Jenna Ladd | January 13, 2017
A statement from the White House on Thursday outlined the relationship between climate change policy and economics.
The authors of the report, Senior Advisor Brian Deese and Chairman of the Council of Economic Advisers, Jason Furman, point out that carbon pollution steadily decreased while the U.S. economy continued to improve from 2008-2015. During those years, carbon dioxide emissions in the U.S. dropped by 9.5 percent while the economy grew by 10 percent.
These trends defy an old reality: increased carbon emissions means increased economic output.
Research from the International Energy Agency demonstrate that the same is true on an international scale. For example, although carbon dioxide emissions stayed the same in 2014 and 2015, the global economy grew.
The statement said that the international community took an important step in combating climate change when the Paris Agreement took effect in 2015. However, the report notes, “But Paris alone is not enough to avoid average global surface temperature increases that climate scientists say are very risky — additional policies that reduce CO2 emissions are needed, in the United States and elsewhere, to ensure that these damages are avoided.”
Failure to address climate change with meaningful policy is costly over time. The report expresses the estimated annual economic damages due to climate change as a fraction of the global gross domestic product from 2050 through 2100. “Climate damage cost” can be thought of as what all nations can expect to pay per year in terms of economic output due of the changing climate. These costs include sea level rise, illness and death related to heat, pollution, tropical diseases, and the effects of rising temperatures on agricultural productivity.
Figure 1 does not include those effects of climate change that are difficult to quantify, such as the increasing frequency and intensity of extreme weather. The statement said, “Failing to make investments in climate change mitigation could leave the global economy, and the U.S. economy, worse off in the future.”
The report ended with a warning:
“In deciding how much to reduce carbon pollution, and how quickly to act, countries must weigh the costs of policy action against estimates of avoided climate damages. But we should be clear-eyed about the fact that effective action is possible, and that the economic and fiscal costs of inaction are steep.”