By Paul Roberts / For The Herald
Consuming fossil fuels generates greenhouse gas emissions (primarily carbon dioxide and methane) that warm the atmosphere and contribute to climate-influenced events including heat, floods, droughts, wildfires, sea level rise and ocean acidification. These are increasing in frequency, intensity and cost. They have a profound effect on the economy as well as the environment, adding costs to infrastructure, health care, business and labor, and increasing risk and liability.
The true cost of fossil fuels is not the price at the pump. That price reflects the cost to extract, refine and deliver that fuel. It does not include the cost to repair the damage to health, the environment and the economy caused by emitting GHGs into the atmosphere. Those costs are passed on to the broader society. They are global in nature, experienced by all.
Economists call this “externalizing costs,” and climate change is a textbook example. As billions of people consume fossil fuels, billions of tons of carbon and GHGs are emitted into the atmosphere. The total costs, including potentially irreversible damage to the environment and the economy, are distributed to society as a whole. Those whose per-capita consumption is low, and who pollute very little, bear a disproportionate burden. They include poor people and poor nations.
These costs are known as the social cost of carbon, and are increasing, along with the impacts of climate change. The social cost of carbon is a comprehensive measurement of the long-term damage done by a ton of carbon emissions in a given year.
Economists and environmentalists largely agree the social cost of carbon must be built into the economy if we are to accurately measure and reduce the effects of consuming fossil fuels on the climate, environment and economy and transition away from fossil fuels to a zero-emission economy. The first step to net zero is accurately pricing carbon to reflect its true costs. The second is to stop subsidizing fossil fuels. As early as 1989, The Economist Magazine argued that the only way for governments to stop global warming is to put a price on pollution, preferably with a carbon tax.
Our entire economic system — all market sectors and segments: land, labor and capital — as well as our society, rely on a stable environment. The economy and society thrive on stability, certainty and predictability. Conversely, instability and uncertainty are disruptive forces on the economy and society, increasing costs and risks.
Humans evolved in the Goldilocks Zone; over 15,000 years of environmental stability. For millions of years before the Industrial Revolution carbon dioxide levels in the atmosphere averaged around 280 parts per million. Today they exceed 420 ppm. In the past 170 years, burning fossil fuels and polluting the environment are propelling earth on a different and destabilizing course. More than half of the carbon emitted into the atmosphere has been in the past three decades. The rate of carbon emissions is estimated to increase at least ten times faster than at any point in human history.
Climate change is the mother of all disruptors, and Mother Nature is applying the heat. As the saying goes, if Mama ain’t happy, ain’t nobody happy.
According to National Oceanic and Atmospheric Administration, 2023 was a record year for disruptive weather and climate disasters. There were 28 such events in the U.S. that exeeded $1 billion, surpassing the the previous record in 2022. The overall price tag for 2023’s disasters exceeds $93 billion, not including late December storms in Florida and Maine. Since 1980 there have been 376 weather and climate disasters in the U.S. exceeding $1 billion in damage, adjusted for inflation. The cumulative total is $2.66 trillion and that does not include climate disasters under $1 billion.
These events are accelerating in frequency, intensity and cost. 2023 is the fourth consecutive year in which 18 or more separate billion-dollar disasters have impacted the U.S. The new normal is an accelerating number of disruptive and costly events. These events continue to increase driven by increased carbon emissions. Reversing these trends — reaching net zero by 2050 — requires taking our foot off of the gas and applying the breaks.
While climate impacts increase costs across all sectors of the economy, some sectors are more sensitive, reflecting climate impacts sooner. Energy, agriculture productivity, labor productivity, human health/health care, and real property are all sectors currently experiencing increases in costs resulting from climate change. As GHGs increase, so too will economic impacts.
Climate change impacts do not take place in a vacuum. Population growth results in increasing demands on food and water resources. These demands come as these resources are more scarce due to climate change. Recent increases in food prices are partially the result of climate change impacting agriculture production.
Building a clean energy zero-emission economy is a recipe for success dealing with climate change. Pricing carbon can reduce GHG emissions and help provide necessary funding for clean energy and research and development for other sectors to reduce carbon emissions.
Transitioning to a zero-emission economy is expensive, but not as expensive as a business-as-usual path. An uninhabitable earth is not good for the economy or society. There are no long-term winners in that game.
Paul Roberts is retired and lives in Everett. His career spans over five decades in infrastructure, economics and environmental policy including advising Washington cities on climate change and past chair of the Puget Sound Clean Air Agency Board of Directors.
Eco-nomics
“Eco-nomics” is a series of articles exploring issues at the intersection of climate change and economics. Climate change (global warming) is caused by greenhouse gas emissions — carbon dioxide and methane chiefly — generated by human activities, primarily burning fossil fuels and agricultural practices. Global warming poses an existential threat to the planet. Successfully responding to this threat requires urgent actions — clear plans and actionable strategies — to rapidly reduce GHG emissions and adapt to climate-influenced events.
The Eco-nomics series, to be published every other week in The Herald, is focusing on mitigation and adaptation strategies viewed through the twin perspectives of science and economics. Find links to the series thus far at tinyurl.com/HeraldEco-nomics.
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