I know what you’re saying after the previous section — Why are you bothering me about these troubles which won’t happen for decades? I’m too busy trying to make ends meet to think about this. We’ll take care of those problems when they crop up, if they actually are problems. Won’t it be like that Y2K thing which was a big scare but turned into nothing?
Can we afford to pay the new technology costs required to mitigate climate change? We’ll go over this in a minute, but the impact of climate change is so severe we can’t afford to NOT take action.
The thing about the Y2K problem was that for years before Jan. 1, 2000, the computer industry reworked systems to detect and erase the Y2K bug. The Y2K bug had real potential for serious problems, because earlier generations of software really were misdesigned around date handling, because earlier generations of programmers made some bad assumptions. It was easy in the 1960’s or 1970’s to think Jan. 1, 2000 was so far in the future we’d never see the day. Maybe the reason there were few actual incidents arising from Y2K is because we collectively prepared for and preemptively fixed problems. A few incidents of Y2K problems did occur, not on December 31, 1999, but over the following weeks.
In other words, it is possible to predict a crisis ahead of time and to prepare for it. For example, government agencies run emergency preparedness drills all the time for the same reason.
We foresee a looming climate crisis. We know what the cause is, and there are technologies available now which could make a big difference in greenhouse gas emissions. If only those technologies were widely deployed.
What’s the likelihood that we’ll collectively do much about climate change? Sigh. Let’s try not to get depressed about that, because we have a question to ponder that raises the financial imperative to do something.
NAMELY: What is the economic impact (a.k.a. shareholder value) of the calamities discussed in the previous section?
“What’s the cost of inaction” made it clear the impacts will be significant. But, can can the impact be described in monetary terms?
In May 2008 the Natural Resources Defense Council (NRDC) published a report, The Cost of Climate Change, going over the projected cost of expected (at that time) climate change impacts. The cost in 2025 is expected to be 1.36% of US GDP or about $271 Billion per year, and by 2100 it’s expected to cost 1.84% of GDP or $1.87 Trillion, per year.
What was the cost when New Orleans flooded after Hurricane Katrina, or New York flooded after Hurricane Sandy? Hurricane Katrina cost between $60 Billion and $125 Billion. Wikipedia pegged the cost of Hurricane Sandy at $32 Billion, in New York City, but of course that storm hit a broad area.
An Yale Environment360 article in 2011 asked “What if last summer’s Russian heat wave and drought, which destroyed one third of the country’s wheat crop, or the catastrophic floods in Pakistan and China, or category 5 hurricanes like Katrina are just glimpses of future havoc from warming left unchecked?” Hurricane Sandy hadn’t happened yet at that point, by the way. Indications are that extreme weather events will become more frequent. How long will our society be able to keep forking out money to repair infrastructure damaged by extreme weather events? In this context, it’s folly to be building (and rebuilding) infrastructure on the coast line, because extreme weather events will keep wrecking it. He doesn’t come to a conclusion, but had found some interesting factoids about the looming problems.
Here’s a “What If” to ponder. The Fukushima nuclear disaster occurred because of a massive earthquake, one of the strongest ever recorded by humanity, triggered a massive Tsunami, which swamped the nuclear reactor, shutting its systems down long enough to trigger a nuclear core meltdown. The resulting disaster forced the evacuation of many square miles of Japanese country-side, is causing a continual leakage of radioactive material into the Pacific Ocean, and will take over 40 years to clean up, requiring development of whole new technologies to do so. What about the combination of higher sea levels and an extreme storm causing the ocean to spill over the sea wall of other nuclear reactors, many of whom are on the coast?
A World Bank report in 2010 looks into the risk of violent conflict around the world given trends around growing population, climate change, and resource constraints. As Evans points out, the business-as-usual projection is that by 2050 world population will be 9.1 Billion people, demand for food will grow by 50%, fossil fuel demand will rise considerably, and so on. The ability to continue growing the food supply will meet some constraints, because the “Green Revolution” (which was made possible by fertilizers derived from fossil fuels) has shown diminishing returns the last few years, and there may not be enough land to grow the food to feed the sheer number of people. In other words, it may be simply impossible for the population to grow that big, even ignoring the impacts of climate change. Add in climate change impacts — widespread crop failures due to an increasingly hot climate — will further constrain the possible food supply. The paper points out the obvious, that increasingly scarce resources like food and water have caused wars in the past, and are very likely to do so over the next few decades.
In early 2015, leading climate change blogger Joe Romm wrote on the Think Progress blog that it’s not too late to stop climate change, and that it’ll be cheap (but not easy). The way he measures this is by official projections of the cost versus global GDP, as well as the cost of taking measures today versus delaying until a few years from now. The technology requirements to stop climate change are known, and according to Joe Romm official estimates by the IPCC is the cost of stopping climate change would cost .06% of the annual economic growth. That is, annual economic growth might be 2.24% rather than 2.3%, and in the grand scheme of things this is a small cost.
The other side is that the International Energy Agency has estimated that “Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.” That is, fixing climate change in 2025 would cost a zillion times more than if we start fixing it in 2015. The longer we wait the more expensive it will be.
One must also, as we’re saying in this section, consider the cost of inaction. Romm claims that a 4 degrees Centigrade temperature rise would “Dust-Bowlify one third of the currently inhabited arable landmass of the planet.” What’s the economic cost if that happens?
Widespread calamity – hugely costly
Even if we didn’t come up with a number — a prediction of the future cost on society for the expected effects of climate change — it’s clear the effects will be enormous. Widespread pain and suffering on an unimaginable scale is very likely.