AN ECONOMIC PERSPECTIVE ON CLIMATE ACTION

By: Laura Calvimontes

Laura Calvimontes,25 years old

Environment and development engineer, EAP Zamorano 

I am passionate about learning of nature, cultures and how the world works. I’m interested in promoting debate and discussion of current issues of interest, as well as providing channels of simplification and access to scientific information to build the foundations for informed ecological, economic and social progress.

The current debate on mechanisms to fight against climate change revolves around reducing CO2 emissions as quickly as possible by any means necessary. It is a speech repeated by the media, politicians and the scientific community all over the world. After 25 years of the RIO+20 convention with the development of the United Nations Framework Convention on Climate Change (UNFCCC), and the many international and global initiatives, efforts and resources aimed at reducing global emissions, the levels of CO2, greenhouse gases, temperatures, etc. continue to increase.

As William Nordhaus said in 2018, “Climate change remains one of the major international environmental challenges facing nations.  So far, nations have adopted minimal policies to curb climate change. Moreover, there has been no significant improvement in emissions trends from the latest data.” Climate change is a serious problem that must be addressed, one that represents and will represent a substantial amount of trouble if left to continue on its current course. But without the inclusion of some solid economical basis to shape those decisions, we are destined to continue moving down the current path.

The Copenhagen Consensus, an organization focused on finding effective ways to, “Do the most good for the most people,” held its first conference in 2004 and began its work to create a prioritization framework for solving problems on a global scale. Within its work focused on prioritizing different international and global actions and investment plans for the sustainable development of nations, it generated an evaluation of different climate strategies and solutions to address the problem of climate change.

A panel of experts ranked and categorized a range of solutions to determine those that would result in the greatest amount of benefits from an annual budget of USD 250 billion over a 10-year period. From this analysis, they found that the worst response to global warming is emission reductions through carbon taxes, and even less effective was the strategy based on carbon emission reductions. While the most cost-effective solutions were: Research on solar radiation management technology which is a policy designed to promote faster development of green technology and finally research on carbon storage technology.

Professor Richard Toll conducted the analysis on the most effective time to reduce carbon emissions and found that, due to the lack of cheap alternatives to fossil fuels, the cost of early emissions reductions (meaning fast action) would represent $17.8 trillion, while century-long strategies to reduce emissions would only cost $2 trillion and, in doing so, we would see a further reduction in temperature and CO2 by 2100. To achieve the cap, CO2 emissions at less than 2°C above the pre-industrial era, the carbon tax rate would have to be $68. But in doing so, there would be an annual loss of $40 billion per year or a 12% reduction in global GDP by 2100. Whereas the total reductions in 2100 GDP that would be avoided by implementing such a policy would only be 2-3% (Lane, Bickel, Galiana, Green and Bosetti, 2009)2. This means that if we decide not to take the proposed strategies against temperature increase (2°C limit) the global GDP would see a 2-3% decrease in 2100, compared to a 12% decrease if the policies were accurately followed. This also means we are wasting a huge amount of public resources; financing policies and projects that will represent costs and damages reflected in the misuse of funds, much greater than the benefits obtained.

Just a small portion of attention is paid to the speech of the importance of prioritization in global actions. Regarding climate science, the degree of politicization and media intervention in science prevents critical analysis of the effectiveness and validity of proposed climate actions. Especially with regard to financial and economic viability, the most popular climate action proposals are economically ineffective and have had little positive impact. Policies must be critically evaluated, changing those aspects that only hinder the processes of shaping a sustainable future. At this point, we have information, methods and resources available to make informed decisions that will maximize the amount of good done in the world.

References 

1Panel compuesto por Finn E Kydland (Nobel Laureate), Thomas C Schelling (Nobel Laureate), Vernon L Smith (Nobel Laureate), Nancy L Stokey (Frederick Henry Prince Profesor de Servicio Distinguido de Economía en la Universidad de Chicago), y  Jagdish Bhagwati (Profesor en Columbia University).Retrieved from: https://www.copenhagenconsensus.com/sites/
default/files/cop15_policy_advice.pdf 

2Lane, L., Bickel, J. E., Galiana, I., Green, C., & Bosetti, V. (2009). Advice for Policymakers. In FIX THE CLIMATE. https://doi.org/10.1007/978-1-4684-4985-3_12

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