The father-son duo of Chris and Mat Hope have published a study in the prestigious scientific journal Nature Climate Change with the counter-intuitive finding that the relative costs of climate change are higher in a world with slower economic growth.
Cambridge’s Chris Hope is one of the world’s most prominent climate economists, having researched energy and climate economics for over three decades. He developed an integrated assessment model called PAGE, which estimates the economic costs of climate change under various greenhouse gas emissions and global warming scenarios.
Growing up, Mat Hope learned from his father about the growing consensus amongst climate science and economics experts that humans are causing global warming (now over 97 percent agreement) and that the costs of climate damage will be high. Mat didn’t understand why policymakers were failing to act on this supposed expert consensus and began to research the subject for himself.
This led Mat to study politics at the University of Bristol, where he’s currently doing PhD research on communicating climate in the US Congress, trying to understand why the US has been unable to pass climate legislation. Mat also recently began researching and writing for The Carbon Brief.
As Mat has documented, the public and policymakers generally view long-term problems like climate change as a low priority when economic times are difficult. The focus understandably shifts toward creating jobs and economic growth, while climate change gets pushed to the back burner. Policymakers often justify this prioritization by pointing out that during an economic recession, greenhouse gas emissions fall as well. That might buy us time to focus on other priorities besides climate change, right?
Chris and Mat decided to try and answer that question using the PAGE economic model. They ran simulations using a wide range of global economic growth scenarios in Scenario A1B from the Intergovernmental Panel on Climate Change, in which the gross domestic product (GDP) of developing countries grow 2 percent faster than in developed countries.
As you would expect, slower economic growth translates into lower greenhouse gas emissions and thus less climate change. However, it also translates into people having less wealth to cope with the impacts of climate change. As a result, the Hopes estimate that the cost of carbon dioxide emissions is actually highest in the slowest economic growth scenarios. The average estimated cost also rises a bit in the highest economic growth scenarios, because these have the largest emissions and the most global warming. Even though people are richer in these scenarios and thus more able to cope with damages from climate change, the possibility of triggering extremely costly catastrophic climate change outweighs the GDP growth.
In any case, the PAGE model average estimate of the cost per ton of carbon dioxide emissions today exceeds $100, whereas in most existing carbon emissions trading schemes and carbon taxes, the price is in the range of $10–25 per ton. The Obama Administration recently revised the US government social cost of carbon estimate upwards 60 percent to a central value of $36 per ton based on updated model assessments, including from Chris Hope’s PAGE model. This change caused great consternation from the Republican Party, but according to the Hope study, it’s still a factor of three too low.
There are thus two main take-home points from this study. First, the economic recession is no excuse for delaying action to address climate change. On the contrary, we should be doing more to reduce greenhouse gas emissions because slow economic growth means we’ll have less wealth to cope with the climate-induced damages in the future.
Second, if the PAGE economic model is correct, we’re currently badly underestimating the costs of our greenhouse gas emissions. In other words, we’re not doing nearly as much to decarbonize the economy and address climate change as we should be, and if we don’t remedy the situation, we’ll pay the price.
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