Wednesday, September 17, 2014

Climate change: Saving the world might not cost anything

One of the core assumptions of the climate policy debate has been that stopping climate change will cost us. It might not be very much - a few percent less economic growth over twenty years - but the assumption has been that the economic effect will be negative. Now, a new report from the Global Commission on the Economy and Climate suggests that that might not be true:

A global commission will announce its finding on Tuesday that an ambitious series of measures to limit emissions would cost $4 trillion or so over the next 15 years, an increase of roughly 5 percent over the amount that would likely be spent anyway on new power plants, transit systems and other infrastructure.

When the secondary benefits of greener policies — like lower fuel costs, fewer premature deaths from air pollution and reduced medical bills — are taken into account, the changes might wind up saving money, according to the findings of the group, the Global Commission on the Economy and Climate.

There's some stuff in the article about the difficulty of estimating benefits and the supposed impossibility of assigning monetary value to lives saved. But governments do this all the time. In New Zealand, we work out whether it is worth fixing an accident blackspot by comparing the cost to the value of lives saved (which apocryphally we value at a million dollars each). We assess home insulation schemes by the value of lives saved, hospitalisations prevented, and sick-days avoided. And we do the same with air quality standards. You can quibble the precise numbers, but such cost-benefit analyses are widely accepted, and they're not exactly rocket science.

The bigger problem is that while benefits may outweigh costs globally, they may not locally. Greenhouse gases are overwhelmingly emitted by the rich world, but the resulting environmental damage will be largely inflicted on the poor. Which means that those lives saved simply may not be on the balance sheets of polluter nations. And that's the real problem right there.