With the kickoff of COP24 this week, policymakers and climate leaders must be ready to explain that urgent and dramatic climate action is needed not in spite of economic growth, but because of it. An emerging and compelling body of research links climate change to slower long-term economic growth globally. Recognizing this connection will help leaders demonstrate that substantial public investments in renewable energy, energy efficiency and CO2 mitigation now will result in much larger benefits through healthier families, economic growth for companies and countries, and a more sustainable global ecosystem.
Indeed, this relationship between economic growth and climate change is so important that Professor William Nordhaus received a Nobel Prize this October for his work developing an Integrated Assessment Model that brings together models of the carbon cycle, climate change and economic impacts. Congratulations, Professor Nordhaus! Perhaps one of the most important applications of Professor Nordhaus’ work is its use in the Social Cost of Carbon (SCC), an estimate by the U.S. federal government of the total economic impact (damages) associated with a ton of CO2 emitted today. The current $40 per ton estimate has already been applied to set hundreds of new regulations impacting CO2 emissions in the United States, and is a benchmark used by corporations and other countries around the world for their own climate change reduction efforts.
Here at Abt Global, I had the pleasure of working with Harvard’s Matthew Ranson to help the National Center for Environmental Economics at the EPA improve SCC modeling. Our work helped inform the current approach to modeling energy demand and extreme weather events, but we also highlighted the important and emerging body of evidence linking climate science to long-term economic growth. One study from the University of Chicago estimated that a 1 percent decrease in productivity from climate change would prompt a 50 percent increase in SCC estimates, and a 5 percent decrease in productivity would triple it.
These results indicate that climate change mitigation efforts are far more economically valuable for society than currently acknowledged, and provide compelling support for pursuing much more aggressive carbon emission reductions today. We look forward to bold leadership from COP24 to lead the way.
You can find additional resources and to learn more about the climate change work led by Abt’s Mikell O’Mealy, Rodolfo Camacho and others here.