The climate change debate is over (apart from a few luntatics of course). The debate is now about what to do, and the current focus is on the costs of reducing greenhouse gas emissions. Unfortunately we’re only getting half of the story on the costs. Here’s a typical example of half-assed coverage:
National has set a target of 10-20% reductions, depending on how ambitious other countries are. The mid-range is 15% which, according to the admittedly tenuous economic analysis, carries a cost of about $30 per week, per person over the next decade.
Labour says the government isn’t being ambitious enough. How much more does Labour think the public is willing to pay to meet New Zealand’s climate change obligations, given we represent just 0.2% of the world’s emissions?
Such estimates are tenuous indeed (the cost may be lower). And the waters are further muddied when the minister in charge spouts absolute nonsense costings. But the cost of action (whatever it is) is only half the story. We aren’t being told the other half. What is the cost of doing nothing? It is much higher.
If climate change goes unchecked, if New Zealand doesn’t play it’s part in responding, expect many more headlines like these:
“Drought costs NZ $2.8 billion”.
“100 per cent Pure brand ‘under threat’”
“Tourism industry takes battering in trying times”
Environmental concerns aside, even in purely economic terms, the cost of doing nothing is much higher. Our own local studies show this — “Economic models support action on climate change”. International studies show this — “Climate change inaction ‘will cost trillions’”. The UK Stern Report (also e.g. here, here) examines the economics in detail, and the take home message is stark:
- The cost of reducing emissions could be limited to around 1% of global GDP;
- Unabated climate change could cost the world at least 5% of GDP each year; if more dramatic predictions come to pass, the cost could be more than 20% of GDP.
So let’s say it again – the cost of doing nothing is much greater. Treasury is starting to get it. Some of our smarter business people get it. One way or the other we are going to pay. We can pay now to reduce emissions (maybe 1% of GDP), or we can pay much, much more (5-20% of GDP) — not today, but sooner than we think ….