How Big A Problem Is Climate Change?

Will Global Climate Change be a Big Problem for Future Generations? And Who Cares?

Nearly everybody agrees that global climate change is real, and that it is mostly caused by our recent and continuing emissions of greenhouse gases. But how big a problem will it be? We have to answer this question in order to figure out how much to spend today to reduce the pace and impact of global warming in the future. Here's the question:

How much are you willing to give up today to minimize the costs human-caused global climate change will impose on future generations?

The answer to this question depends on two factors:

• How great will be the costs to society in the future due to climate change we could have prevented today? And
• How much do we care about the costs borne by future generations?

Most people will say, "Of course I care a lot about the pain I might be causing future generations!" But the evidence does not support this. How much would you pay today to prevent a million children from dying during the coming year from a cause that you could mitigate?

About one million children die of malaria annually in Africa. Distribution of insecticide-treated bed netting could prevent hundreds of millions of cases of malaria next year. To provide every susceptible family in Africa with such protection would cost around $1 billion (about 200 million nets at $5 each). The people of the rich nations of the world are evidently not willing to spend this amount (your share, if you live in a developed country, would be about $1).

Do we care more about future generations than we do about our fellow Earthlings alive today? Would you give up a dollar today to prevent a million people from dying due to the impact of global warming in 2100?

How Much Will It Cost Future Generations?

There are many studies attempting to quantify the losses future generations will suffer due to the climate change we and our forebears are causing. Two of the best are the Stern Review Report on the Economics of Climate Change and a recent study by Resources for the Future. These reports use different methods to come to similar conclusions:

Stern: "Using the results from formal economic models, the Review estimates that if we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more."

Sterner and Persson, RFF: "Total damages in our case amount to slightly more than 2 percent of the GDP for a temperature increase of 2.5°C."

Current world GDP is about $65 trillion (figured at purchasing power parity). A 2% loss today would be about $1.3 trillion (1.3x10¹²). Five percent would be more than $3 trillion. And that cost would probably not be distributed equitably, but would fall most heavily on the poor.

How Much Would It Cost Us Today To Spare Future Generations That Pain?

Of course the rich countries would be the ones which would have to make the sacrifice today, because:

• They have the money (people living on $1 per day can't afford to give up any consumption--they'd starve), and
• They caused the problem.

The Stern Report estimates that to avoid a 5% or greater loss of consumption on the part of our successors in the future we would have to give up only 1% of consumption today. ("In contrast, the costs of action -- reducing greenhouse gas emissions to avoid the worst impacts of climate change -- can be limited to around 1% of global GDP each year.") One percent of current global GDP is about $700 billion. The per capita share of that sum for people in the developed countries would be $700 per year.

Would you be willing to give up a few hundred dollars a year -- about $2 per day (say in carbon taxes) to prevent the worst effects of future global warming? Let your elected representatives know your answer.

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Sources

Stern Review Report on the Economics of Climate Change

RFF analysis

Malaria in Africa

More Insecticide-Treated Nets Needed For African Households

CIA World Factbook