We have to do something. This [insert inane policy idea here] is something. Therefore we have to do it. Or, as writers in the Globe & Mail said recently, “Ignoring climate change is becoming really, really expensive.” This from authors who live in an alternate universe where everyone ignores climate change, unlike the one we inhabit where people talk about it nonstop. So hang onto your wallets because they have plans. Because doing nothing is not an option, so we have to do something, and the sooner the better. But who says doing nothing is not an option? Well, everybody, since everybody knows it’s not an option. But we’re not everybody, we’re a bunch of nobodies who insist on asking: what’s the downside of doing nothing?
We recently reported on a new study from Canada’s Parliamentary Budget Office which purported to show what greenhouse gas-induced climate change will do to Canada’s economy over the rest of this century. They warned that if we do nothing, our GDP will be a whopping 6.6 percent smaller in 2100 than it otherwise would be. Which sounds bad only if you ignore the fact that the Canadian economy will have grown more than four and a half times its current size by then. We had some admittedly unkind things to say about the study, since the authors warned up front they were ignoring things like adaptation in their efforts to tally up the costs of climate breakdown, which guarantees they overstated the potential costs. But let’s take their numbers at face value and ask, what are the costs if we do something rather than nothing? Specifically, what if we and everybody else lives up to their Paris promises?
The PBO estimated that instead of Canada’s economy being 6.6 percent smaller in 2100 it will be... 5.8 percent smaller. In other words the benefit of doing “something” comes down to 0.8 percent of GDP 80 years from now. And obtaining that sub-atomic sized benefit by complying with Paris would cost us far more than 0.8 percent of GDP. So doing nothing is not just an option, it’s a better option.
For the world as a whole the story is pretty much the same. In a report last year for the Fraser Institute economists Robert Murphy and Ross McKitrick looked at the climate analysis of Yale economist William Nordhaus, for which he won a Nobel Memorial Prize in 2018. Nordhaus examined the costs and benefits of cutting greenhouse gas emissions over the coming century and concluded that it would be optimal to cut them, but only a little bit.
His model projects the world will warm by about 4.0° C compared to preindustrial temperatures by 2100. Which seems like a lot. And then he recommends a carbon tax that would supposedly cut it… but only to about 3.5° C which still seems like a lot and would have most alarmists screeching. But Nordhaus basically thinks we should mostly just learn to live with the warming because the cost of preventing it is higher than the cost of allowing it.
Indeed, he also showed that trying to hit a cap of 2.5° C compared to preindustrial temperatures would cost so much it would be better to do nothing at all. And he didn’t even bother trying to assess the cost of keeping to a 1.5° C cap since it would be so far out of reach as to be impossible.
So doing nothing is an option. It may not be the best option, but it is better than most of the other options out there. And given the success rate of governments at meeting their targets so far, it may end up being the one we end up doing even if it’s not the one we deliberately choose.