The Staggering Economic Toll of Global Warming

The “American Clean Energy and Security Act” introduced by Reps. Henry Waxman, D-Calif., and Ed Markey, D-Mass., is generating a flurry of comment. For groups like The Wilderness Society, the introduction of the Waxman-Markey bill is welcome news — a signal that Congress is finally willing to tackle the potentially catastrophic challenge of global warming. For others, the bill represents a threat to the fossil-fuel-fired status quo. Their response has been to try to protect special interests by frightening American taxpayers with threats of a huge increase in utility costs.

What’s true and what’s false?

Combating global warming will involve requiring polluters to start paying for the harm they cause. This is true. And yes, polluters may try to pass some of the cost on to consumers, but the increases have been vastly overstated in the flurry to scare Americans away from clean energy legislation. More importantly, the costs of a comprehensive climate and energy bill are far lower than the dramatic economic costs of doing nothing.

Hurricane damage, real estate losses, energy costs, and water costs alone could come with a price tag of $1.9 trillion per year (in today’s dollars) by 2100 if we don’t take action now to begin to reduce the amount of harmful carbon dioxide we pour into the atmosphere.

If we don’t act, that cost amounts to $6,260 a year for every man, woman and child in the United States.

In all, the cost of our inaction could lead to damage costing between 5 to 20 percent of the global GDP, according to Sir Nicholas Stern, former chief economist for the World Bank. If we act now, Stern predicts, the number would be much lower at one percent of the world’s GDP by the year 2050.

Beyond that, the enormity of climate change will greatly impact industries. According to testimony before Congress by the Reinsurance Association of America, “the sheer magnitude of climate change could impact a large number of industries to such an extent that sustainable insurability may ultimately be put into question.”

Read more about the staggering costs of failing to act in our policy brief “The Economic Toll of Global Warming.”

We support the Waxman-Markey legislation and believe it is economically important to pass the bill.

Wilderness Society President Bill Meadows elaborated on this theme in his March 31 National Journal blog:

“Unlike the financial crisis, which can conceivably turn around in a matter of months or a few years, global warming just gets more expensive, the politics more difficult, the risk to the public even greater.”

Predictably, not everyone is happy with the first comprehensive climate and energy bill to come out of the 111th Congress. Opponents have mounted an organized misinformation campaign touting erroneous costs to consumers. Republicans in Congress, for example, have been misinterpreting an MIT study to wrongly charge that the household cost of the bill would be more than $3,100 per family. This is simply false. The study’s author, John M. Reilly, wrote a stern letter to House Republican Leader John Boehner saying that his study had been misused. The truth, said Mr. Reilly, is more like $340 a year — or less than a dollar a day — when you take into account not just electricity but all energy-related costs.

Members of Boehner’s own party even blasted him. Jim DiPeso, the policy director of Republicans for Environmental Protection who blogs as “The Green Conservative,” attributed the MIT citation to an “embarrassing” mistake by Boehner’s staff that should have earned the staffer a “red F” on an economics term paper. DiPeso accused Boehner and others of “misquoting the facts” and “trying to scare people about a cap-and-trade carbon regulation.”

Whether or not this reality check will lead to a more fact-based debate in the weeks ahead remains to be seen. We hope it does. As TWS President Meadows noted:

“If Congress says ‘not now,’ will we get a better deal later? No. A cheaper deal? No. A quicker solution? Quite the contrary.”