
The graph above is not a realistic prediction of what the cost of climate change will be to the global economy. It is not meant to be. What it is meant to do is illustrate the relatively slight cost of actually dealing with climate change proactively, transforming to a renewable based economy. According to a model by Germany’s Potsdam Institute, an aggressive program to keep the planet under 2 degrees C warming in this century would mean reaching a level of prosperity 8 times above today’s, about a year and a half later than if we did nothing.
It is understood that doing nothing would bring untold damages to the real economy – those damages are deliberately left out of the graph – so as to show the relative small cost we need pay for survival of human civilization as we know it.
Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.
People on both the left and the right often fail to understand this point. (I hate it when pundits try to make every issue into a case of “both sides are wrong,” but, in this case, it happens to be true.) On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth. But there’s no reason we can’t become richer while reducing our impact on the environment.
Let me add that free-market advocates seem to experience a peculiar loss of faith whenever the subject of the environment comes up. They normally trumpet their belief that the magic of the market can surmount all obstacles — that the private sector’s flexibility and talent for innovation can easily cope with limiting factors like scarcity of land or minerals. But suggest the possibility of market-friendly environmental measures, like a carbon tax or a cap-and-trade system for carbon emissions, and they suddenly assert that the private sector would be unable to cope, that the costs would be immense. Funny how that works.









