Many people wonder what governments, businesses, and citizens must sacrifice to tackle climate change. Can we bear the expense of a world without fossil fuels? How many jobs and how much income will be lost? Is it really worth the effort?
 | Spending OptionsHMS Belfast passes through the Thames flood barrier, London's protection against surging tides. Protecting the world from climate change would cost the same annually as nations spent on the military in 2008 (Photo: Reuters) |
Those that are still amazed by the estimated 4 trillion dollars lost since the financial meltdown in 2008, will have to get used to even bigger losses: Climate change could destroy more than 20 percent of annual global GDP, about 12.5 trillion dollars in 2008 terms.
The daunting numbers stem from the Stern Review on the Economics of Climate Change published in 2006, a report now considered even by its authors to be overly optimistic.
Now the good news: It will cost just “two to three percent of global GDP per annum” to stabilize greenhouse gas concentrations in the atmosphere and avoid the worst effects of runaway climate change, says Alex Bowen, senior economist on the Stern team. That is about the same proportion of global GDP that all the world's governments spent on the military in 2008.
Likewise, in Southeast Asia the costs of adapting agriculture and coastal zones by building sea walls and developing drought- and heat-resistant crops will, in the long run, be outweighed by the benefits, predicts the Asia Development Bank. “By 2100, the benefit could reach 1.9 percent of GDP, compared to the cost at 0.2 percent of GDP,” the Bank estimates.
 | Picture Gallery (click on the picture to start)See how the climate change balance sheet stacks up. Count the costs of climate change and the costs of protecting the climate. (Graphic: Asian Development Bank) |
The arithmetic appears irrefutable. The problem is the timescale. The costs of climate change are relatively modest in the near term but increase with time. The truly colossal costs will be felt not by the current generation of policymakers, businesspeople, and consumers but by their grandchildren. The trick is to persuade people that future generations’ wellbeing is worth paying for now.
In the meantime, we have an economic recession to deal with, jobs to save, economic growth and social wellbeing to preserve. Opponents of a de-carbonization strategy argue that we cannot afford 2 to 3 percent of GDP to reduce greenhouse gas emissions. But recent research suggests that a low-carbon economy and climate change mitigation efforts need not catapult us back to the dark ages.
The European Union could slightly increase its GDP while creating a net gain of 410,000 jobs if it meets its target of getting one fifth of its energy from renewables by 2020, says the EU Commission.
Although jobs would be lost in the fossil fuel energy sector, an estimated 2.8 million green energy jobs would more than make up the difference. Saleemul Huq, senior researcher at the International Institute for Environment and Development, argues that the economic crisis, far from being a threat, is the perfect opportunity for governments to direct investment into a low-carbon future.
“The power balance has shifted from so-called market forces to policymakers in the economic and banking arena and that shift can be translated to the climate change arena as well,” he suggests. “In the short term the costs are worth paying so we won’t have to face globally catastrophic impacts in the long term.”
editor: James Tulloch
publishing date: June 9, 2009
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