days of temperatures over 95 degrees each year, will likely see an additional 17 to 52 of these days by midcentury and up to four months of them by the end of the century. This could lead to 11,000 to 36,000 additional deaths per year.

— Higher temperatures will reduce Midwest crop yields by 19 percent by midcentury and by 63 percent by the end of the century.

— The Southwest will see an extra month of temperatures above 95 degrees by 2050, which will lead to more frequent droughts and wildfires.

The report does not calculate the cost of these droughts or wildfires, or many other possible costs such as the loss of unique ecosystems and species and the possible compounding effects of extreme weather conditions. Nor does it calculate some of the ways economies could adapt to the changing climate and reduce the costs of climate change.

Beyond the three co-chairs, the members of the group's risk committee include Former Treasury Secretary Robert Rubin, former Cargill CEO Gregory Page, and George Shultz, former treasury secretary and secretary of state.

"These are people who have managed risk all their lives and have made an enormous amount of money doing so," Yohe said.

Read the AP Report at The Buffalo News

Risky Business Report: The U.S. economy faces significant risks from unmitigated climate change. The Risky Business report presents a new approach to understanding these risks for key U.S. business sectors, and provides business leaders with a framework for measuring and mitigating their own exposure to climate risk. Explore the report here: http://riskybusiness.org.

Inaction on Climate Change: The Cost to Taxpayers

When we examine the full costs of public programs that pay for disaster relief and recovery from extreme weather events—ad hoc disaster assistance appropriations, flood insurance, crop insurance, wildfire protection, and state run “residual market” insurance programs—we can begin to understand the price to U.S. taxpayers of inaction on climate change.

As the frequency and severity of extreme weather events intensify with the effects of climate change, our federal and state disaster relief and insurance programs will become increasingly unsustainable as losses from such events increase. The net present value of the federal government’s liability for unfunded disaster assistance over the next 75 years could be greater than the net present value of the unfunded liability for the Social Security program.

Boosting our resiliency to today’s extreme weather events is an urgent priority. Investing concurrently in forward-looking measures that over time will reduce the climate-altering carbon emissions contributing to extreme weather is essential to our long-term physical and economic well-being.

Download the Ceres report here.

 

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