Climate Crisis Economics: A Serious Threat and a Real Opportunity

Climate change is a serious threat and an unprecedented economic opportunity. The science is clear and so is the solution. However, after seventeen decades of climate inaction there is an ever diminishing window within which we must act if we are to avoid the worst impacts of a rapidly warming world. We are in danger of triggering feedback loops and surpassing tipping points from which we may not be able to recover.

The need for action is urgent and it is coupled with a cogent economic rationale. This includes both a compelling incentive and a powerful disincentive.

According to a study from the Global Commission on the Economy and Climate the economic opportunity is real as are the costs of inaction. The Commission is composed of former heads of government, business leaders, economists and other experts.

According to the study our carbon intensive societies will require $90 trillion in investments over the next 15 years or $6 trillion a year. This includes infrastructure investments, transport, energy and water systems. The study also outlines the costs of air pollution which is between 4.4 and 10 percent of world gross domestic product.

A shift to low-carbon energy including renewables and greener cities would cost $270 billion a year. This is only a 4.5 percent increase which could be offset by savings including savings on fuel.

The key takeaway from this and many other studies like it is that the cost of inaction is far greater than the cost of action. The impacts of global warming on agriculture, energy, real estate, trade, public health and labor productivity are devastating. However, the economic potential of climate action is significant.

Many economists are not addresing this threat because the metrics we use to assess our economic health (GDP, GNP, fiscal prospects, business earnings etc) completely ignore these risks.

We cannot fall for the false choice between the economy and the environment. In the final analysis climate action spurs economic growth and protects our economy by protecting the environment.

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