We’re Talking About The Cost Of Climate Change All Wrong
Failing to act on climate change, climate experts warn, will cost even more money. So we tried to calculate just how much.
Fights over solutions to the climate crisis often boil down to one question: How much will a specific policy cost? But what’s left out of these conversations is the even higher financial toll of doing nothing.
Yes, you read that right. Not acting on climate change, climate experts warn, has a higher price tag. We’re talking hundreds of billions of dollars by the end of the decade. Maybe much worse.
“We only talk about the costs of doing something about the problem,” Daniel Swain, a climate scientist at the University of California, Los Angeles, told BuzzFeed News. “It’s been really remarkable how infrequently we talk about the costs of not solving the problem, which are almost incalculably large.”
Democrats have begun leaning into the “climate inaction costs more” idea, desperate to convey the message to voters. “And every day we delay, the cost of inaction increases,” said President Joe Biden this week. “The most unaffordable path forward is inaction,” said Robert Reich, former secretary of labor. “Climate action is much more affordable than climate inaction,” wrote Washington Rep. Pramila Jayapal.
Meanwhile, eye-popping price tags of bold climate solutions abound. Biden proposed $555 billion for climate policies in his Build Back Better bill. And the US is one of several countries this week that collectively pledged roughly $19 billion in public and private funds to help end deforestation by 2030. That’s all on top of the $100 billion a year by 2020 that developed nations promised developing nations back in 2009 and have not yet delivered.
Pinning down the costs of climate inaction as a dollar figure, meanwhile, is not so easy. A big reason why is the sheer magnitude of the crisis, which is already impacting every region of the world. How do you put a price on everything that could be lost, from a little-known animal to a sacred cultural site?
I set off in search of an answer. After speaking with about half a dozen climate scientists, economists, and policy experts, I didn’t find one go-to number — I found a handful.
1. Climate change could cause a COVID-like shock to the economy every five years by 2030.
One straightforward way to estimate the costs of climate inaction is as a percentage of gross domestic product, or GDP.
A 2020 paper calculated the climate costs facing the US by the end of this decade if current warming levels effectively continue through then.
“Drawing on recent research on the impact of temperature and hurricanes on economic activity, we estimate that by 2030, climate change will be costing the US economy around 1.2% of GDP per year,” study author Trevor Houser, a partner with the research organization Rhodium Group, told BuzzFeed News in an email.
That’s equivalent to about $240 billion a year, calculated with today’s $20.4 trillion US GDP rate.
Houser did a back-of-the-envelope calculation, comparing that 1.2% number to how the COVID-19 pandemic devastated US GDP in 2020. “That’s roughly equivalent to having a COVID-style economic shock once every five years,” he said.
The pandemic has claimed over 750,000 lives across the US. Unemployment soared to 13%. The situation was so dire for millions of Americans struggling without a steady income that the US government put in place an eviction moratorium. At one point, the World Bank described the pandemic’s knock on the global economy as the worst recession since World World II.
Now imagine the US economy enduring that every five years, starting next decade. Those climate costs are predicted to go up over time, Houser found, jumping to 1.8% of GDP by mid-century.
These estimates aren’t exhaustive, but instead really just the lower bound of possible costs.
Plus, they don’t cover what researchers call “non-market effects,” such as health impacts, noted Frances Moore, an assistant professor focused on economics and climate change at the University of California, Davis.
The assumption baked into these analyses is that the world markets and global trade will continue to function as normal, as the world gets hotter. But this may not be true.
“In a world with irregular, disruptive, extreme weather, it’s not hard to imagine that all sorts of the mechanisms which keep this backdrop functioning are going to themselves start cracking up,” said Daniel Crow, a modeler at the International Energy Agency.
2. Climate change has already caused billions in extreme weather damage.
From record-setting floods to wildfires to heat waves, climate change is already costing us plenty.
In a study published earlier this year in the journal Nature Communications, a team of researchers estimated that about $8.1 billion of the more than $60 billion in damages caused by Hurricane Sandy in the Connecticut, New Jersey, and New York region could be blamed on climate-linked sea level rise.
Sandy did not have especially strong winds for a tropical cyclone — the storm no longer had hurricane status by the time it made landfall on Oct. 29, 2012. But it was massive, arrived at peak high tide, and struck some of the most populated places in the country. The result was catastrophic damage, largely from a storm surge that flooded far inland. Sandy knocked out power for 4 million people, and affected more than 340,000 homes, according to FEMA. More than 60 people died in the tristate area alone.
The scientists studying Sandy identified how much sea level rise could be attributable to global warming (less than 4 inches). Then they mapped out what flooding would have been both with and without that warming to calculate the difference in damages.
“Fewer than 4 inches of sea level rise caused an extra 8 billion dollars worth of damage during a single storm event,” Scott Kulp, one of the study authors, told BuzzFeed News by email. “Another 6 inches of sea level rise are projected between now and 2050, which will cause progressively higher, more frequent, and more damaging floods across the global coastline.”
A study in the journal Climatic Change, also published this year, used a different approach to quantify the climate-caused damages of Hurricane Harvey, the second-most expensive hurricane in recent US history.
Harvey set records for its historic rainfall. After making landfall twice along the Texas coast on Aug. 5, 2017, the hurricane slowed to a crawl and unleashed upwards of 60 inches of rain. Highways were underwater. Abandoned cars floated in the streets. Businesses, homes, and apartment buildings flooded across the region. More than 60 people died.
Of the $85 billion to $125 billion in damages caused by Harvey’s historic flooding, the researchers found about $13 billion of that can be attributable to climate change.
The primary author of this study, Michael Wehner, had previously determined that climate change likely increased the storm’s precipitation by between 19% and 38%. In this newer study, he and his colleague Christopher Sampson then worked out how much flooding and related damage occurred from that extra water.
“At the end of the day, our best estimate is that 14% to 15% of the cost of flooding during Hurricane Harvey is because of climate change, which doesn’t sound like a lot,” Wehner told BuzzFeed News. “But $13 billion does.”
3. Climate change could cause trillion-dollar disasters in the future.
Another way to try to estimate the costs of climate inaction is by modeling a future disaster and its possible damages.
A team of researchers are doing that, inspired by a terrible disaster from California’s past: a series of storms that hit in 1861–62 and are estimated to have killed about 1% of the state’s population at the time.
“One of the things we’re currently looking at — it’s sort of a mega-storm planning scenario,” said Swain of the University of California, Los Angeles. “It’s for a huge flood event. It’s called ARkStorm. This one is the 2.0 version because the original one didn’t include anything about climate change.”
The original ARkStorm project, completed a decade ago, simulated what would be the fallout if a series of widespread flooding events, similar in size and magnitude to the 1861–62 storms, were to hit now. Such an event was considered unlikely but possible. And the results were bleak — about 1.5 million people would likely need to be evacuated and the cost of the disaster was estimated at $725 billion. In current dollars, the cost jumps to more than $900 billion.
Factoring in climate change, which will only make such an event more likely, “it probably would be a trillion-dollar disaster, if not more,” said Swain, who is contributing to the ongoing research. “That’s just one specific hypothetical example of one major regional disaster for which the odds are increasing due to climate change.”
“There’s no reason why this couldn’t happen more than once in the same region,” he continued, “and there are infinitely many different scenarios you can come up with like this.”
A future of trillion-dollar storms puts the current costs of climate policies into perspective.
“All of a sudden talking about a $3 trillion or $4 trillion package that only peripherally has to do with climate change doesn’t sound like a lot of money,” Swain said. ●