An Economic Perspective on the Challenges of Global Warming

Abstract

The cause of today’s climate crisis has been well understood for about a quarter century—excessive emission of green house gases, for which humanity is responsible. The tools at hand to confront it include “mitigation” by reducing emissions, “adaptation” to the effects of warming by developing systems resilient to its effects, and “climate engineering”--the modification of the climate through things like removal of carbon dioxide from the atmosphere on a large scale. The price of doing little or nothing by way of response is predicted to be very high, including a major negative impact on the GDP of the developing world, massive migration forced by rising sea-levels, and other forms of damage. By contrast, the economic cost of dealing with the challenge, as long as it is not long delayed, are quite modest, probably falling in the range of 1-3% of world GDP. There is no plausible reason to hold back the response. But it has been weak due to a combination of lack of awareness on the part of populations and governments of either the magnitude of the likely damage and the small cost of dealing with it, together with powerful vested interests which have been successful in blocking major efforts thus far.