Wednesday, October 24, 2018

Climate Economics: Trump and Republicans Ignore the Math

Neither Donald Trump nor Republican legislators acknowledge the benefits of climate action. They oppose the green economy while increasing US emissions that exacerbate climate change. They have increased the extraction fossil fuels while ending decades of bipartisan support for energy efficiency. The pretexts they put forward to eschew climate action are two-fold. First they question the science proving the anthropogenic origins of climate change and second they ignore cost benefit analyses. Despite the self-serving narrative offered by the GOP, a large body of scientific evidence unequivocally concludes that humans are responsible for climate change and a slew of studies demonstrate the benefits of climate action.
"I don't want to give trillions and trillions of dollars. I don't want to lose millions and millions of jobs" Trump said. This comment sounds very much like the remarks made by Republican Senator Marco Rubio. In an interview CNN's Jake Tapper Rubio said he is not going to "destroy the economy" to address climate change.

The problem is these arguments are untrue. Addressing climate change will benefit the economy and increase the total number of jobs. The green economy is an undervalued opportunity and not only by Republicans. As stated in a Washington Post headline, the idea that climate action is going to destroy the economy could not be more wrong.

They avoid cogent economic analysis for the same reason they eschew science. The facts represent a threat to anyone who deals in climate denial. It exposes the intellectual vacuousness of their policy positions. Trump's energy agenda does not square with the math and his support for energy inefficiency ignores significant opportunities.

Republicans conveniently fail to acknowledge the cost of inaction and they ignore the $28 trillion opportunity.  The idea that investing in the green economy costs jobs is equally absurd. The green economy will produce more new jobs than the old energy economy. Studies show there is more employment potential in renewable energy than there is in fossil fuels. Yet Trump undermines renewables and supports dirty energy.

An IIED study indicates that if we do not invest in climate-resilient infrastructure the cost of climate change could be $1240 trillion.  Alternatively, the same report claims we can preempt the problem by investing $890 trillion in the green economy. By 2060 the mean annual impacts are estimated to be between $1.5 trillion and $20 trillion.

Although the relative values people assign to environmental and economic concerns vary the logic of emissions reduction remains. Most of the data points to a net savings associated with climate action. No matter how you look at the problem the costs of inaction are far greater than the costs of action. The benefits of reducing greenhouse gas emissions outweigh the costs of runaway climate change by trillions of dollars annually.

The math justifying climate action is hardly new. In 2005 the German Institute of Economic Research and Watkiss et al. suggested the total cost of climate action (cost plus damages) by 2100 is approximately $12 trillion, while the cost of inaction (just damages) is approximately $20 trillion.

Since then a number of reports have come to similar conclusions. The Stern Review, the Risky Business report and countless other studies demonstrate that investing in the green economy will create jobs and generate economic opportunities.

Driven by sound projections climate action is taking hold all around the world. Corporations and various levels of government are engaged in science based initiatives. Republicans appear to be willfully oblivious to the math. As the world invests in the green economy Trump and his Republican minions are handing out tax cuts that will massively inflate the federal deficit. The budget deficit was $666 billion in 2017, versus $585 billion in 2016, an increase of $81 billion or 15 percent. In 2018 the budget deficit is $779 billion, an increase of nearly 17 percent over last year. In 2019 the deficit is expected to be more than $1 trillion. The GOP’s second tax cuts would add $3.8 trillion to deficit and this is unsustainable.

Tax cuts and unbridled degregulation have sparked upticks in economic growth and employment but in a way that is analogous to a sugar rush. As interest rates rise the cost of this burgeoning defit will become unmanageable. The short term spike is putting upward pressure on interest rates. In 2019 it is expected that the entire discretionary budget will be needed to service the debt.

The tariffs are starting to bite and this is already hurting the stock market as investors are anticipating a slowdown. Companies have also been hurt by Trump's tariffs and some of these companies will not survive. The slowdown in foreign trade will force many to layoff workers. Ultimately Americans will be out of work and consumers will have to pay more for some of their goods and services.  What makes this so significant is the fact that it is taking place in America's heartland, this is supposed to beTrump country.

Republicans may bury their head in the sand but this problem will not go away. The threat remains alongside the opportunity. The longer we wait to address it the more other nations will gain a competitive advantage and the more it will cost Americans in the long run. 

Trump's refusal to invest in climate resilient infrastructure and the green economy will cost Americans more than they realize. The costs of extreme weather alone are already astronomical to say nothing of the toll on human lives. The economic and employment arguments are compelling, but even if we put the math aside, common sense dictates that we should be doing all that we can to minimize this civilization altering crisis.

Updated October 24th 10:52 PM EST

We Cannot Afford to Deny the Cost of Climate Change
The Economics of Climate Action
The Economics of Sea-level Rise
Acting on Climate Change: A Cost Benefit Analysis
The Cost of Climate Inaction/Action
Acting on Climate Change Makes Good Economic Sense According to Citibank
An LSE Cost Benefit Analysis of Acting on Climate Change
A Cost Oriented Approach to Climate Change for Conservatives
Risky Business Report Quantifies the Cost of Climate Change
Action on Climate Change a Cost Benefit Analysis
The Cost of Delaying Action to Stem Climate Change
Climate Change: Frequency, Costs and Mortality (World Meteorological Organisation)
Economic Benefits of Combating Climate Change (IIED)
Economic Costs of Combating Climate Change (IPCC)

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