Stop saying economic growth will rescue us from climate change
Since climate change has become a top-tier issue, there has been a cohort of Americans arguing that action to address the problem is unnecessary. There are the straight-up science deniers, who posit climate change as some sort of hoax, others who admit warming but deny that humans are responsible, and others who admit human-caused global warming but argue that whatever climate policy is under discussion is bad.
Today, the most intellectually respectable version of this school of thought — which for unfathomable reasons is now given wide circulation by two separate columnists at The New York Times — is the idea that we can buy our way out of any problems caused by climate change. Climate policy won't be necessary, by this view, because we're getting richer faster than damages are getting more expensive. As Americans in Houston recover from the worst rainstorm in American history, and Americans in Puerto Rico endure a brutal pummeling from the most powerful hurricane ever measured in the Atlantic basin, it's worth putting this idiotic notion to bed.
The New York Times' Bret Stephens was, of course, the most recent advocate of this perspective in a characteristically muddled and lazy column. At one point, he argues that it "isn't just better regulation" saving rich countries from natural disasters, and then later in the exact same paragraph, admits that actually enforcing regulations does help. But extraordinarily sloppy drafting aside, the meat of the argument is that greater wealth helps avert damage from natural disasters of all sorts: "The best lesson the world can take from Texas is to follow the path of its extraordinary economic growth on the way to environmental resilience."
It's in keeping with more detailed arguments from so-called "lukewarmer" Oren Cass that climate policy is simply unnecessary, because future wealth will be so abundant that we'll be able to easily repair any damages. [In an email, Cass strenuously denied this characterization, saying he "does argue for affirmative climate policies including investment in innovation, research, and adaptation."]
There are two points to make about this. The first is that while it is correct that greater wealth does help avert and repair damages from natural disasters, it is not remotely certain that future wealth will be so plentiful that it will outpace future climate damages. The best way to understand this, I think, is to compare the predictions of climate science to economic ones. Climate scientists model how greenhouse gases behave in the global climate system, constrained with well-understood physics and chemistry, and thus estimate future climate scenarios depending on emissions trajectories.
Now, weather disasters are among the least certain aspects of these scenarios, because of the complexity of stuff like hurricane formation and so on. However, we can say with very strong confidence that increased warming will cause more extreme weather overall, and with good confidence that Harvey and Irma were strengthened by climate change.
More importantly, economic models are hugely less certain than even the shakiest sub-topics of climate science. For example, Cass' thesis in an article for National Affairs rests on an economic model from William Nordhaus which basically assumes its two most important variables: First, that economic growth will keep chugging along pretty much as it has done in the past; second (and relatedly), that economic damages from climate change will only harm output levels, not growth rates.
Such models generally have to incorporate assumptions like that, because unlike climate science, not only does economics not have a consensus theory that predicts why economic growth should automatically trundle along at some rate or another indefinitely, it does not even have a consensus theory about why growth happens in the first place. It simply cannot be remotely as theoretically rigorous as physics and chemistry.
But in this case, there are strong reasons to question these assumptions — and especially Cass' interpretation thereof. First, a survey of over a thousand experts on the economics of climate change found over three-quarters thought it was likely (36 percent) or extremely likely (42 percent) that global warming would harm future growth rates — and only 5 percent disagreed. That would increase the costs of future climate change by "many orders of magnitude." Second, since 2008 both productivity and economic growth have been abysmally bad in the United States and Europe, far below the previous long-term average. Economist J.W. Mason argues this is due to a structural lack of demand that shows no sign of being fixed. That's nearly a whole lost decade and counting failing to pile up about half of the wealth that is supposed to save us. And if Mason is right, then absent major policy changes, we might well continue in this low-growth state indefinitely.
All this is probably why the the user guide for Nordhaus' model specifically warns against relying on it for extreme cases of warming. In one article, Cass notes that the model "estimates 3.8 degrees Celsius of warming by 2100 costing an associated 3.9 percent of GDP in that year." But as Nordhaus writes: "In reality, estimates of damage functions are virtually non-existent for temperature increases above 3 Celsius," noting that his damage equation in the model has been deliberately designed to exclude the possibility of damages that exceed 100 percent of output. That "limits the usefulness of this approach for catastrophic climate change." He concludes: "The damage function needs to be examined carefully or re-specified in cases of higher warming or catastrophic damages."
That brings me back to Bret Stephens. He cites a 2014 chart from Roger Pielke, Jr., showing relatively steady natural disaster damages over time at 0.3 percent of world GDP per year. What Stephens failed to anticipate (as his column was from last week) was that Harvey will cost an estimated $190 billion in damages — or 1 percent of U.S. GDP, from one single storm, with an even more powerful one landing mere days later. It takes a truly extraordinarily level of glibness to make such a statement while America is being brutally initiated into a more dangerous future.
That finally brings me to my second point. So far, the world has experienced one degree Celsius of warming, and America has been suffering an unusual spate of natural disasters. But it has always been obvious that developing, poorer countries will be hit with by far the worst effects of climate change. Indeed, massive, highly unseasonal flooding over the past few weeks in India, Bangladesh, and Nepal has killed something like 1,200 people.
Stephens' advice to developing countries is basically "become rich." That is happening in India and China (though growth in the latter country has slowed markedly over the last few years). But it is not happening in much of Africa, the Middle East, and central Asia. Climate disasters in such places will not appear very "expensive," because the countries are already so poor and likely to remain that way. But that is where by far the most death and suffering is going to happen. If places like the Democratic Republic of the Congo remain poor in 2100, how likely do we think it is that rich countries will pony up billions or trillions to rescue them from climate disaster — or accept tens of millions of climate refugees?
All things considered, it's far better to start ratcheting down emissions now and not put all our chips on imagined future growth magically rescuing everyone.
Editor's note: A previous version of this article overstated the degree to which Oren Cass' argument rested on Nordhaus' work. It has been corrected. We regret the error.