At a time when it is increasingly difficult to ignore the consequences of climate change, the media is raising an important question: what is the cost of avoiding the climate crisis?
As temperatures rise and the effects of a changing environment become undeniably clear, the response, repeated consistently over the past 15 years, is generally remarkably modest.
With unexpected increases in sea surface temperatures and unusually warm winter days, February 2024 was once again February on record and broke an unprecedented number of heat records as human-caused global warming collides with the El Niño phenomenon. Climate replacement can no longer be denied.
The facts are in front of us, illustrating the economic viability and pressing need for climate action right now. The cost is high, but in the long run it will be much less costly than doing nothing and bearing the consequences.
The groundbreaking Stern study, commissioned 18 years ago through Gordon Brown, then Chancellor of the United Kingdom, provided an initial estimate, suggesting that the stabilization of greenhouse gases would account for 1% of global GDP if action was taken quickly.
This figure was later revised to 2% to take into account the more severe damage expected from climate change.
Despite criticism for being overly optimistic, the Stern Report highlighted a very important point: the mitigation burden far exceeds the mitigation burden, with potential losses ranging from 5% to 20% of GDP annually.
Following the Stern Report, the reports, along with those of the European Commission and the International Energy Agency (IEA), have echoed similar conclusions, albeit with slight variations.
The European Commission’s long-term strategy “A Clean Planet for All” projected a rate of 2. 8% of GDP, while the IEA projected an investment need of 3% of GDP until 2050 to tackle climate change well.
More recently, the European Commission’s ambitious 2040 targets, driven by reflections on COP28 and IEA modelling, have highlighted the need for evolved economies to decarbonise at an accelerated pace. The proposed target of a 90% reduction in emissions by 2040, in most cases, mindful of existing targets, underlines the feasibility of ambitious climate action.
In addition, a recent publication by the Club of Rome, “Earth for All,” assesses efforts to align with planetary climate boundaries, estimating a cost of about 2% of GDP.
This conclusion is supported by sources, such as the IEA’s “Net Zero Through 2050” report, Time magazine op-eds via Yuval Noah Harari, and DNV’s studies on the energy transition, which converge on the consensus that between 1% and 3% of GDP can simply stay with us. in the transition of power. The goals of the Paris Agreement.
Despite the transparent consensus of many studies on the affordability of such investments (close to $2 trillion, or a quarter of global profits), the question remains: why is there any hesitation to take decisive action?
The concept that 2% of GDP is a significant expense does take into account the broader context of affordability.
Overall, monetary commitment is not only manageable, but also imperative to ensure a sustainable future. So what does “affordable” mean in the face of a potential climate catastrophe?
The hard truth of adapting to climate change is evident in the cities of southern Europe. For example, in the Catalonia region of Spain, stricter water restrictions have been imposed due to severe droughts and fears of a loss of rain before the summer season. Barcelona may want to import water, while southern Spain’s agricultural sector is at risk. On a trip to Florence in January, I was told that high summer temperatures are making air conditioning a non-negotiable necessity in the city.
However, this adjustment comes at a significant monetary cost, specifically in terms of capital and operating expenditures, highlighting a hole in which the less wealthy find it difficult to access such luxuries.
Despite the likely nature of climate replacement mitigation efforts, collective inertia persists. The reluctance of the global community to invest mandatory resources in combating climate replacement is puzzling, especially when compared to the immediate mobilization of budget in reaction to other crises, such as pandemics or currency crises.
The idea, expressed by biologist Dag Olav Hessen, that the biggest risk to the fight against warming is the assumption that “someone else is going to fix it,” underscores the challenge.
Some damages are difficult to value financially. For example, the loss of islands due to rising sea levels and more extreme weather. Announced low-lying Pacific island dives (e. g. , climate migration agreement between Tuvalu and Australia) and other things that may simply be uninhabitable. By 2064, everyone else in Tuvalu could be resettled in Australia. Such an event cannot be quantified financially and raises a real moral question.
It can also be argued that the agreement is based on the fact that its linear attitude towards global warming (2. 5% of the population each year is resettled) is questionable.
The economic and social imperatives for climate renewal are clear. In the financial crises of 1988 and 2007, huge sums of money were allocated to revitalize the economy, but they were invested in solving the most urgent global challenge of our time, the natural and climate crisis. , is still insufficient.
Similar arguments can be made for the Covid pandemic. According to an assessment by the World Economic Forum (WEF), the global cost of the pandemic is between $8 trillion and $16 trillion. The world’s GDP is approximately $100 trillion. Avoiding crisis preparedness measures I would have charged 500 times less.
This disparity in responses is alarming, especially the tangible symptoms of ecological distress, such as the marked decline in insect populations.
Government intervention is essential, as the market alone cannot overcome the crisis. It will be necessary to establish the framework for sustainable market operations, fostering a collective movement towards a cleaner and healthier planet.
The burden of saving our world is strangely affordable, and the real burden lies in continued inaction. Now is the time to act decisively.